I thank the Chairman for allowing us to address the committee. I also thank the many Oireachtas Members who attended the lobby session we held last week. I thank the Chairman, in particular, for the role he played in recent weeks in sorting out the difficulties relating to the REPS 2 and REPS 3 payments. His help is much appreciated by farmers. The impasse was holding up payments worth €37 million to 6,000 farmers, as we highlighted last week, and it was important that it be resolved as quickly as possible. The Minister for Agriculture, Fisheries and Food, Deputy Coughlan, took up this issue at a meeting in Brussels last Monday with the Commissioner for Agriculture and Rural Development, Ms Mariann Fischer Boel, and the matter was resolved satisfactorily. The payments are now being processed.
In many cases, the REPS payment goes directly to pay off bank loans associated with environmental investments farmers have made under their five-year REPS plan. Farmers involved in the scheme had a legitimate expectation under the five-year contract arrangement that payments would be made at the start of the plan and at the beginning of each subsequent year. While the problems with REPS 2 and REPS 3 have been resolved, problems persist in terms of when payments will be made to farmers who joined REPS 4 since the start of the year. In addition, farmers who will join the scheme in coming months are unclear as to when payments will be made. An early payment system has been in place for 14 years and contributed greatly to what has been and still is the most successful agri-environmental programme in the European Union.
The IFA prioritised REPS in the partnership negotiations in 2006. The outcome of those negotiations was a 17% increase in payment rates and an improved environmental scheme with significant capital investments being made by farmers. The objective in the partnership agreement and the rural development plan for 2007-13 is that up to 70,000 farmers will be participating in the scheme by 2010. This is an ambitious target for the scheme but I have no doubt it will be achieved if farmers have confidence in the payment arrangement.
This necessitates the continuation of the early payment system which has been a feature of REPS since its introduction and involves early payment at the start of each year of the five-year contract. This is vital in encouraging farmers to join the environmental scheme and helps to meet the high costs incurred in the early stages of the plan. These costs include planner costs, capital investments and general compliance costs. Furthermore, reduction in inputs, namely, fertilisers and chemicals, leads to a loss of income which must be immediately compensated for, as the farmer has committed to farming to a higher standard than what is considered the norm in good farming practice.
Some 1,200 farmers have joined REPS 4 since the scheme was introduced last August. Many of these farmers had been out of the scheme as their contracts under REPS 2 had expired in the course of 2007 and there was no scheme available to join from January to August of last year. The 500 farmers who joined REPS 4 before the end of 2007 are currently being paid. Farmers who have joined since are in limbo in that they do not know when they will be paid. Meanwhile, farmers who are currently participating in REPS 2 or 3 and who will be moving to REPS 4 in the course of this year are also uncertain as to when payment will be made.
A press release from the Minister on 24 October indicated that payments would only be delayed for those farmers joining REPS 4 for the first time. It also indicated that farmers participating in REPS 2 and REPS 3 would continue to receive payments in the normal way when they joined REPS 4. The current early payment system for farmers joining REPS 4 must continue. The issue of payments to farmers who are in REPS 2 and REPS 3 and who are moving into REPS 4 should be clarified immediately as there is much uncertainty among farmers and planners as to how to deal with the scheme in the future.
I wish to highlight to members the importance of REPS to farmers. According to the most recent Teagasc national farm survey, an estimated 48% of farmers received REPS payments in 2006. The average farm income on REPS farms was €17,713, which was 13% higher than the average farm income on non-REPS farms, which stood at €15,774. More than 76% of farms that participate in REPS operate dry stock farm enterprise systems in the main. Sheep farmers in REPS had an income 2.5 times higher than sheep farmers who were not in REPS. Under REPS 4, the level of participation is likely to increase from 60,000 to 70,000 farmers in the course of the next six years. Farmers who will qualify for the nitrates derogation will be eligible to apply for REPS 4. In addition, farmers with less than 170 kg of nitrogen per hectare who previously were not in REPS are likely to consider this scheme due to cross-compliance rules under the single farm payment.
As members are aware, the early payment system has been the most important feature of the REP scheme since its introduction in 1994. If REPS is to hold its attraction to farmers and if the target set out in the programme for Government to have 70,000 farmers in REPS 4 in the future is to be achieved, the IFA believes this feature must continue. Both the environmental gains that have been achieved as well as the income gains at farm level are very important. Moreover, were this feature not to continue, the cash flow issues thus created would be huge.
