Joint Committee on Agriculture, Food and the Marine díospóireacht -
Tuesday, 16 Jun 2015

Basic Payment Scheme Eligibility: Discussion

Vice Chairman

I welcome from the Irish Cattle & Sheep Farmers Association, ICSFA, Mr. Patrick Kent, president; Mr. Eddie Punch, general secretary; Mr. Cathal O'Reilly; Mr. Kenneth O'Brien; Mr. James Fitzgerald, and Mr. Michael Murphy. The delegates from Macra na Feirme are Mr. Seán Finan, national president, whom I congratulate on his recent election and wish well in his coming term; Mr. Brian Hynes, chairman of the agricultural affairs committee, and Mr. Derrie Dillon, agriculture and rural affairs manager. I thank all of them for attending to brief the joint committee on the difficulties experienced by a number of farmers known as the forgotten farmers.

Witnesses are protected by absolute privilege in respect of the evidence they give to the committee. However, if they are directed by it to cease giving evidence on a particular matter and continue to so do, they are entitled thereafter only to qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person or an entity by name or in such a way as to make him, her or it identifiable.

The format of the meeting is that we will allow opening statements from the ICSFA and Macra na Feirme before we open the discussion to members. As I understand there may be a vote on the Order of Business at approximately 5 p.m., we may have to suspend the sitting for a period. I invite Mr. Kent to make his opening statement.

Mr. Patrick Kent

I thank the Chairman and members of the joint committee for the invitation. The issue we bring to members' attention relates to young farmers who, through no fault of their own, are not catered for under the national reserve arrangements in terms of entitlements under the new basic payment scheme. The ICSFA believes this issue must be revisited if we are serious about supporting the future of agriculture and encouraging those who have worked hard to make a go at farming with very little EU or national support to date. The issue essentially revolves around the technical definition of a young farmer set out in EU regulations which refer to a young farmer as having commenced farming in the five years preceding the first submission of an application under the new basic payment scheme. This definition was set out in reference to the young farmers' top-up payment. It was also used initially in the definition of a young farmer under the national reserve scheme.

A key issue in the debate on CAP reform revolved around the definition of a young farmer as being under 40 years of age. This limit continues to apply but the national reserve regulations were subsequently revised so that old young farmers, that is, farmers who commenced their farming activities in 2008 or 2009 would also be eligible to apply for entitlements. The off-farm income limit of €40,000 which applies in all cases has resulted in a number of anomalies. It is important that farmers who commenced farming prior to 2008 are given a chance. The basic entitlements allocated under the new basic payment scheme are linked to the rate of entitlements held by farmers under the old single payment scheme. As members will be aware, these entitlements reflect the farming activities carried out during the original reference period from 2000 to 2002. A cohort of farmers who commenced their farming activities too late to benefit from the original period are now considered to have been farming for too long a period to get a fair opportunity under the new scheme. The problem is that the national reserve during the single payment era imposed a restrictive ceiling on off-farm income of €30,000, as well as limits on allocations per hectare. We ask that farmers in this category be brought up to the national average payment per hectare, which is approximately €250. That is a very modest amount for hard-working young farmers. ICSA believes that it is profoundly unfair to leave these farmers behind. It is welcome that a way was found for old young farmers but it is now time to resolve the unfair treatment of the remaining farmers.

We cannot complain about the age structure of the industry if we allow a cohort of young farmers to be left behind. We have met a considerable number of farmers in this category and, in all cases, we were impressed by the hard work, courage and determination they brought to farming. It is a major flaw in the national reserve that regulations do not allow for a five-year use-it-or-lose-it clause. The options should include a substantial clawback on entitlement sales to ensure there are funds in the national reserve. At this point we have no information on how many of the current applicants to the national reserve will be successful, or how much money will be left over. The key message is that the farmers concerned have a compelling case based on merit and we have to do the right thing by them.

Mr. Kenneth O'Brien

I thank the committee for inviting us before it. We are known in the media as the forgotten farmers. I started farming in 2001, which was the last year of the reference period. From a financial point of view, I had to pay for my agricultural course and started out by leasing my land. By the time I had enough money to lease the land and pay for my agricultural course, I had fallen out of the category because I was not able to lease sufficient ground to draw down installation aid. In the following year I had land on a five-year lease but by the time I applied to the national reserve, the lease was down to four years and I fell between the stools once again. I have fought this for the last 13 years but I seem to have fallen into the cracks rather than crossing over them.

Along my journey I have fought against the big farmer who was on a single farm payment. I had 32 hectares and my overall payment was €780. I fought against that big farmer to be able to lease my land and stay in this game. I was told that we would be brought up in the subsequent round of CAP in 2013. It is now 2015 and I have been left out once again. This was an extremely difficult year. One expects things to get easier with time and effort but I am still fighting against the big fellow and now we have the new entrant with €40,000 in off-farm income and €300 per hectare. My payment equates to approximately €28 per hectare. When I tried to lease land, I was beaten from both sides because I was competing with the new entrant and the big farmer.

From meetings we have held around the country, we have discovered that a maximum of 3,800 farmers are in a similar situation. I recognise that not all of these farmers have a green certificate, and that some may meet different criteria, but all they want is to be brought to the national average - the 25% top-up and 60% into the hand. I am 33 years old. I stayed in farming, which is the backbone of rural Ireland. We lost our youth in every other walk of life. We have to do something for these farmers. We have been in this game for 13 years and it is unfair that we are being kicked to the kerb. We feel we are being discriminated against. We paid for our green certificates but the work we have done is not being acknowledged. If we get a single farm payment, we will return twice or three times the amount we receive to our local villages and towns.

Vice Chairman

I invite Mr. Seán Finan to make his opening statement.

Mr. Seán Finan

I am grateful for the opportunity to attend this meeting and to outline issues affecting a cohort of young farmers referred to as old young farmers or forgotten farmers, who have been in farming longer than five years and receive low levels of support, or no support, under the Common Agricultural Policy. I am the national president of Macra na Feirme and I am accompanied by Mr. Bryan Hynes, chairman of Macra na Feirme's agricultural affairs committee, and Mr. Derrie Dillon, agricultural affairs manager.

The new CAP reform has brought positive and important incentives for young farmers, including the young farmer top-up for those who are within five years of set-up. However, the rules for establishing and administering young farmer schemes under the basic payment and rural development programmes have not had the same positive impact on old young farmers. Certain old young farmers have been particularly disadvantaged by the CAP. Many of them have either low or no basic payments under the CAP for a variety of reasons related to the historical model on which the single farm payment was based. This situation has been compounded by the introduction of a five-year rule for eligibility for support, with the result that they lack the support of the CAP system to help them manage income volatility or to facilitate investment in their farm businesses. The convergence model under the new CAP will bring them within 60% of the national average basic payment by 2019.

In terms of Macra na Feirme’s active engagement on young farmer issues and developments in the CAP process, we work closely with the European Council of Young Farmers, CEJA, which is the representative body for 2 million young farmers in Europe, and we are active participants at Irish and European level in developing policy on young farmers with the various institutions and stakeholders.

I will now outline the background to the situation in which these young farmers find themselves, following which I will describe a young farmer case study, and then I will summarise the key issues and possible solutions for these old young farmers. Historically, some of the most far-reaching and fundamental changes in the Common Agricultural Policy to date have arisen out of the Luxembourg agreement, which allowed farmers who previously claimed production-based premiums to receive a decoupled payment instead. This broke the link with production, and subsequent CAP reforms used historical data to determine the value of farmers' basic payments. We believe in the underlying principle that farmers should be rewarded for developing their businesses and generating economic activity. Basic payment allocations to farmers should reflect this principle. As a general principle, land and basic payment should be released from those who do not want to engage in agricultural production and made available to active farmers who want to produce food.

Our policy fundamentally differs from other proposals in the last reform in that we believe payments to individual farmers should move from being on a historic basis to being on a rolling reference year basis whereby farmers would continue to be paid a basic payment but according to their current level of farming activity. The main motivation for this approach is that over time the historic basis for basic payment becomes less equitable as farmers develop and change their enterprises, so that their activities now are different from their activities between 2000 and 2002. The only obligation on farmers currently is to maintain their lands in good agricultural and environmental condition, with no obligation or encouragement to maximise the productive potential of the land. Furthermore, the historic system does not adequately take into account new entrants and young farmers who did not establish a basic payment entitlement in the reference years.

The introduction of a mandatory young farmer basic payment scheme under Pillar 1 to deliver a 25% top-up of the average basic payment on a maximum of 50 ha for the first five years in farming was a very positive element of the reforms and a policy for which we had lobbied on behalf of young farmers.

The young farmer measure is worth approximately €800 million annually for European young farmers and up to €24 million for Irish young farmers, or €64 per hectare. The basic payment national reserve is also a very important mechanism to ensure young farmers get a fair start relative to their established counterparts in farming. For the first time, the EU Commission's proposals emphasise that national reserve entitlement shall prioritise young farmers who are commencing their activities. The change to prioritising the allocation of entitlements from national reserves to young farmers is particularly welcomed by the European Court of Auditors.

Young farmers who are potentially eligible for the national reserve include those who commenced farming since 2010 and meet the additional objective criteria such as off-farm income limits and educational requirements. An additional category in the national reserve is based on a hardship case for young farmers who commenced farming in 2008 or 2009, due to the fact that installation aid was suspended. Macra acknowledges the introduction of this category, but there are still young farmers who commenced before 2008 with low levels of basic payments. The rules of the basic payment national reserve, as implemented at member state level, can constitute a barrier to entry for certain young farmers and new entrants when applying for entitlements. Many of our members have been very dissatisfied with the level of single farm payment they were able to establish from previous national reserves.

Farmers who commenced farming activity before 2008 are not eligible to apply to the basic payment national reserve. These older young farmers who have low or no basic payments feel that the CAP system has failed them since many of them fell outside the criteria of various schemes in the past. The ongoing replenishment of the national reserve is also a concern and Macra has proposed that mechanisms should be put in place to guarantee that entitlements are available in the national reserve every year for young farmers applying for it. We need to learn the lessons from past national reserve and avoid a scenario of inadequate resources to meet the needs of young farmers. The experience in recent years has been that the national reserve does not provide sufficient payment to new entrants as it becomes depleted of funds as there is no sufficient ongoing mechanism to fund a national reserve.

In Pillar 2, the introduction of the 60% young farmer targeted agricultural modernisation scheme on certain capital investment for start-up young farmers within their first five years of set-up was also important in the absence of the introduction of an installation aid scheme. The key obstacles for young farmers starting up in farming in order of priority are: transfer costs, conveyancing, cost of stock and land improvement. Many young farmers are not in a position to make significant physical infrastructural developments within their first five years of set-up. They have had to prioritise investments that will give a short to medium-term return. Therefore, Macra believes that the 60% young farmer TAMS should be extended to all young farmers in order to benefit from the support.

The overall CAP package for farmers is positive but the measures for young farmers are restrictive and therefore more limited in their impact. This amounts to a missed opportunity to support all young farmers. Accommodating older young farmers in the national reserve, and all young farmers in the 60% young farmer TAMS was to deliver a comprehensive package for Ireland’s young farmers. The sympathies towards these young farmers need to be converted into action.

The EU Commission definition of a young farmer under the new CAP is a young farmer who has established in farming and generally activated a herd number within a five-year timeframe. This is a very restrictive definition, with the result that a young farmer who activated a herd number at 18 years of age is no longer defined as a young farmer at 23 years of age, while a farmer who activates a herd number at 39 is still defined as a young farmer at 43 years. The definition is also linked to both Pillar 1 and Pillar 2 of the CAP. Macra believes that the EU definition of a young farmer needs to be reviewed as part of the simplification of the CAP and the mid-term review.

The basic payment national reserve needs to be a real support for young farmers who find themselves with no or low entitlements. It needs to be available throughout the duration of CAP 2014-2020, so that as each year passes, a new tranche of young, trained farmers will have the opportunity to get into the reserve each year and get on the first rung of the ladder for a successful career in agriculture. Otherwise, this group of young farmers will become the next older young farmer group who will have missed out on the opportunity to access young farmer schemes. The national reserve must remain available to young farmers and further linear reductions on basic payments may be required to replenish the national reserve. Young farmers accessing the national reserve should not be tied up in red tape and ruled out by a range of restrictive criteria, which are generally implemented at the discretion of the Department of Agriculture, Food and the Marine.

In regard to the targeted agricultural modernisation scheme, farming is a capital-intensive, expensive industry for young farmers to develop their farm businesses in. The definition of a young farmer as one who commenced farming within the past five years to activate the 60% young farmer TAMS is restrictive. Many young farmers will have infrastructural deficits on farms that need to be addressed. Macra believes that the 60% grant rate should apply to all young farmers.

The new CAP reform will benefit many young farmers through the young farmers' top-up, the national reserve and the 60% young farmer targeted agricultural modernisation scheme. However, there is also a group of older young farmers who for a variety of reasons related to the historical model upon which the single farm payment is based fall between rules and miss out on measures intended for their benefit. I thank members for their attention.

Deputy Éamon Ó Cuív

I thank the ICSA and Macra na Feirme for their presentations. I congratulate Mr. Finan on his election as president of Macra na Feirme. The presentations speak for themselves. When the Minister was negotiating the CAP, he brought in an unnecessarily restrictive definition of a young farmer. He said there was not only an age requirement but also a restriction based on when one had entered farming. As has been pointed out, a farmer could be disqualified at 23 years of age and be eligible at 39 years of age. The Minister's explanation was that he wanted young farmer provisions to be mandatory across all member states. I suggest that it might have been better for the Minister to allow each country the flexibility to provide its own definition of a young farmer, and leave each country make up their minds on what it did or did not want to do for young farmers. The whole CAP was characterised by much more national confidence. I have no doubt that in reality all countries would have activated a young farmer provision even had it not been mandatory. I cannot see any country that would have passed it over.

I believe we can all support what was said about priority access for all young farmers under 40 to the average rate of basic payment plus greening. The Department needs to be pressed on how to get there. I understand that the Department considers the old young farmers to comprise a disadvantaged group. Therefore, although they are not officially young farmers, we can get them through by calling them disadvantaged. I do not know why the Department could not call young farmers super-disadvantaged. Has Macra any idea of the potential cost of this? Presumably some old young farmers, or forgotten farmers, have quite decent entitlements. Sometimes when people are making a case they think it is important to picture it as very expensive. Sometimes I believe that it might be useful if it was not so expensive because it would be easier to fund. I wonder if we could find out? I believe it is important that we do this and that we fund it. The mechanisms are there if the will is there to do it.

I fully agree with the points raised on capital investment. When young farmers get into farming it is hard for them to have the ready cash because they have not had years of opportunity to build up reserves. The temptation is to go to the bank to borrow excessive amounts, which puts the farm regime under pressure. I believe the Minister should make the simple decision that all farmers under the age of 40 should get the grant at the 60% rate. The Minister needs to go to Europe to make the case that Europe should not be short-changing young farmers and that young farmers are those who are chronologically young, not just farmers who have entered into farming in the last five years. I support the two points made and I think something should happen. I hope the committee sees itself as being in a position to support the clear-cut case put here, and I believe the costs would be quite modest.

Deputy Martin Ferris

I thank Mr. Kent and Mr. Finan for their presentations. I believe there is unanimous support on this committee, but where it goes from here will pose the difficulty. The Department and the Minister, deliberately or otherwise, are discriminating against old young farmers.

Up to 3,800 farmers will be affected by this. Mr. Kenneth O’Brien said his entitlement was €780 for 32 hectares, working out at €28 per hectare. All of us know that if it were not for the entitlements, many in the sector would not be able to survive. How one can survive on that payment is baffling. It is an indictment of the system and how it has failed these farmers.

The money will have to be found to remedy this. We are trying to get more young people involved in the farming sector. When one has this example of discrimination hanging out there, however, it is an awful disincentive to young people. Have the associations been advised legally on this? Has any legal advice been sought on it?

Mr. Seán Finan stated: "Individual farmers should move from a historic basis to a 'rolling reference year' basis whereby farmers would continue to be paid a basic payment but based upon their current level of farming activity." Would that be based on production or effort? If it were based on production, then it would affect farmers on marginal land and so forth. Their activity is just as strong and committed as that of farmers on good arable land. Will Mr. Finan clarify that for me?

Deputy Tom Barry

I welcome the associations and thank them for their presentations. I understand the conundrum in which they find themselves. It does not seem so many years ago that I was in their position applying for installation aid and all that went with it. The system back then was a lot easier, however. One applied for area aid on whatever crops one produced. Once one did it according to the standards, one got paid. I have put down parliamentary questions to the Minister on this. The answer I am getting back is that many farmers in this category have received the benefit of free quota, low-price quota, etc. As Deputy Ó Cuív said earlier, we need to get the facts. I have asked several people affected their details so that we can clearly show that there is unfairness in the system. A little bit of homework needs to be done and all it will take is a few cases to prove it.

I am not happy about the suggestion of a linear reduction in basic payments, in view of the fact that many people, including myself, have already taken a reduction of up to 40%. The associations need to be conscious that it is not a bonanza time for farmers. I agree that we need to support the active farmer. Therein lies the problem. Macra na Feirme stated: “The basic payment should be released from persons who do not want to engage in agricultural production.” That is easier said than done. From what I can see with the single farm payment, in the past, when one produced an acre of grain, one paid, say, €150 per acre and collected a similar figure. However, today, if one rents land from someone who has a single farm payment, the payment goes back to them and then one pays an additional €200 or €300 an acre. The system as it evolved with decoupling has crippled the active farmer. I feel the single farm payment has become a social welfare system for Irish farming. It is not staying with the active farmer but is actually going out to pay for ground. Effectively, what was €150 in rent on land a few years ago is now €150 plus the entitlement. That is going in the wrong direction. If we got the facts and figures on several individual cases, we could get a costing on it and make a good argument on the associations’ behalf.

I also have a disagreement with the use of off-farm income. It should play no role in eligibility for several reasons. Many working spouses of farmers may have lost their jobs. We should also be encouraging diversification and encouraging farmers to earn off-farm income. They should be encouraged to earn, not discouraged from doing so. Off-farm income has kept many farms viable over the past several years. The simplification process in the review is the time to tidy this up. If the associations get the facts behind the stories presented today, then the arguments will be much stronger.

I thank the delegations for attending today’s meeting.

Deputy Willie Penrose

I thank the Irish Cattle and Sheep Farmers Association and Macra na Feirme for their presentations and I congratulate Mr. Sean Finan on his elevation to the Macra presidency and wish him well on it.

The delegations made very good presentations. I was particularly struck by Mr. Kenneth O'Brien’s because I have met a number of those farmers categorised as “Others” whom he represents. He put his case eloquently in terms of how people are impacted on by a cohort of anomalies which are historic in origin. No matter how fast he ran, he still found himself going backwards. It is an unusual achievement, meaning the efforts he made were reduced to nought.

There are 3,500 farmers in this category and not all of them will qualify because some may lose out due to agricultural qualifications and various other factors. It is a pity installation aid was done away with because it was a simple way of getting farmers established and re-established, particularly with the significant set-up costs for young farmers. Some of the Common Agricultural Policy reform measures are useful, such as the 60% under the targeted agricultural modernisation scheme and the 25% top-up.

It is time this anomalous position regarding the forgotten farmers was addressed. Any cost-benefit analysis would show the country would gain positively. I agree with Deputy Fitzmaurice that the money required would be low, approximately €10 million. It has to be found to remedy this anomaly. Ultimately, if these farmers do not get their entitlement, the legal side of this should be explored. It is important that we get the facts and the numbers. The point was made about the restrictive definition, with the result that a young farmer who activated a herd number at 18 years of age is no longer defined as a young farmer at 23 years of age, while a farmer who activates a herd number at 39 is still defined as a young farmer at 43 years. That does not make sense, particularly when we are trying to encourage young people to go into farming. If we do not have flexibility at this level, we will not have it at any level. If we get the figures on the farmers affected, I will be supportive of advancing the argument to ensure this anomaly is remedied and the farmers get what is justly theirs. We would all reap the benefits of a positive payback.

Sitting suspended 5 p.m. and resumed at 5.20 p.m.

Vice Chairman

We may have another vote in 20 minutes or half an hour so we will try to get through this if we can.

Deputy Michael Fitzmaurice

I thank the witnesses for their presentations. I have followed this issue with interest for a while. I wish Mr. Finan the best in his new position. I listened to him speak about the TAMS and he is right about including people. If a young farmer walks into a bank in the morning and tells the bank manager he or she is putting up a shed or buying a bit of land, am I correct to state the first thing he or she will be asked for is the single farm payment? Farmers are not asked how many cattle they have, they are asked about the single farm payment. Do the witnesses agree that the present average single farm payment in the country for 32 ha is alarming? We are looking at young farmers with 90 ha. Adding 90 and 90 is 180 and adding 45 gives 235 acres.

Have the witnesses spoken to the Department about considering a 40 ha or 50 ha threshold, which may give money to all these guys under 40 years of age who have no payments? My understanding from the figures I received from the Department is there are almost 4,000 of them. Not all of them are as low as Mr. O'Brien and some of them are higher. My understanding is the total figure is €12 million and we need to ensure there is enough money in the pot to include everyone. It will be a sad day if we do not bring in the new farmers. Recently I watched George Lee on the television, who told us the beef barons are able to get €500,000 in a single farm payment. Many of us are from the west where many of the farmers are elderly.

We are not bringing in the new blood we need. It would be great if we could bring in the 5,500 farmers who have applied along with 4,000 more. Let us face it, only 10% in the whole demographic are changing. Year by year we must encourage it.

Macra na Feirme has welcomed the young farmer scheme. Was this on the basis of 90 ha or does it believe everyone should be included? We must watch that we are not always looking after the big fellows and think of the ordinary person with 30 ha, 40 ha or 50 ha.

Vice Chairman

Is there a county-by-county breakdown of the 3,800 forgotten farmers, and I feel as though I am one myself, about whom we are speaking? Do the witnesses have any idea where they are? Is there a bigger proportion in one part of the country than another?

This day week, the Commissioner, Mr. Hogan, will come before the committee to brief it on agricultural matters. Have the witnesses discussed any of this in Europe? Have they gone that far yet? Have they received any feedback from there? It is an issue we could discuss next week with Commissioner Hogan. I will refer back to the witnesses to cover the various topics raised by the members.

Mr. Patrick Kent

We must raise the issue with Commissioner Hogan. We have yet to do so.

Mr. Kenneth O'Brien

The number of what are known in the media as forgotten farmers seems to be similar in every county in Ireland. We have with us folders with information on this, which committee members may view if they want to see them. It seems to be a problem throughout Ireland, from one corner to another.

Vice Chairman

How do you mean a problem, numbers-wise?

Mr. Kenneth O'Brien

Numbers-wise it seems to be throughout Ireland. It is even enough throughout the country. There are many in Cork and Kerry. We have not been in contact with them all. We have been in contact with most of them.

Going back to what Deputy Fitzmaurice said, farmers are on varying levels of payments. When I went to the bank to get a loan, the first thing I was asked for was information on the single farm payment. When the bank officials saw it was €780, I was laughed at and I was told I could do nothing without a single farm payment. We need a single farm payment for sustainability. According to the figures of which we are aware, 80,000 farmers in rural Ireland are over the age of 55 and 6% of farmers are under the age of 35. We also know approximately 4,000 farmers are in this scenario. I can speak for myself. I have put up an awful battle to have land included. Every other year I fought against big farmers but now it is against new entrants. We will not be able to be sustained in farming. These are family farms and it is a problem throughout rural Ireland. We cannot get funding from the banks. We feel we are being discriminated against on every side through no fault of our own. We have a green cert. I am not considered a young farmer at 33. I see people older than me, aged 39, who come home from a good job where they earn €40,000 a year, which is €800 a week, and get €300 per hectare. The lads who stayed in the game are being discriminated against.

We paid our way, including the cost of agricultural courses. When I did my course in 2001-02, it was suggested that my local college in Mountbellew would close. We were the lads who kept it open and stayed in agriculture, yet we are being discriminated against for adhering to the rules.

Senator Michael Comiskey

I will be brief as many of the points I intended to raise have been covered. I thank the witnesses for their submissions and join my colleagues in congratulating Mr. Finan on his election as president of Macra na Feirme. I hope to work with him in the years ahead.

I support the position taken by the witnesses. In recent years, members have received many telephone calls from this group of farmers who receive either no payment or only a small payment. Some of them have been farming since 2002-03. It is vital that the joint committee identifies what can be done for this forgotten group which numbers fewer than 4,000 farmers. I spoke to a few lads during the recent break. Perhaps their cases can be examined individually. Some of them may be fortunate enough to receive a reasonably good payment, while others may not receive a payment. It may not cost a great deal to look after them. Members support the case that has been made, certainly in respect of the 60% proposal regarding capital investment, which is crucial.

Vice Chairman

The red light is flashing to indicate a division has been called in the Dáil. We will have to hurry.

Deputy Denis Naughten

I will have to hobble to the Chamber. I congratulate Mr. Seán Finan on his election. It is great to see a Roscommon man as president of Macra na Feirme. I thank Mr. O'Brien for the work he is doing on this issue which affects 4,000 farmers. A large number of farmers have fallen between the cracks, with one in five farmers under the age of 40 falling into this category. All the farming organisations and public representatives must take some responsibility for this issue and there is an onus on all of us to try to find a final resolution to it.

We must acknowledge that there were problems with the previous national reserve scheme, which was established after the introduction of the single farm payment. We were in the unfortunate position that young progressive farmers who happened to be in a district electoral division with a large cohort of older farmers received a very low top-up under the national reserve if they were lucky enough to be accepted in the scheme. One of the main problems with the old national reserve scheme was that priority was not given to young farmers and new entrants. The problem was noted by the European Court of Auditors, which criticised the lack of priority given to young farmers, and the issue was addressed in the most recent scheme. The difficulty, however, is that this occurred after the horse had bolted and left another group of young farmers isolated.

We need to overcome the current difficulties. Another category of specific disadvantage could be introduced for farmers who were disadvantaged under the old national reserve scheme. While they could theoretically apply for a payment under the scheme, many did not obtain a decent payment, if any, under the national reserve scheme and their position was not even close to being equitable with their peers who are able to access the scheme.

The definition has already been provided because the Minister has stated that, under the targeted agricultural modernisation scheme, TAMS, he will give priority to every farmer under the age of 40. However, the rate of grant provided to farmers who are defined as young farmers will differ from that available to those who are not defined as young farmers. The Minister should remove this anomaly rather than creating new ones. Part of the problem is that he has tied his hands and reduced the flexibility available to him by taking the bizarre decision to introduce a 90 ha limit for the national reserve. Given that the average holding is 33 ha, the Minister's decision, as Deputy Tom Barry noted, will mean the national reserve will be paid to retired farmers. We are in the bizarre position that young farmers who are eligible for a payment under the national reserve are applying in respect of additional lands and paying a premium over and above the value of these lands. This premium is what they will receive in the national reserve top-up.

It is wrong that people who have left farming are being given priority under the national reserve scheme. The Minister must address this issue and not only in respect of this specific cohort of young farmers. In the area I come from, one in three farmers is aged over 65 years. We will not change the position unless young farmers are given priority in TAMS and the national reserve scheme, irrespective of how long they have been established.

Vice Chairman

I ask Mr. Punch to be brief as Deputies must leave shortly for a division in the Dáil.

Mr. Eddie Punch

On the estimated figure of €12 million, I have reason to believe the final figure would not be as high as €12 million. It is difficult to determine in practice how many people would require payments because some of them will be in receipt of payments, while others will have an entitlement under the Scottish derogation. For various reasons, therefore, the entire sum will not be required to bring payments to this group of farmers up to the average. In addition, we do not know how many of the group would be excluded from payment for other reasons. As such, the final figure may not be as high as the estimate.

I agree with Deputy Fitzmaurice that a small cohort of people receive payments of €500,000. If we reduced payments to this group to €150,000 - let us not be greedy - we would quickly find half of the €12 million it is estimated we would need. It is clear that a wrong has been done to this group.

To address the question on the agriculture Commissioner, Mr. Phil Hogan, the problem is that the definition of a young farmer in the regulation includes a five-year rule. However, it also makes provision for categories of disadvantage, which I understand was used for applicants in 2008. This type of innovative use of the current definition is needed if we are to achieve a quick resolution to this problem. We must also discuss the possibility of changing the regulation at EU level because the five-year condition attached to the definition of a young farmer will continue to be problematic. In the short term, however, we must use the existing flexibility in the national reserve to look after this group of farmers.

Mr. Seán Finan

We have discussed this issue with the agriculture Commissioner, Mr. Hogan, the Minister and his officials and we are involved with CESA, the European Council of Young Farmers. The mandatory approach to young farmer measures was very important for Macra na Feirme because in the case of non-mandatory measures there was a tendency to withdraw schemes when budgets came under pressure.

We understand the potential cost involved in addressing this issue would be of the magnitude of €12 million, although we do not know how many of the 3,800 farmers concerned have fulfilled the educational, income and other requirements of the schemes.

Deputy Ferris referred to my comment on having a rolling reference year. We wanted to establish a principle that payment would be based on farming activity and effort, which could include stocking rates or whatever is the level of a farmer's activity. It would also take into account disadvantaged area status, which would overcome the issues Deputy Barry raised in respect of land mobility and access to a single farm payment.

Deputy Barry also referred to the new interim parent partnerships. While this is not a subject for discussion today, it is an issue. Some 249 young farmers are in this category, having entered milk production partnerships. As they have never activated a herd number, they were not deemed to be established by the Department by entering the partnership with their families. Now, when they activate a herd number, they are not deemed eligible, as young farmers, for the young farmer schemes, national reserve scheme or TAMS grants. This anomaly needs to be addressed.

Vice Chairman

I apologise for hurrying the witnesses but we are under time pressure.

Mr. Seán Finan

Mr. Hynes will briefly discuss installation aid, while Mr. Dillon will discuss the question on the 90 ha threshold.

Mr. Bryan Hynes

On installation aid, if one asks any young farmer, including me, when he or she needs money, the obvious answer will be that money is needed on the day he or she starts farming because they have set-up, capital infrastructure and stock costs. While it is good to receive payments spread over five years, as Deputy Penrose pointed out, the ideal scenario for young farmers would be if installation aid were reinstated.

Mr. Derry Dillon

On the figure of 90 ha, the dichotomy for Macra na Feirme is that we have young farmers who are starting on marginal land. Why restrict them to 50 ha if they want to have a full-time career in farming? That is not realistic for them and that was our difficulty. There was a 90 ha limit for the young farmers top-up payment, but Ireland chose to implement a limit of 50 ha. Some member states have decided not to apply any limit in the case of the national reserve. Having low limits in place is adding further criteria and imposing restrictions on young farmers. That is our difficulty. Young progressive farmers should have opportunities and not be restricted by particular limits. That is Macra's na Feirme policy.

Deputy Denis Naughten

I propose that a new category of disadvantage be established for all farmers under the age of 40 years in receipt of low payments established prior to 2008. It will be impossible to secure agreement in the committee today, but perhaps it might be approved by it at the next meeting and referred to the Minister.

Vice Chairman

We can put it to the committee at the next meeting. From listening to the contributions of members, it seems they are generally supportive of the principle. Some work needs to be done to harden the numbers, but members are supportive in principle. We all know that the age profile of farmers in this country is high and we need to get it down. We need to get young farmers involved. That is the name of the game.

Deputy Michael Fitzmaurice

I second Deputy Denis Naughten's proposal.

Vice Chairman

We will put it to the committee at the next meeting. I thank the delegates for coming to explain the position. There is an anomaly in the system dating back a number of years which has not been addressed. The committee will do whatever it can to address it.

Deputy Denis Naughten

We will not be voting on the issue. Whatever else we are doing, we cannot be in two places at the one time.

Vice Chairman

It is highly unlikely that the Government will fall today.

Deputy Denis Naughten

The Opposition has done well.

Vice Chairman

Next Tuesday we will have a joint meeting with the Joint Committee on Jobs, Enterprise and Innovation and the Joint Committee on European Union Affairs to discuss the TTIP.

The joint committee adjourned at 5.40 p.m. until 1.30 p.m. on Tuesday, 23 June 2015.