Joint Committee on Agriculture, Food and the Marine díospóireacht -
Thursday, 8 Oct 2015

Organic Farming Scheme: Organic Farmers Representative Body

Chairman

I remind members and delegates to turn off their mobile phones as they interfere with the broadcasting of proceedings.

I welcome from the Organic Farmers Representative Body Mr. Padraic Finnegan, chairman; Mr. Padraic Connelly, secretary; Mr. Enda Monaghan and Mr. Michael Lambert, committee members. I thank them for forwarding their submission and coming before the joint committee.

By virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence 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. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official, either by name or in such a way as to make him or her identifiable.

I understand Mr. Finnegan will make an opening statement on behalf of the group and that the other members may respond to questions and comments.

Mr. Padraic Finnegan

I thank the Chairman and committee members for giving us the opportunity to highlight the major problems with the organic farming scheme. I also thank Deputy Thomas Pringle for organising the meeting.

The introduction of double funding has impacted very severely on farmers with a few hectares as they can no longer benefit from both the GLAS and organic schemes. A severe financial cut has been imposed on the smaller producer. We seek to have the schemes front-loaded to lessen the impact on those with small farms. We have a copy of our submission on the CAP and rural development plan. We want to know the reason the Department of Agriculture, Food and the Marine decided to ignore our submission in favour of the completely one sided scheme it has introduced and disregarded the financial implications for the smaller producer. We are not looking for more money but want the funds to be fairly distributed to allow those with small farms to continue to farm organically. We also have a copy of the observations made by the planners which point to the major problems from their point of view.

The Department needs to define clearly the role of a certification body. We ask why the Department cannot do this work. What the certification body is charging farmers is absolutely scandalous. Sums ranging from 9% to 25% of the organic payment have to be paid to the certification body. I have three examples of fees paid to the certification body in the five year lifetime of the scheme: a farmer with 12 hectares pays €2,200; a farmer with 30 hectares pays €3,000, while a farmer with 50 hectares pays €3,100.

The body not only collects fees from farmers, it also collects from factories, co-op marts, shops and butchers, etc. It is also funded by the Department. In its present form the scheme is completely biased in favour of the big farmer to the detriment of the small operator and needs to be reviewed urgently.

A problem with payments came to light once again this week. We always have a problem in getting paid. There seems to be an ongoing problem in paying out under the organic farming scheme. Payments under all other schemes are made on time; the single farm payment, the rural environment protection, REP, payments and payments under areas of natural constraint schemes are all made inside the year, usually before Christmas. The organic farming payment which had been due at the end of 2014 was not made until February 2015 and it took a protest by our members at the agri-environment schemes, AES, office in Athenry to force the Department to pay out. The Minister of State, Deputy Tom Hayes, gave us a commitment that this would never happen again as the organic farming scheme would be included in the electronic system, like all other schemes, but that has not happened. We were in contact with Johnstown Castle earlier this week and informed that the electronic payments system would apply only to new entrants and those included in the scheme previously would remain on the old system. I asked what progress had been made with the applications not included in the electronic system. The man said no files had yet arrived in Johnstown Castle from any area office in the country. This can have only one outcome - our payments will be late again this year.

We had to face into last Christmas without the organic farming payment. The position this year will be far worse because the REPS 4 scheme has finished and many of the farmers in that scheme will face a far more serious financial problem this year. It is essential that the organic farming payment be made in line with all others. Farmers are keeping their end of the deal, but the Department is not.

Chairman

I thank Mr. Finnegan. That was fairly informative.

Senator Brian Ó Domhnaill

I thank the delegates for coming and highlighting an important issue. Deputy Éamon Ó Cuív wanted to be here, as he is concerned about the problems of the delegates.

Like some of the others around the table, I come from the west. While many farmers in the area are not engaged in organic farming, they do farm areas of natural constraint, whether it be natural heritage and endangered species, NHES, areas or special areas of conservation, SAC, etc. The Government has set a target to increase the current rate of organic farming from 1.1% of land in Ireland. The EU average is under 6%. We are, therefore, not in line with the European convention.

Food Harvest 2020 and Food Wise 2025 set out a pathway to developing production in agriculture, but they do not recognise the need to protect the environment, to look after areas of natural constraint and to advance organic farming to bring us more into line with the rest of Europe. That is a mistake. Under Food Wise 2015 there is an over-emphasis on production. My information from the European Commission is that Ireland will face penalties, unless this issue is addressed before we travel down the road to a production-based system. We all want to increase production. The previous Government brought forward Food Harvest 2020 which was the template for Food Wise 2025. Northern Ireland wants to follow that blueprint, too. Unfortunately, the environmental lobby within the European Union is very strong and under the Kyoto Protocol Ireland must meet its targets; otherwise it will be fined and the taxpayer will carry the can. There is, therefore, a need to embrace organic farming and entice more people into the sector.

The delegates say the farmers already included in the system are finding it exceptionally difficult to deal with it. How, therefore, can we entice new people into it? There is a need to deal with this issue. The delegates have identified several issues. The discontinuation of the REPS will have a major impact. I did not realise the certification fee was so high, but it is exceptionally high. Are there two or three simple things we could do for farmers already involved in the sector and to entice more farmers into it? Organic farming is not for everyone, but it does suit certain farm holdings. It should be linked with areas of natural constraint which need to be supported. The European Commission is advancing the argument that they should be given more support, but that comes down to a departmental decision. What are the views of delegates of Food Wise 2025? Are the environmental benefits of organic farming sufficiently recognised? Is there something simple the committee could suggest or recommend to the Minister of State, Deputy Tom Hayes, in regard to the payments made? The payments should be in line with all others. I do not see why there should be a delay in making organic farming payments when all the others are made and there has been a 75% advance, in October, on payments due this year. Are organic farmers not receiving payments other farmers receive until February or March the following year? That does not make any sense and needs to be addressed forthwith to bring the payments into line with all others. I was not aware of this problem.

It is fine to set out performance or outcome targets to increase production from 1.1% of land used for organic farming to 5%. Departments are very good at setting targets, but sometimes they are not specified on performance outcome measures. Going from 1% to 5% is a 500% increase in organic farming over the lifetime of Food Wise 2025 and the Department does not have a pathway or framework to achieve that target. What the delegates are bringing to the table today is vitally important and the Department needs to react to it. I will support the delegates because Ireland needs to market itself on the international stage as a green, clean, agriculture friendly environment. We can use organic farming to our advantage in that regard.

I thank the delegates for coming and look forward to further interaction during the meeting.

Deputy Martin Ferris

I thank Mr. Finnegan for his presentation. Organic farming is a very poor relation in the overall farming sector. It is neglected politically and discriminated against, not just by this but also by previous Governments.

Mr Finnegan has mentioned that while some organic farmers can no longer benefit under both schemes, the green low-carbon agri-environment scheme, GLAS, and the organic scheme, larger existing organic holdings can do so. To me, that is absolute and total discrimination. What reason for this was given to the delegates? Has it something to do with the size of holdings? If that is the case, it is a policy driven by a desire to get rid of the smaller and weaker person. Was this also the case under the previous Government?

Mr. Padraic Finnegan

Yes.

Deputy Martin Ferris

The previous and present Governments are culpable. The delay in making payments is inexcusable because those involved in all other sectors are being paid. A figure of 75% has been paid out this month, for whatever reason.

We can suspect the reason for it, but it is being paid out this month. I am delighted that is the case because everybody involved in the agricultural sector has many bills to pay coming up to Christmas and receiving early payment in this respect makes a big difference.

I note the figures involved in respect of the certification body. For a farmer with 12 hectares the amount to be paid is €2,200, for a farmer with 30 hectares it is €3,000, and for a farmer with 50 hectares it is €3,100. I cannot honestly understand that. I could understand it if a farmer with 12 hectares had to pay €1,500 and a farmer with 30 hectares had to pay €2,800 or €3,000. A farmer who increases his hectares from 12 to 30 has to pay €3,000, which is an increase of €800 on what he would have to pay for 12 hectares but a farmer who increases his hectares from 30 to 50, which is a difference of 20 hectares, has to pay only an extra €100. That is mind-boggling, to say the least.

What does the certification process entail? It was said the certification should be done by the Department, but an outside body is to be involved in this context It is a money-gathering exercise that is being paid for by the organic farmer producers. The representative body should raise with the Equality Authority the fact that smaller organic farmers are being denied the two payments while the larger organic farmers are getting the two payments. Has the representative body considered raising that issue with the Equality Authority or with the Ombudsman, both of which entities are supposed to give those who are more discriminated against an opportunity to get justice? The representatives should consider doing that. I thank them for their presentation.

Deputy Michael Fitzmaurice

I welcome the representatives. There is a problem in terms of the double payment for those farmers who have 17 or 18 ha. I understand a farmer who was a participant in the rural environment protection scheme, REPS, could be a participant of that scheme and of the organic scheme and receive payments under the two schemes, but now a farmer will get only one or other of those payments. If a farmer has ten hectares under the organic scheme, that farmer cannot get a GLAS payment in respect of that land, so he is caught in that way. There seems to be a gap in terms of the scheme for the farmer who has between five to 17 or 18 hectares. If a farmer had 20 hectares, he could apply ten hectares to each scheme. It is not possible for the smaller farmers to do that and that is the problem. It is a front-loaded system and comprises Pillar 2 funding. Such funding will go out one door or the other. If, as the representatives said, farmers are getting out of the organic sector, they will move into GLAS and the Pillar 2 funding will go out that door. To keep people in organic farming, they should be given an incentive or front-loading in respect of payment for the first 20 hectares.

To be fully compliant with the organic farming scheme, I understand a farmer must be in it for two years before his cattle, sheep or other animals will be recognised as organic. A new plan has been embarked upon this year to bring many larger farmers into the sector. Am I correct in understanding that those farmers' cattle, sheep or other animals will not be recognised as organic for two years? Do the representatives know the number of farmers who are engaged in organic farming, the number of smaller producers who will jump ship and are ready to leave the sector due to the lack of incentive in it? That will leave a gap in the sector over the next year and a half until the other animals as recognised as organic. That will cause a major problem in that we will not fulfil what we have said to Europe we would fulfil.

In respect of the delay in payments, there was an industrial dispute about that last year. The representatives are correct in saying that the process is being dealt with manually. That was supposed to be sorted at that time and obviously the issue is arising again. Have the representatives been given a reason they cannot be put onto the system if new entrants are being put onto it?

It is mainly smaller farmers who are engaged in the organic sector. Do the representatives know the number of farmers who intend to leave the scheme, be it this year, early next year or the end of next year? We need to know if there will be a gap in the market in terms of the loss of recognised organic meat.

Serious questions need to be asked about the categories of payments to be made to the certification body. Will there be one or two, or more, certification bodies? Will they do the work of the Department? That is the key question. There may be a sufficient number of inspectors in the Department to cover that work. What is the representative body's view of the certification process? In terms of over-pricing in that respect, the figures presented indicate that the smaller the producer's operation, the harder he is hit. That is not the way it should be if we want to keep the smaller farmers in the sector. It may be worthwhile inviting in the people who are in charge of the certification body and asking them directly what is the problem or why the small farmers are basically being screwed.

Senator Mary Ann O'Brien

I thank all the representatives for coming in and making a presentation and for taking a day off because I would say they can afford to take a day off like the can afford to have a hole in the head. I also thank Deputy Thomas Pringle, who invited the representatives to appear before the committee. Is it possible in a timely fashion to invite in the management of the organic certification board to make a presentation and share their figures?

I have a limited knowledge of organic certification in the food business because we have organic certification in Lily OBrien's, and it is a pain in the neck and it is also costly. That is all I will tell the representatives about that. There is need to have it. It is a great business to be in. One can charge a premium for one's product but I have always been quite resentful about the certification aspect because it is very difficult. However, I am not comparing myself to the representative body or its members. I have a few friends who are organic farmers and it is a tough way of life, but I am a great believer in marketing. Mr. Aidan Cotter from Bord Bia said that if one were to take a satellite picture of any country in the world, what other country looks green and is a little island on the edge of the Europe? Therefore, what country is better positioned to have a strong organic sector? However, from the figures the representatives shared with us and those that Senator Ó Domhnaill shared in response, we are using only 1.1% of the land in this respect while the average in use is 6%. I am not surprised about that when the representatives have told us about the mess the payments are in. Could we invite in a departmental representative from Johnstown Castle? It is not acceptable in this day and age to have electronic payments in the mess that has been described whereby a bigger newer entrant is getting their payment but another applicant might have to wait until February to be paid. If I were one of the representatives before us, I would just go to the pub. They have voluntarily set up this group to look after the interests of the organic farmers.

The organic certification body concerns me greatly. As Deputy Martin said, the payment in respect of 30 to 50 hectares will be €3,000 to €3,100. What genius worked that out? The payment in respect of 12 ha is €2,200 and in respect of 50 hectares it is €3,100. I agree with the strong words the Deputy used in terms of the smaller producers being politically neglected and discriminated against. I am very pleased that the representatives are here. They are members of a small group and therefore are not sexy. We all want to talk about the dairy sector and the fact that the quota has been lifted. I believe in this group and they will do the environment of Ireland, the environmental cause, climate change and tourism a great deal of good. All of us here will do anything we can to assist the group.

Senator Pat O'Neill

I thank the members of the Organic Farmers Representative Body for coming in to address us. Many of the issues have been dealt with. I understand the problem the representative body has with late payments because cashflow is very important, regardless of the sector of farming in which one is engaged.

If payments are being held up since February, the committee has to take up the issue and contact the Department about it.

Everyone has spoken about a certification body but no one has identified it. Is it a private company? Is it a closed shop or is there more than one body or group that carries out certification? Will someone identify the certification body to us? We do not know the structures for the payments. Is there a basic payment for certification plus an additional cost per hectare? Is it something like that? It is important that the body be identified.

Organic production is a lot lower than that in normal farming. It is therefore necessary to be able to realise a premium price in the market. I know we are not dealing with that issue here, which concerns supply, but, as already stated, 1% of land is involved in organic farming. If we can get more land used in organic farming, retailers and sellers would be more sure of the supply and, especially, that the products are of Irish origin. It may be beneficial in that regard to have more people producing organically.

The new GLAS scheme and the fact that people cannot receive both payments was mentioned. The latest scheme is the beef genomics scheme. Was there any concession by the Department to the practice of organic farming in the beef genomics scheme? Has anything been done on this issue?

Senator Paschal Mooney

I also welcome the group. I have been a long-time supporter of the concept of organic farming. When it first became official, if one were to put it as such, and guys such as those here today got involved in it, I welcomed it because I thought it was great. As Senator O'Brien said, what better place than this green and pleasant land to produce organic farm products? I remember reading about the Italian market, in particular, which was very susceptible to premium Irish beef selling at big prices. However, I cannot understand the situation the witnesses have been telling us about today. There seems to be a lack of urgency among the various State agencies in the development of organic farming. I agree with Senator O'Brien and others that we as a committee have a responsibility to the group here today to pull in all the various people involved. It is disappointing that a Minister of State would make a promise to the group that was not fulfilled. That is very significant. I am not playing politics here, but it is unacceptable that a Minister of State would sit a person down, face him or her eyeball to eyeball and say that he sees the problem and that it is going to be solved, only for the person to find that it has not been solved. If we cannot have faith in the system, it will lead to chaos. I propose that the Minister of State with responsibility for organic farming and his officials be brought before this committee. I agree with Senator O'Brien that those who are involved in the certification process should be brought in here also, along with officials from An Bord Bia.

The witnesses are absolutely right when they talk about targets. In other committees, we have been going through performance targets set by Departments, which are currently going through a mid-term review. It is becoming apparent that Government Departments are falling well short of the mark in terms of what they say one day and what they do the next. There is a big gap between the two realities. The group is not alone in that regard. We are increasingly finding this to be the case as well. I am appalled by some of the results obtained from the process. I am on another committee which yesterday went through the targets with a Minister. The Departments are not meeting their targets, but they look lovely. They all look very impressive. It is the responsibility of this committee to get the people who are making the decisions before it and have them made accountable. They need to answer the questions that have been put here today. We would be doing a good day's work for the group if we were to do that, and I am sure everyone in this committee would support that initiative. I am sure the Chairman has a view on it, but I am specifically asking that the Minister of State and officials from An Bord Bia come before the committee. They are talking about organic farming being at 5%. As my colleague, Senator Ó Domhnaill, has said, that is a 500% increase. Based on my little experience, as explained, of performance targets set by other Departments, the target is pie in the sky, yet the group here today is being penalised under the inspection regime. I do not understand it. It seems as if someone somewhere is saying organic farming is a great concept but is doing everything possible to restrict and inhibit it and stop its progress in every way. That is not on. It is not good for the witnesses or Irish farming.

That is my proposal. I am sure the Chairman will be able to formulate the necessary request to the relevant bodies. I wish the witnesses well and am grateful that they have come before the committee. I have been working in tandem with Deputy Fitzmaurice on this issue. He has been filling me in a lot over the past couple of days on the problems and difficulties faced by the group. As Senator Ó Domhnaill stated, we are all west of Ireland people and we understand fully the difficulties the group is facing.

Senator Pat O'Neill

I am not a west of Ireland person.

Senator Paschal Mooney

Senator O'Neill is an honorary west of Ireland person.

Senator Mary Ann O'Brien

He is involved with organic people in Kildare.

Senator Pat O'Neill

Kilkenny.

Senator Paschal Mooney

We understand where the witnesses are coming from and I hope they will leave here today feeling a little reassured.

Chairman

There has been quite a bit of surprise among people, particularly with regard to the payments and why they should not or could not be online. Many years ago, all of us on the old system were told to send in a bank account number or we would not get paid. If it is online, at least it gets processed and cleared and goes out in a batch.

I have just taken a few minutes to read the rules. Is the issue that the GLAS scheme is excluded, or is it the restrictive nature of the measures? For instance, the rules state that the GLAS action of "consolidation of solitary bees" is "allowed along with the OFS payment," but the next one, which is breeding waders, is allowable only where the OFS payment is foregone for that area. Is that the issue? Can the witnesses clarify whether it is completely out, or is it the selection of measures that makes it restrictive for smaller organic farmers? The group now has a list of questions, one of which concerns the certification body. No one knows who or what it is or whether it is private or public. Is it the Organic Trust? Who or what is it?

Mr. Padraic Finnegan

I did not write down the questions, which is a problem. To clarify one point about the smaller operator who cannot, as Deputy Fitzmaurice said, qualify for both schemes, a double-funding issue was brought in from Europe in the past few years. A person cannot apply for two schemes on the same piece of ground. If a person has 60 ha of land, that has no effect at all. If a person has 20 ha of land, he or she has to choose one scheme or the other. To maximise payments, a farmer with 20 ha might decide that he will put 10 ha into the GLAS scheme. He is then left with 10 ha in the organic scheme because he cannot claim on both schemes. He still has to pay the certification bodies for the entire 20 ha, which, again, makes it far less viable for him.

For financial reasons, questions were asked about the possibility of farmers' leaving the organic scheme and concentrating on the GLAS scheme. The Department is now telling us that if an organic farmer pulls out of organic farming, he will be kicked out of the GLAS scheme as well. The Department knows what it has done. This is an attempt to trap the farmers. If there was a mass exodus from organic farming by smaller producers, it would look bad for the Department, so it has brought in this ingenious rule which provides that if a person leaves the organic farming scheme he or she will be automatically kicked out of the GLAS scheme. In the new scheme, the Department says that if a person is in organics, he or she will be given automatic entry into the GLAS scheme. It is called priority access to GLAS.

Mr. Padraic Connelly

Tier one.

Mr. Padraic Finnegan

Yes. This is the method the Department is using to hold onto smaller operators. If they leave one scheme, they will get kicked out of both of them and have nothing. I do not know if that answers the question.

Deputy Martin Ferris

If one has 50 ha or 60 ha, can one apply for 60 ha under both schemes?

Mr. Padraic Finnegan

GLAS is different. If one puts 10 ha into that scheme, one will draw the full €5,000 on it. One can take measures like building stone walls and fencing off rivers. One can do many things like that.

Deputy Martin Ferris

If one put 40 ha into the organic scheme-----

Mr. Padraic Finnegan

One could do far better than that. If one's farm is big enough and one has a good lot of stone walls, a river and some hedges, one could take all the measures to get one to the €5,000 level under GLAS and one could still put one's entire farm of 60 ha into the organic scheme as well. At the other end of the scale, perhaps in the west of Ireland where farms are small, the fact that REPS is gone means this double-funding is the worst thing that ever happened. For some reason, neither the Irish Government nor the MEPs nor anybody else seem to have fought against it. The only people affected by the double-funding issue are the smallest and most vulnerable farms in the country. They have been absolutely hammered.

Deputy Michael Fitzmaurice

Am I correct in saying that both schemes involve Pillar 2 funding?

Mr. Padraic Finnegan

Yes, that is right.

Deputy Michael Fitzmaurice

I have used the analogy of the two doors. We have been told that one could be kicked out of it if one got into it, and that if one has owned meadow or pasture up to now - I accept that this is changing - one might get into GLAS down the road by not being in organics. I am saying that if the money does not go out this door for the organics scheme, the farmer can go out the other side. It is going to go one way or the other. We thought were better advised to keep the witnesses in the organics scheme. Can the witnesses address the problem of the two-year scenario before one is recognised as organic? Are we going to have a drop in the number of organic cattle or whatever between one phase and the other? Do the witnesses understand what I am saying?

Mr. Padraic Finnegan

Yes. Cattle cannot be killed as organic. They are in what is called "conversion". One is in conversion for the first two years. One is paid at a slightly higher rate for those two years because one has to farm organically, but one cannot sell any organic produce. The conversion period is two years. If many farmers were to leave now, as has been suggested, there would certainly be a major shortfall in the two years before the next round, when much bigger farmers come on stream to take up-----

Mr. Enda Monaghan

A neighbour of mine, who had vegetables, cattle and sheep on an organic Teagasc farm, does not intend to join the new organic scheme because it is not worth it for him. He will join GLAS. I would say he had approximately 20 ha. We originally got together as a group three and a half years ago when we saw the double-funding issue coming to light and decided to do something about it. We have been highlighting that issue since then. We knew that CAP would be coming on stream, so we put in our submissions and said there was a need to ensure whatever was planned as part of the new organics scheme was compatible with the new REPS. The Government knew that the double-funding issue was there. We were looking to front-load the payment to the smaller farmer, but they did not front-load it. They actually increased it from a 55-ha payment to a 60-ha payment. I think there are approximately 44,000 farmers with less than 20 ha. Many of them are in the west of Ireland. We could understand - to a point - why this was being done. They wanted to get the acres in and they did not mind about the production. It was handy for them to get in a bigger amount. They were also saying they needed to get more crops grown and more protein.

We accept this is an issue. They were hoping bigger tillage farmers would get into it. We would prefer the payment to the smaller farmer to be front-loaded because that would allow him to grow his own crop or compensate him for the price he would have to pay. We have been highlighting the double-funding issue for three years. I suppose they have increased the organic payment from €106 per hectare to €170 per hectare. It is a big increase all right. We came up with our own figures and costings and we sent all of that in. They gave us the €170, but then they came along with the GLAS which gives €315 to a farmer with 10 ha. The figure of €3,000 for certification equates to €600 a year. A farmer over the wall might not have been paying that €600. We actually have to pay it for six years because our year starts in the middle of the year, in May. We need to have certification from the start of the year. In the final year - the fifth year - we are in the middle of another year so we need to pay our certification costs again. That means we actually pay €3,600.

Chairman

Yes.

Mr. Enda Monaghan

We were working it out there. I think we were saying it is another 28% on the smaller farmer. The certification cost is not 28%, however; it is actually over 30%. It is 32% or 33%. We wanted to front-load the small lad to enable him to pay the certification costs. If a 20-ha farmer, who could get €170 under the organic scheme for each of his 20 ha, wants to join GLAS, he cannot get the €315. He can get a payment for stone walls and hedges, etc., but he cannot get the €315 unless he drops 10 ha out of the organic payment. He would still have to farm it organically. In my own case, I have 28 ha. I was delighted that the increase under the organic scheme was €1,800, but I had to drop 10 ha. This meant I had to drop €1,700 from my organic payment to maximise the GLAS payment. I am kind of in the middle. We have some lads with larger numbers of hectares. One of our lads who cannot be here today would have 55 ha or 60 ha. He could get the full organic payment of €170 per hectare for the 60 hectares. He does not need to go for the €315. He has enough stone walls, hedges and the other things one can do to get the full GLAS payment. He is able to get his full organic payment and his full GLAS payment. He is paying €3,000 or €3,600, whereas the small lad is paying €2,000 or €2,400 and therefore cannot-----

Chairman

Mr. Monaghan might clarify an aspect of the new scheme that was announced or revised in May. Is it the case that annex 5, which determines the activities in respect of which payment can or cannot be draw down, is really the problem?

Mr. Enda Monaghan

A double payment can apply to everything that is area-based.

Chairman

With the exception of minimum tillage and catch crops.

Mr. Enda Monaghan

That is right.

Chairman

Yes.

Mr. Enda Monaghan

That would be for tillage lads, more so than for-----

Chairman

I should also mention arable grass margins, which-----

Mr. Enda Monaghan

Yes.

Chairman

Hedgerows and everything else are different.

Mr. Enda Monaghan

One gets paid on a linear basis for walls and hedges.

Chairman

With the exception of catch crops and minimum tillage.

Mr. Enda Monaghan

Yes.

Chairman

Obviously, this is only in place since May. During the three years in question, did negotiations or discussions take place between the witnesses and the officials in the Department and the Minister's office?

Mr. Enda Monaghan

We were-----

Chairman

What was the reason for this level of-----

Mr. Enda Monaghan

Value for money.

Chairman

Okay.

Mr. Enda Monaghan

We were led to believe that the original budget was €10 million per year. We discovered that all they were spending was approximately €4.5 million. They brought us to a meeting in Agriculture House approximately two years ago, and they announced that the new organics scheme was going to be worth €44 million. If I recall what they were saying, this was an increase of 70% or 30%-----

Chairman

This was over five years.

Mr. Enda Monaghan

Yes. It was actually cut by approximately 70%. If one divides the €44 million into six years, it is approximately €7 million per year. The original budget was €10 million, but they were spending just €4.5 million. I will explain the way they were calculating it in order to say it had gone up by 40% or 50%. They said they had been spending €4.5 million and now they were going to spend €6 million or €7 million. I suggest it was actually cut. When we were setting out the measures we wanted, we calculated how much it would cost on the basis of 1,500 farmers being involved. We estimated that there were 1,100 or 1,200 farmers involved in the organic scheme and that an increase of 20% or 30% was expected. On that basis, we calculated that this would cost approximately €2 million if it was front-loaded.

They said the money was not there. A few months ago they put another €12 million into organic and we were looking €2 million to front-load it. They have put another €12 million in and now there is €56 million in it. The member spoke about the 1% in organic going to 5%. If they were serious about organic and they wanted to go up to 5%, one would want a 500% increase in the organic budget.

One could say all the mountain areas from Kerry to Donegal are organic but they do not have the paper. In the context of Food Wise 2025 and going from €10.5 billion where we are now up to €19 billion, we could increase our export value if all the food produced along the west coast was organic. We do not need to increase calving or the stocking rate. The food would be there if it were labelled organic. If there was a good scheme for them, it would come down from the mountains and could be fattened on the lowland. The market in Europe is €22 billion for organic and the Irish market is worth €100 million. We are way down.

Senator Brian Ó Domhnaill

Mr. Monaghan has touched on a very important point. All the commonage land in the west is organic essentially because it is commonly owned and no one spreads fertiliser there. The only thing running through it is the water coming through the rocks, which is organic water nearly as well. The biggest mistake in the CAP reform was not to front-load payments for smaller farmers across the board, including organic. Our spokesman, Deputy Ó Cuív, championed that cause because it would have helped smaller farmers to stay in business. There are some smaller farmers who might be getting on in years and want to hand it over but there is no incentive to do so. They are cornered because they are not able to expand. They do not have the resources, they are not making the profit and they cannot expand. The bigger guys are coming in and taking over the land. Unfortunately, the structure of the CAP is helping the big guy and penalising the small guy.

While it has increased to €170 per hectare, that does not even meet the average hectare payment in Ireland, which is about €250 or €260 per hectare. They are not even getting the average hectare payment. Some people are getting €500 or €600 per hectare. Others earn €100 and they have been taken up-----

Chairman

Farmers can still get the basic payment scheme on top of this.

Senator Brian Ó Domhnaill

This is an addition; I am aware of that. However, they are still not getting the average basic payment even taking that into account.

We should have a solution or a recommendation we could make to the Minister. The Department has a target of 5%. To keep people farming organically and to incentivise new people to come on board, should the Minister increase the payment for the first 20 or 30 hectares? What figure would Mr. Monaghan propose?

Mr. Enda Monaghan

I believe we suggested €350 for the first ten hectares.

Chairman

I believe it was for the first 20 ha.

Mr. Enda Monaghan

Yes, but that was in conversion. It was €340 for the first 20 ha and €225 for the next one and then €115, which is much less than €170. We were doing it on 55 ha because that is what the original one was. They came in across the board with €170 for everything. That could still be put back to 50 hectares. If a farmer with 60 hectares is getting €170 and ten ha are taken off him but he is given twice as much for the first ten hectares, he will still get the same amount of money, but it will help the smaller lad survive.

Senator Brian Ó Domhnaill

Approximately 120,000 farmers are getting single farm payments. If 1% of them are in organic farming, that equates to about 1,200 farmers. What is the breakdown of those?

Chairman

It is something we could get from the Minister.

Senator Brian Ó Domhnaill

We should look at it. The cost of it may not be huge.

Chairman

There is probably enough in the allocated fund.

Senator Brian Ó Domhnaill

Exactly.

Deputy Martin Ferris

Mr. Monaghan referred to the mountainous areas from west County Cork to County Donegal and suggested that in effect all animals produced in that environment are organic. For the Government to meet its 5% target, what would it take for the certification of that?

Mr. Enda Monaghan

Could the Deputy repeat that?

Deputy Martin Ferris

What would it take to certify all that as an organic producing area?

Mr. Enda Monaghan

That is a good question. The cost of certification for that particular farmer-----

Deputy Martin Ferris

What criteria could one suggest?

Mr. Enda Monaghan

The stocking rate. At the moment we have to carry half a unit per hectare and on the mountain areas they are not carrying that. They might have three or four hectares for a half unit. Our payment is based on a stocking rate. However, if the stocking rate were reduced for the mountains or even front-loaded, we would get them on it then. It would be essential for the mountains to have a good organic scheme. As Mr. Lambert said, they will get Pillar 2 anyway; there will be a scheme for them. To bring them into it, certification costs would have to come down to zero and their stocking rate reduced or front-loaded.

Deputy Martin Ferris

Everybody would benefit. The producer would-----

Chairman

I come from a similar area with hills in the east. The big thing will be farming practices. Dipping and dosing of sheep are seen as essential for keeping them on a hill, but that would have to end.

Mr. Enda Monaghan

No. Farmers are allowed to dip and dose-----

Chairman

With what though?

Mr. Enda Monaghan

-----but the withdrawal period is twice what it is normally.

Senator Brian Ó Domhnaill

Can a farmer dose with any product?

Mr. Enda Monaghan

A farmer may dose with whatever the vet advises. It must be done under animal welfare requirements. Farmers are allowed to dip, but there is a withdrawal period.

Chairman

However, certain dips are not allowed. With the organophosphorus ones farmers have to-----

Mr. Michael Lambert

That is not allowed in conventional-----

Mr. Enda Monaghan

Farmers are allowed to use the pour-ons. In the organic category, farmers are allowed to do anything, but they cannot then sell the food for a certain period.

Chairman

In a land use policy we prepared, we argued that all the land that is farmed traditionally should be used as a countermeasure for all the intensive land because of carbon capture and sequestration, which is linked to what Mr. Monaghan is saying.

Senator Mary Ann O'Brien

We have been appalled by what we have heard about the payment but we have hit on something here with land use and commonages. Let us imagine if that could be done. We must remember that the prize is the export potential of a €22 billion market in Europe. In Lidl, organic vegetables are very affordable for people but none of them is Irish. Lidl loves buying Irish-----

Chairman

All vegetables at the moment-----

Senator Mary Ann O'Brien

-----but with the mess in this sector, what hope do farmers have of supplying Lidl? What country in the EU has best practice in terms of state incentives and administration for organic for us to aspire to? What country is the one?

Chairman

Austria.

Senator Mary Ann O'Brien

It sounds like we are in an appalling mess here and it would be great if we could look at best practice and decide to do better than that. Our positioning in Europe on the edge of the Atlantic allows us to have a good go at this.

Mr. Michael Lambert

Austria is the country.

Deputy Michael Fitzmaurice

Is there one certification body or more than one? What are their names? If we are to find out about the cost of the certification, we need to know that.

Mr. Padriac Finnegan

There are two main certification bodies. There is IOFGA, the Irish Organic Farmers and Growers Association.

The name alone is misleading. The other organisation is the Organic Trust. They would be doing the bulk of it. There are probably smaller fringe groups but they are the main ones and their prices tend to be the same.

Senator Mary Ann O'Brien

Are they charities, registered companies, limited companies or what?

Mr. Padraic Finnegan

They are private companies contracted to the Department to deliver certification. The problem is they have gone way beyond what was originally intended. They have a stand for three days at the ploughing championship and the Senator can imagine what that is costing them. I do not know what else they have. They are going around doing training courses and I do not know what else, but there are a big number of them in it.

Senator Mary Ann O'Brien

They are making a fortune.

Mr. Padraic Finnegan

What their role is should be clearly defined. Going back 20 years everything was done on paper. There was a big packet of forms sent out, some of which were needed and more which were not. Now everything is done online so that role is greatly diminished and there is little or none of it to be done. They used to go to livestock marts and the farmers had to straw-bed all the cattle. They would have their biros out and be writing things down. That is gone. We can sell organic cattle now at an ordinary mart. We have actually a sale coming up in Castlerea next Saturday and there will be a few pens of organic cattle. Their role has diminished.

Mr. Enda Monaghan

Thanks to us, because it was us that got ordinary marts to sell organic cattle. They were telling us we could only sell organic stock at an organic mart and they would have to be there to certify everything. We did a bit of research ourselves and in England there was no need for that. We went ahead and showed our research to the Minister, who allowed us to have our own marts. That brought down our costs as well.

There are lots of things they implement and if they get away with it, they get away with it.

Mr. Michael Lambert

I am looking at the balance sheet of one of the organic bodies, and it says 30% went towards certification. The 70%----

Senator Mary Ann O'Brien

Salaries?

Mr. Michael Lambert

We do not know what that was for.

Chairman

On that aspect it is contained in the rules that "an organic control body, OCB, shall mean a private inspection body approved by the Minister". If I might summarise, we have had more questions and reasonable points put to us than answers. We need answers. If the members are in agreement we should invite the Minister and his officials who have been central in drawing up the new scheme. What the witnesses are saying essentially is that the Organic Trust, the certification body has----

Mr. Padraic Connelly

On Deputy Fitzmaurice's question about how many organisations there are, I have them listed here. There are five certification bodies. Organic Trust is one of them, then there are the Irish Organic Farmers and Growers Association; IOFGA, the Institute of Marketecology, IMO; Global Trust Certificate Limited; GTC; and Demeter. I do not know if they are all Irish but they have addresses here.

Deputy Paul J. Connaughton

We have five bodies to certify how many organic farmers?

Senator Mary Ann O'Brien

Some 1,100 farmers, and factories and shops.

Chairman

It is important to have somebody making sure that what is being sold as organic is registered organic.

Senator Mary Ann O'Brien

Chairman, we surely do not need five bodies.

Chairman

I am just making the point that it is important to have somebody. Given the refinement of the system the cost base should have dropped. The system of certification charging should have been amended and streamlined and that has not happened. That is another issue we need to raise with the----

Senator Mary Ann O'Brien

If we were looking for value for money, what we have just been hearing is laughable. Five bodies for the whole of Ireland? One streamlined body is all we need.

Mr. Michael Lambert

The other issue is, taking a butcher, for example, who wants to sell organic produce, he needs to get a licence. Any of the multiples can get one licence at the same price to cover all their stores, North and South. The one local butcher can only get the one licence and it is at the same cost.

Mr. Enda Monaghan

We think that is where it should start. As producers, we have one or two outlets and feel there is a bit of a cartel. None of us here today went to the local butcher's shop and bought organic. It is too costly for the local butcher; he would have to pay about €1,500 a year for a licence and would have to keep everything segregated. He is not going to do that for maybe 5% of his food sales. If he was given an incentive, if the licence was brought down or if he could avail of an introductory one for a couple of years, then I would have some place to go locally. All the local people would have an opportunity to buy organic food from a local butcher or shop.

Senator Mary Ann O'Brien

In general it is the farmers' market where people buy organic meat. At the one in Carlow on a Saturday it is difficult, for example, I have to queue for hours to buy organic meat or vegetables as they have become so popular

Chairman

I sometimes see shops selling organic eggs when it might be a butcher's shop.

Senator Paschal Mooney

Would that not be an issue for Bord Bia, which is involved in the marketing side of things? Should we inquire as to what it is doing? That is why I suggested Bord Bia should be brought before the committee. It is part of the equation here.

Chairman

No, it is more the Department. Bord Bia only carries out the rules.

Senator Paschal Mooney

Is Bord Bia not the marketing arm?

Chairman

That has nothing to do with this, though.

Mr. Michael Lambert

Bord Bia is the marketing arm. These are two separate issues.

Yesterday there was a seminar in Athlone where they had all the buyers and they had people in from France and other locations. They were trying to give opportunities so that people would be able to go and sell their produce. The problem is that Bord Bia has removed the organic symbol from the products. Now they have brought in this one emblem - "Origin Green". A product is stamped with "Origin Green" and it might be organic or it might not. Bord Bia is selling the two kinds of produce under the one label.

Mr. Enda Monaghan

They are promoting Irish food abroad as Origin Green.

Senator Mary Ann O'Brien

We are all members of that but it is not organic, which is a problem for these people.

Mr. Enda Monaghan

So it looks kind of organic. We were led to believe that when supermarkets approach some of the factories to buy food, and ask if they do organic produce, the factory people will say, "No, we do not do organic, but we have Origin Green. There is only a small percentage of organic food in Ireland". That is how they get over selling into major multiples.

Senator Paschal Mooney

Does that affect the market? Does it affect the prices organic producers can charge?

Mr. Enda Monaghan

It does, yes.

Senator Paschal Mooney

That is why I am saying Bord Bia would be central to this discussion.

Mr. Enda Monaghan

Bord Bia only has two people working in Germany. In Ireland there must be 50 or 60 people from Bord Bia going around to farms. They might not all be on their books but they are subcontracted in by Farm Relief Services, FRS, or whatever, to check us for quality assurance.

Senator Paschal Mooney

In fairness, as the Chairman will be aware, we were in Germany a couple of years ago for the green week and I was very impressed with the Bord Bia set-up and the manner in which it has penetrated the German market.

Chairman

There was only one Bord Bia person there that time. There are two since then because Germany was seen as so important.

Senator Paschal Mooney

I am still sticking to the view that if we are bringing in people, Bord Bia also needs to be part of the discussion.

Chairman

The key point is that although Origin Green is great, it should have an addendum to it.

Senator Paschal Mooney

I would like to know what they are doing with the promotion of organic products.

Senator Mary Ann O'Brien

That is the bigger picture. The foundation of this, the payments and so on, is so wrong at the moment. Anuga is on this week in Cologne but we are not ready to go there. I am depressed after meeting the witnesses. We have a lot to sort out.

Mr. Padraic Finnegan

Returning to a point Deputy Ferris made about the certification bodies being like a money making machine, I agree with him entirely. We are one of the few schemes that are inspected every year by certification bodies. We have a document here that came from Frank Macken from the Department saying this was discussed at EU level, and the EU has no problem with going on to what they call a risk-based inspection arrangement.

This means farmers' properties would not have to be inspected every year. In my case - I have been involved in organics for 13 or 14 years - I have never had a black mark against me and would be seen as low risk. However, my property is inspected every year. Mr. Connelly and I went to Brussels in the spring and met some people from the European Commission who told us this issue had been raised there but that, oddly enough, Ireland had voted against it and wanted to retain the existing system. It would be interesting to know who voted against it in Brussels. Clearly, the European Union has no problem with setting up a risk-based system that would lower the cost of certification.

On the issue of certification, a document from the IOFGA's annual general meeting asks questions regarding the association's lobby group or certification body. The answer to these questions was that IOFGA is a certification body. However, it had extended its scope to include promotion for members. It is contracted to the Department as a certification body, not as a promotion group. Therefore, it should be required to do what it is contracted for. If we look at the document, we can see the various people involved. There is a Jim Carew, who is-----

Chairman

I know this is a matter of public record but the witness should not infer anything about the person.

Mr. Padraic Finnegan

No, I am not doing that.

Chairman

I just wish to caution the witness on the issue of privilege.

Mr. Padraic Finnegan

It is just to say he is chairman of the impartiality committee. I wonder why a certification body needs an impartiality committee.

Chairman

That is delving into territory we should avoid. We should keep our discussion at the top level and on the key points, such as payments and the certification body system.

Mr. Enda Monaghan

And cost.

Chairman

And cost. We should also discuss the scheme, as it is tailored, and the restrictions that apply in respect of the double payment. They are the key points.

I would like to bring to the witnesses attention the fact that we made a contribution to the debate last November because, during its Presidency of the European Union, Italy produced a position paper on amendments to the organic area in regard to transition, certification and rules. This committee put forward 11 observations on the paper, which would have had an impact on Irish organic farming potential at the time. We can provide those observations, which were sent to both the Commission and the Minister, to the witnesses.

Mr. Michael Lambert

It would be of great benefit to the scheme if there was more contact with farmers on the ground in regard to regulations. What happens at present is that a regulation is introduced without any contact being made with farmers and then we discover the regulation is unworkable. We then have to go back to try to get it changed. Consider, for example, the regulation being introduced now in regard to straw beds under which farmers will be obliged to put straw beds on concrete floors for livestock. However, nowadays we have modernised to slatted sheds and could put straw on them. However, the rule now states that we cannot put straw on slats and must fill the slat channels with concrete to do so. Anybody in his right mind would know that if we put straw on slats and put animals in on that, all the waste will go straight through and it is still a dry bed. This new rule defeats that purpose. The rule was brought in, but no contact was made with us to ask whether it was workable.

We have carried out significant research here in Ireland and, in the context of livestock housing, we are ahead of Europe in many ways in regard to mats, etc. We cannot have mats on the floors under the stock.

Chairman

It makes no sense because the waste goes into a sealed, contained unit.

Mr. Michael Lambert

There is a massive amount of work to be done on this if we are to achieve success but we seem to be going in reverse. I am old enough to remember when we did not have fertilisers or sprays. Everything has advanced significantly now. These rules are taken from back then instead of being operated in the current, up-to-date procedures in agriculture. Teagasc needs to do more research. It does a certain amount but it is limited in resources at the coal face. The people working in Teagasc are very good at their job, but they are limited in numbers. Teagasc had an organic farm at the college in Athenry, but it was closed down two or three years ago.

Senator Mary Ann O'Brien

Why?

Mr. Michael Lambert

The research part was closed down and the livestock it had was sold on the conventional market. None of the rest of us got an opportunity chance of buying any of the stock that had been certified as organic. The animals were brought to the local mart and sold off. This is the type of thing that is going on. We are trying to fight a rearguard action. If the regulations had been laid before a committee of some kind, we could have taken the opportunity to discuss with it what might and might not be workable. That would give us some chance but it is not what happens.

Chairman

The witnesses are aware that what we say here is on the public record. Therefore, the remarks just made are now on record for us and others to respond to and address. That is the value of having the witnesses attend the committee. It is from people at the grass roots, from those working through these issues, that we hear of these issues and that is important.

Mr. Padraic Connelly

The figures we provided are based on a five-year contract. That is correct in regard to the Department and payments because the payment we receive is a five-year one. However, in regard to the certification body costs, the scheme starts in May, so a farmer has six years of licence fees. In the first year, when starting off, there is a reduced rate or introductory-type fee, which is perhaps half of what is expected. Once the first five years are up, if the farmer wants to continue with organics, he proceeds on to another five years. However, it is a six-year contract for which he pays for licences. He is paying for licences for six years but the figures we provided are for five years. Therefore, the amount a farmer with 10 ha of land would have to pay would be 31% and the amount for a farmer with 30 ha would be 14%. There is quite a difference in the figures.

Mr. Michael Lambert

Bord Bia inspections are basically free of charge but we pay a levy. There is very little difference between the inspection Bord Bia carries out and the organic inspection.

Chairman

I am aware of the quality assurance inspection.

Mr. Enda Monaghan

It is a tough inspection.

Chairman

It is fairly rigorous.

Mr. Michael Lambert

The organic inspection is as rigorous. It is quite similar. Our contention is that we can handle the Bord Bia one which is done every 18 months, whereas the organic one is carried out every 12 months and is very costly.

Chairman

This is a point we need to raise with the Department. Bord Bia appoints qualified field officers to conduct inspections. These officers operate off a checklist and the farmer is sent a reminder "to do" list. It is not inconceivable that these inspectors could add an additional checklist to cover organic farmers also.

Mr. Enda Monaghan

The levy should cover that then.

Chairman

Yes, farmers pay an initial fee to join the quality assurance scheme, which, I presume, all organic farmers must join in any event.

We could go on for ever but we have given the issues a good airing. The committee has been enlightened by the debate and members have, perhaps, been surprised by what they have been told. We will take on board what has been said. It has been agreed that we will invite the Minister, his officials and representatives from Bord Bia to discuss how to advance the issue. We will be in touch again with the witnesses and will notify them of any meetings that take place. If we draw up recommendations, we will furnish them to the witnesses.

I thank the delegates for taking the time to visit us to make their presentation.

The joint committee adjourned at 11.30 a.m. until 10 a.m. on Thursday, 15 October 2015.