I welcome the Minister for Agriculture, Food and the Marine, Deputy Simon Coveney, and his officials. Before the select sub-committee proceeds to consider the detail of the Estimate by programme area, the Minister wishes to make a brief general statement on the Estimate.
Vote 30 - Department of Agriculture, Food and the Marine (Revised)
I seek guidance from the Vice Chairman. I have a very long script and I do not want to spend the entire morning reading it when people would like to ask questions. I could go through the commentary on the Estimates. I have a general introduction on where agriculture is going but I think the sub-committee members have heard this from me on many occasions.
I presume everybody has a copy of the Minister's statement so I ask him to give a summary of approximately five minutes after which we will have questions.
We are all involved in a sector which has, over the past two years, become even more important than it was. We are operating to a plan, namely, Food Harvest 2020, which was put in place by the previous Government and is being implemented by the current Government. It is achieving exciting results in terms of export-led growth and planning for the future, in particular in the dairy industry as we approach the end of milk quotas in several years. We are also in the middle of reform of the Common Fisheries Policy, CFP, and the Common Agricultural Policy, CAP, which offers opportunities for new types of financial support for the farming and fishing sectors which are encouraging.
With regard to the Revised Estimates I suspect we will go through them section by section and people can ask questions as to where the figures come from and why we have set them as we have. I look forward to this. Last year there was quite a significant underspend when one compares the Estimates to actual expenditure. There was good reason for this and I can explain it to sub-committee members. We have gone through it in the Dáil during Question Time. Many of the schemes operated by the Department are either demand led or support systems whereby people apply for money and are required to complete a series of actions to qualify for it. We must set Estimates, and last year the Estimates were set at a level that had to take account of the potential for full drawdown of all moneys in all schemes, which subsequently did not materialise. I can go through the actual figures if sub-committee members wish me to do so later. This is very unlikely to be the case this year. We have been much tighter in terms of Estimates versus predicted spend in all sectors, which was not the case last year when we had a generous Estimate. For example, in terms of the TB eradication scheme, while a generous estimate was made based on the assumption that significant progress would not be made in a reduction in the number of reactors in herds, a significant reduction was achieved, which resulted in a significant saving. That is a good news story. Money was not withheld from farmers, rather there was no need to pay farmers because there was less TB in herds. Likewise, significant savings were made in respect of REPS and AEOS because of delays in certain payments for justifiable reasons. Even though our payment schedule was well ahead of previous years, some payments were not made last year but will be paid this year. There is no loss to farmers even though there was an under-spend in terms of the accounts.
In terms of capital spending, we deliberately budgeted for a saving last year because one can carry over savings on the capital side from one year into the next. We knew we would have a shortfall in terms of the capital expenditure ceiling we were being given for this year, particularly in the forestry area, and so we made the deliberate decision to carry over €27 million of savings from last year into this year so we could increase our capital spend this year to allow us spend approximately €110 million on forestry, which we would otherwise not have been able to spend as our ceiling would have been well below €100 million, resulting in our having to cut forestry premiums and so on. The approach this year compared with last year is different in terms of Estimates versus likely spend. We will not get anything like even a percentage of what the under-spend was last year, in terms of Estimates versus actual spend. I believe we will be a lot closer, which people will be relieved to hear. I have become semi-obsessed with matching Estimate with spend within the Department. I am sure Mr. Burke and Mr. Caddle are sick of hearing me beating this drum. That is the way we need to work because of the ceilings imposed on us in terms of capital and current expenditure.
We will go through the Estimates in detail later. Members will note from the briefing note supplied, that we have compared actual spend last year with the Estimate this year rather than the Estimate last year to the Estimate this year. As such, they can compare in real terms what was actually spent last year versus what we are planning to spend this year. If we make savings, so be it. As recently as yesterday we went through our spend so far this year, making estimates in terms of where we may be able to make savings this year in terms of spending less than the Estimate. There are limited savings this year in comparison with last year. The savings will not be in the same realm this year.
I am happy to respond to questions in regard to where we have had to make changes to the spending schemes this year, including disadvantaged areas, qualification criteria set last year, the new AEOS scheme and so on. I will be as open as I can in terms of the answers I give. I am extremely optimistic for the future of our sector. Even with difficult budgetary ceilings being applied to the Department there is the potential to continue to drive and facilitate growth in this sector. We managed to raise those ceilings slightly last year in the build up to the budget and I will be working hard to get the best possible deal around the Cabinet table for our sector again this year. We have seen this happening. As I stated, the Food Harvest 2020 document and targets are being met. We are ahead of schedule in relation to most targets. Combined with a successful outcome to the CAP, which hopefully will be delivered during the Irish Presidency in the first six months of next year and the CFP, this will provide for a sector that can continue to grow and expand, create wealth and employ more people. We should all bear in mind our responsibilities to ensure that the potential of this sector is realised. It has much more potential than many other sectors of the Irish economy over the next four or five years.
Thank you, Minister. We will proceed now to programme A. I call Deputy Colreavy followed by Deputy Browne.
I thank the Minister for his briefing. Nothing we say will change the monetary values included in these Estimates.
That is a fair point.
I do not know if we have any discretion in terms of the internal distribution of the overall Estimate. My understanding is that we do not. Am I correct that what we are discussing is the format of the Estimates as presented?
That is correct.
This is essentially holding me to account in terms of the decisions made and the impact of those decisions on schemes such as AEOS, REPS and so on. The Deputy is correct that this process will not result in any change per se.
Committees have never had the power to change Estimates. There will be an earlier engagement next year in advance of the Estimates being announced.
I propose to comment on the format of the Estimates as presented to us. They are well structured and easy to understand. It is useful that we have been given the Estimate and outturn for 2011 versus the Estimate for 2012. The key to the success or otherwise of the Estimate, budgetary and monitoring process lies in how well we design the performance indicators. I would like to see all performance indicators structured by geographic area because there are huge imbalances between different parts of the country. This could be done by this sub-committee only, rather than in other fora and should be linked to the production volumes in Food Harvest 2020 in terms of value added in relation to food processing and domestic and export monetary values. We need also to consider the volume and value of food imports in the context of import substitution.
Given the Government's stated intention on job creation, employment statistics must be high up in terms of performance indicators. I would like to see included in the Estimates statistics on the age profile of farmers by geographic area, given the desire to encourage younger people to get involved in agriculture. I would also like to see statistics on the percentage drawdown of potential EU funding. We need to look at areas where we are not achieving our full potential in terms of EU funding. In addition, I would also like statistics on the performance of grant payments, in particular in respect of delays, average turnaround times and so on. The Minister stated that this process is working well but there is anecdotal information that that is not the case. I would welcome the inclusion of those types of statistics in the Estimates.
Does the Minister wish to comment?
They are helpful suggestions. In the published Estimates we have what are called context and impact indicators, but they are not broken down on a geographical basis. We have, for example, the value of agricultural food and fish exports for 2009, 2010 and 2011 and the value percentage change of those figures, but we do not have the type of detail the Deputy was discussing. What we have is the progress made on achieving the sectoral targets of Food Harvest 2020, namely, an increase in exports by 42% from the baseline of where we are starting. We are now moving towards almost internalising the Food Harvest 2020 document in our budgetary planning, which is something that has never happened previously.
I am sure Deputy Browne will talk about the thinking behind setting up the Food Harvest 2020 document but it is a really useful tool for us in terms of setting a benchmark as to where we need to be each year. In fact, we use that to set benchmarks as to where we need to be in each quarter of each year. The implementation group I chair for the Food Harvest 2020 programme sets quarterly targets for each year for all sorts of sectors, including upskilling for farmers, the investment that is needed in the processing sector, opening up new markets and so forth. That is why I was in Algeria with the Irish Dairy Board last year and why we visited China a number of weeks ago. The visits are part of the Food Harvest 2020 implementation plan for finding, developing and expanding new markets. It is a fair point that perhaps we should have more detail about target setting within the Estimates and link that to a more detailed assessment not just on how and where we spend money, which is what the Estimates is about, but also how that links in with the overall food harvest strategy. Then one could compare it year on year and build on the information. That is quite useful.
It might be difficult, however, to break up performance indicators on a geographical basis. In the dairy industry, for example, milk is taken in batches from individual farms and then gets mixed up into a single batch. It is not like beef, where one can trace a steak in a supermarket back to the farm. One cannot do that with milk because much of it gets turned into milk powder and one sees milk being transferred between different parts of the country, targeting different markets. It would be far more difficult but we could do it. It would require more data collection at farm level to look at and measure output on a type of point scoring scale in terms of how different parts of the country are doing. I would be cautious enough about that because I would not like to stigmatise certain counties that have more challenging natural conditions to operate under in terms of soil depth, fertility, soil moisture and so forth. I will think about it. I am a believer in data collection so we can make educated decisions about where and how we spend money, but I do not wish to over-burden farmers with forms to be filled.
On the EU drawdown, the Deputy can rest assured that we are targeting all available EU funds. As I am regularly reminded by farming organisations, particularly the IFA, we do not wish to leave any money on the table in Brussels if we can draw it down and spend it on Irish agriculture. It is much more difficult to do that now, however, than it was in the past because of the way in which the budgetary ceilings work, as enforced by the troika. We have this crazy situation where even if I get 85% co-funded schemes from the European Union, that still counts as 100% expenditure in respect of my ceiling. In other words, whether the Exchequer is paying for the full cost of a scheme or only 15%, I must still account for it in the same way, that is, 100% expenditure against my ceiling. It is a ridiculous way of calculating it.
Recently, for example, the Commission, in an effort to try to help programme countries such as Ireland and Portugal, stated that many of the schemes that were previously 50% or 70% co-funded will now be 85% co-funded by the European Union, but that does not help Ireland in terms of meeting our obligations under our expenditure ceilings, which are about forcing the Government to spend less overall, regardless of where the money comes from. I believe we should try to renegotiate this with the troika. We have been trying to do it and must continue to do it in the run up to the next budget. My understanding is that there is a difference between how Portugal is treated on this issue and how Ireland is treated. I had an informal bilateral meeting with my Portuguese counterpart on this issue in Denmark in the last few days. In my view, our ceilings should be set on the basis of the Exchequer contribution so we can try to maximise the European contribution to the overall budget.
With regard to payments drawdown, my Department and I got a great deal of stick last year about the delay in some payments linked with AEOS in particular. It is important to point out that last year, on the overall payments for DAS, REPS and single farm payment, we were ahead of schedule on every measurement in terms of how quickly payments were made to farmers. We were significantly ahead of the previous year and the year before that. In other words, the bulk of payments got to farmers quicker than ever. Yesterday we said we will be applying to the Commission again this year for payment of single farm payments six weeks earlier than would normally be the case. We will apply for that and, hopefully, achieve it again this year. However, there were some delays with AEOS. They were linked to a mapping and mapping digitisation issue which caused much irritation and frustration for farmers and also for officials in the Department. We are working hard to ensure that does not happen again this year.
I am conscious of time so I remind members to ask specific questions on section A. If we use too much time on this, we will lose time for the other sections.
I will be largely silent on the other headings. I am looking at the format rather than them.
Perhaps I will be able to let you come back on that at the end. I will call Deputy Browne now.
I thank the Minister for his overview but perhaps he will clarify a few issues. Last year there was an underspend of €200 million on agriculture. As farmers would say, if that underspend had not occurred, the Minister would not have to cut the DAS, REPS or AEOS. The Minister says there might not be as big an underspend in 2012 but if there is an underspend, will he ensure that it will be carried forward to the 2013 allocation? I was previously a Minister of State in the Department. Should the Department's accounting system issue red alerts about possible underspend in areas and have it transferred to other sections within the Department? In 2011, for example, if there had been a red alert about that €200 million earlier in the year, the Minister could have transferred it to other areas to be spent and not have it returned to the Department of Finance. It is important that all moneys in the Department be spent in the farming sector.
The Minister spoke about the positive news in farming generally. There has, of course, been very good news in farming in recent years and the agriculture sector is playing a major role in the country's economic recovery. However, it is not all good news. Milk and sheep prices are down while the cost of oil and fertiliser has gone through the roof. The Minister touched briefly on the other issue, in respect of the digitisation of maps, which is the bureaucracy, red tape and over-inspection. The farmers view that as holding them back from really developing the way they should. Will the Minister comment on that?
With regard to the AEOS, I am not a farmer but farmers tell me there is no meaningful scheme there at present. There are major delays with payments. Can the Minister comment on that? I have been at a number of farm meetings in my county where people keep asking me whether we will have the same budget as previous years and when the Minister will announce the real budget for CAP reform. The budget will dictate everything else.
Alternative energy crops are a disaster at present. A number of farmers in Wexford went into alternative energy crops but there is no market and no return. Some of them are getting rid of the alternative energy crops because of the lack of income.
There has been a major reduction in the disadvantaged areas schemes. The criteria are too strict. Perhaps the Minister can comment.
Food Harvest 2020 is a very positive document and I am glad the Minister and the Government have taken it on board. Perhaps the Minister can give us an overview of food entrepreneurs. Certain food companies in this country are doing a great job creating jobs and exporting food. We are big in the pharmaceutical sector and other sectors but we need more food entrepreneurs. Are Enterprise Ireland, the IDA and Teagasc doing enough to promote and develop food entrepreneurs to meet the growing market in Europe? The Minister was recently in China, a market of 1.3 billion people with cities larger than Ireland. There is huge population growth and major opportunities. Is Ireland's food sector geared up, or can it be in five or ten years, to meet the needs of Europe and the wider world?
The 2012 estimate for the administration and pay element of programme A1 is higher than 2011.
I ask the Minister to concentrate on replies to areas covered by A1.
I will also respond to questions of Deputy Browne.
We will have an opportunity to do that.
I expect we will go through other areas very quickly if we deal with general queries now but I am in the hands of the Vice Chairman.
That is fine but I want to give everyone an opportunity to deal with all issues.
On the subject of the underspend carryover, last year we had a major problem in terms of the capital expenditure ceiling for this year. I was very worried about its potential impact on forestry because forestry is a major portion of our capital spend. Forestry premia are not current expenditure but capital expenditure, which is a bit ridiculous but that is how it works from an accounting point of view. Essentially, we need to raise the capital ceiling. We will have the same problem this year and we will not be able to have the carryover we had last year. I must find another way of trying to solve it. We can see significant savings in terms of capital last year. We managed to carry over the maximum amount of capital from one year to the next in order to solve the capital expenditure ceiling problem we had last year. We could carry over the €27 million and add it to the ceiling. Last year we could not carry over current expenditure savings. It was not possible from an accounting point of view so any current expenditure that was not spent returned to the Department of Finance. This year, we have been given assurances that the Department of Finance is looking to facilitate a certain amount of carryover of current expenditure savings. We should be trying to encourage Departments to save money if they do not need to spend it. We do not want to see Departments, knowing that they have underspent, finding ways in November and December of spending money that does not have a good return. The country cannot afford that kind of politics. I need to ensure we spend all the money we can spend on useful schemes, building and adding to the work on Food Harvest 2020 and supporting farmers, the agrifood industry and fishermen as best we can. Nothing will be left unspent if we can spend it this year. If we can find savings for reasons like we had last year, we want to be able to carry over the spend into next year.
Next year's budget is a particular squeeze year. The following year should be much easier because many farmers will come out of REPS and go into some new environmental scheme that might not be as expensive as REPS. Hopefully we can make savings to meet our targets more easily in 2014 than in 2013. In previous years there was a significant underspend but it was disguised by the fact that we put more money into the farm waste management scheme. Under previous Administrations, there was a significant underspend but the availability of the farm waste management scheme meant a lot of money was spent in a short period of time by inviting more applications for grant aid. We do not have that this year and it is a huge figure of €200 million. I am very unhappy about it and I can assure Deputies it will not happen again. We are putting alert systems in place to ensure we are monitoring what we are spending and how we are spending it on a month by month basis to ensure that, at the end of the year, we do not lose money that should be going to rural Ireland and to farmers.
I have been consistent on the agri-environment options scheme since budget day, when I said we could not afford to put together a scheme as extensive as the first two schemes in our 2013 budget. If I could do that I would but all I am committing to is that by the end of September, the deadline for applications for a new scheme, we will prioritise and target special areas of conservation, mature areas and commonage areas. Farmers farming under those conditions have many restrictions on them in terms of stocking rates and the land on which they are operating and it needs some financial recognition. It will probably not get as much financial recognition as the farmers in the area would like but it deserves some financial recognition. That is how we will frame the new agri-environment options scheme, for which I will need approval from the Department of Finance. We have not yet received approval but I am hopeful we can do so. We must be clear that this is new spending and has not been budgeted for next year.
People talk about the underspend last year and how we could have had a more extensive agri-environment options scheme last year. We could have afforded to spend more on the scheme last year but it is a multi-annual commitment so we must budget three years in advance. One cannot spend what one has today in the hope one may find some money somewhere in 12 years' time. I can only introduce schemes if I am sure I can pay for them 18 months in advance. That was the problem with the scheme last year in terms of this year's budget and next year's budget in terms of how we will spend it. That is the context for the introduction of a new agri-environment options scheme. I will work with farming organisations over the summer to examine how we can broaden the scheme and whether we can afford to do so in the context of the likely future challenges. There is no new money. If we introduce a broader a broader agri-environment option scheme, we must take money from somewhere else or potentially delay payments from next year to the following year to create space and room for it. There are no easy options. I am, however, open to looking at the figures to see what can be done in relation to the agri-environment options scheme, AEOS. A limited number of schemes under the AEOS will open in September if we receive approval from the Department of Finance, which I hope we will.
When does the Minister expect to meet the farm organisations? Will it be as soon as possible?
It will be within the next few weeks. The past month has been difficult for the obvious reason - the referendum campaign. I speak to a number of farming organisations on a regular basis and hope to have formal discussions with them on this issue towards the end of June and during July.
In regard to the negotiations on the Common Agricultural Policy, they may take place during the Irish Presidency. People may not realise the implications of the multi-annual financial framework, MFF, that must be agreed at European level, that is, the European budget for the next six or seven years, but it has not yet been agreed. It is hoped to have it agreed by the end of the year. It would be brilliant if it could be agreed to in December, but the likelihood is that it will be pushed into 2013 during our Presidency. This means that during our Presidency we would have to have the European budget agreed to and afterwards the budget for the CAP. Some 85% of the European funds that come into Ireland is accounted for by payments under the Common Agricultural Policy which is by far the most important element of the European budget for us. The key decisions around the CAP form part of the negotiating box for the multi-annual financial framework, in other words, the Heads of State and Government and Finance Ministers will take the key decisions on the MFF. I suspect my Department will be very much involved in these discussions as we need to ensure Ireland does not lose out in the redistribution of funds between member states. Ireland is well positioned on that issue in relation to pillar 1 moneys; however, it is not well positioned in relation to pillar 2 or rural development fund moneys, which is worrying. We are working on this issue. We also need to fight hard to ensure there is no cut in the overall agriculture budget, as a number of countries are actively campaigning for such a cut. The three major spending headings are research and development, the Structural Funds and the CAP and the funding must be allocated between them. As potentially we will see a cut of 10% in the budget, the budget for one or a number of them will be cut. The budget is 1.1% of European gross national product, but a cut is being sought to 1% of European GNP which effectively would mean nearly a 10% cut. If it were to come from the CAP budget, it would be a significant blow to Ireland. However, much remains to be negotiated.
Do we have a line-up of countries that think on the same lines as we do?
Yes, absolutely. The key issue for us in relation to the CAP is internal redistribution, in respect of which the Commission is proposing that countries move to an area based flat rate payment, such that regardless of where a farm is located and stocking rates, everybody would receive the same payment per hectare. That would be a disastrous policy in terms of agri-food productivity. Yes, we need to support those in disadvantaged areas and we do this through the disadvantaged areas scheme, DAS, and other environment schemes, but in terms of direct payments, we see a significant transfer of moneys from the more productive sectors to the less productive centres of agriculture. Essentially, we would be rewarding people for land ownership rather than actively farming. That would be a retrograde step and we are working hard to try to resist this change. Even though we accept there needs to be some level of redistribution from those who historically have done very well from direct payments to individuals who have not, one cannot have a situation in 2019 where people would be receive direct payments on the basis of their productivity levels in 2002, which forms the basis for historical payments. We need some level of redistribution, but what we are trying to do is to create a coalition of countries with similar issues and concerns to limit the losses that any one farmer might have to take in that redistribution. I have put a figure of 15% on this, but that is just a gut feeling in positioning Ireland and trying to protect our productive sector, while at the same time recognising the fact that there needs to be some level of redistribution to farmers who have not done so well under the system of direct payments. If there was to be a 15% reduction in payments to the top 50,000 farmers in Ireland, one would see an increase of between 25% and 30% for the other 80,000 farmers. That is the level of redistribution I would like to see, but if it is more dramatic than this, it could do a great deal of damage to what we are trying to do with Food Harvest 2020.
The Minister might have an answer for Deputy Heydon. Deputy Colreavy has indicated he wishes to come in again.
I will deal with the issue of administrative pay and come back in later to deal with the disadvantaged areas scheme and the issue of the food entrepreneur.
My understanding is that the overall pay bill is down significantly. If one looks at the numbers employed by my Department, they are also down significantly. In the past three years there has been a dramatic reduction in the number of staff in the Department. The numbers have dropped from more than 4,000 to just over 3,000. They are reducing as we close offices and try to do more with less, as every Department has to do. The reduction in the cost of running the Department and its agencies since last year is approximately €18 million. Therefore, anyone who accuses the Department of not apply cuts is not looking at the figures. When one looks at the figures for the pay bill, it appears as if they are increasing; however, my understanding is that pensions form a large element of it. I will revert to the Deputy with a more detailed answer on administrative pay. The figure for salaries, wages and allowances is down from €189 million to €184 million. The add-ons for travel and subsistence payments are down by 5%. Therefore, the overall pay bill is coming down.
As the Minister has described it, the European Union gives us money, but the troika takes it away. Money is available, but it is locked away because of the troika. Does this apply across all programmes or only in relation to specific programmes?
Let me be clear. We will be drawing down all EU funds available. It is not the case that we are leaving money behind.
On the cap on expenditure, the troika includes money that has been made available to the Government. Is my understanding correct?
The ceilings were set when our programme was put in place. I do not want to get into the politics of who signed up to it, but in terms of budgeting, all expenditure is included, whether the money comes from the Exchequer or the European Union. That was how we had to put the budget together last year. I would like to see this changed and have made my views known that in putting the expenditure ceiling in place the Exchequer contribution should form the basis rather than the overall level of expenditure. My Department is different from others. For most Departments, this is a non-issue because they do not participate in EU co-financed schemes. Ours is the only Department that has this level of co-financing. In my view, expenditure ceilings for the Department of Agriculture, Fisheries and Food should be set on the basis of Exchequer contribution rather than on the basis of overall expenditure. I have made that case, but we have not yet got a result. We will continue to make it. However, that does not mean we will not be drawing down full available funding from the European Union, because we will.
Has the Minister done a study on how much additional Exchequer spending would be possible if the troika lifted that lock?
I am told the EU receipts we draw down in co-financing amount to approximately €350 million.
With respect, that does not answer the question. There is potential EU funding that we cannot draw down-----
That is not true.
-----because the troika has determined that our expenditure, irrespective of its source, must be capped.
The Deputy should not put words in my mouth. There is no EU funding that we are not drawing down or cannot draw down. At present, we are drawing down all the available EU funding, be it for AEOS, REPS or DAS, but I would like the flexibility to be able to get the benefit, in terms of expenditure ceiling limitations, of decisions by the European Commission, for example, to raise its co-funding contribution from 70% to 85% in certain schemes. We have less flexibility because of the way the expenditure ceilings work. That is my point.
Does this apply to capital as well as revenue expenditure?
Yes. There are some co-financed capital schemes such as targeted agricultural modernisation, TAM, schemes but, in general, this is about current expenditure on farm schemes.
I am sure that, as part of the negotiations, the Department's officials have worked out what additional expenditure we could have if this troika-imposed limit was not in place. There is money locked away that we cannot touch.
There is not.
It is not new money; it is old money.
Let us be clear about this. This is not a case of there being money we cannot touch. My understanding is we are drawing down all available funding at present. The issue is the accounting for this, the gross versus net expenditure, and how the expenditure ceilings as they are currently calculated limit the options we have in how we position Estimates and budgeting. I believe the expenditure ceilings should be set in respect of the Exchequer contribution, because that is where we need to control expenditure, rather than overall expenditure. This was put in place when we initially went into the programme. This is not about a troika imposition. This is a partnership and we signed up to it. It is about looking for flexibility and change, as we have sought in a number of other areas. However, it is a specific issue that relates to my Department rather than other Departments. That is the reason I must advocate for this quite strongly, and I am doing that.
We must move on. At this stage we should be at programme C, but the schedule has gone out the door. Are there questions on programme B?
I have a question on programme B. The budget provides for expenditure in 18 areas but the main cost appears to be tuberculosis, TB, and brucellosis, for which there is a figure of €50 million. How does that compare with other years? What is the Minister's view on TB and brucellosis in general?
We are making significant progress on both. Farmers and farming organisations have a concern about a new approach the Department is taking to TB and contiguous herds in particular. It is my intention to eradicate TB in Ireland. The Department is working hard on that with farmers and farming organisations. Everybody wants to achieve that goal, but we want to do it in a way that farmers can live with and does not involve unnecessary herd testing, given the time and cost of that, form filling and so forth. In recent weeks we have met farming organisations and made some changes and compromises with regard to TB testing and contiguous herds, that is, herds that are next door to herds that have a reactor or TB issue.
On overall numbers, there are fewer animals infected by TB now than at any time since the 1950s. What we are doing is working. I believe a big element of that has been our badger culling programme, which nobody likes. However, people who understand the issue recognise it is necessary. Compare the results for TB control in Ireland versus Northern Ireland or the UK. We have had far greater success than the UK and part of that is because we have implemented the targeted badger culling programme and Northern Ireland and the UK have not. The expenditure on TB in 2008, for example, was just under €62 million. Last year it was €39 million, so it is going in the right direction. The more we can save here, the more funds, one hopes, we can transfer from this programme into other funding programmes in the agriculture sector. We will continue to talk to farming bodies about how to work with farmers to continue moving towards eradicating TB. Brucellosis is almost there.
There are also other disease control programmes up and running, particularly for bovine viral diarrhoea, BVD, which is a new initiative this year and which I believe will be successful. We believe we can eradicate BVD within four years. I am encouraged by the progress we are making on TB but we must continue to work on it. As the instances become fewer, we must become even more vigilant and targeted to wipe it out and finish it off. We are trying to do that, but we must do it in a way that farmers can accommodate as well. That is the reason we are having the ongoing discussions with the IFA, in particular, which has been very active on this issue.
I welcome the fact the Minister is having discussions with the farming organisations. It is important we have the highest standards of food safety and protection of the consumer. However, there is a fear there is overly stringent regulation of what the Minister calls the next door herds. Will he resolve this problem with the farming organisations or will there be a relaxation? I met farmers in my constituency whose herds, the next door herds, have been locked up and they are very annoyed about it.
A number of things have happened. We have already made some concessions in respect of genuine and very fair concerns expressed by the IFA. Basically, if one is a farmer and the farmer next door has an outbreak of TB in their herd, one's farm is locked up until one can test one's herd if one has not tested it within the previous four months. Then one must have another test again within four months to ensure there is no outbreak. We have said that farms will be assessed case by case from now on, rather than there being automatic restrictions. Sometimes, for example, contiguous herds would have a buffer strip between them and the herd that had the outbreak. It could be a strip of forestry or a field of cereals. Clearly there has not and would not have been interaction between the two herds. We are giving veterinary surgeons the capacity to use their judgment as to whether restrictions should apply. The big concession farming organisations would like us to make is to extend that four-month period to six months. I gave a commitment we would examine that but I have not given a commitment that we would agree to that yet. It is all well and good to do something that is convenient for farmers and would be welcomed by them, but if it was to contribute to TB problems increasing rather than decreasing, we could not do it. That request, which was made only a few weeks ago, is being examined. If it is possible to do something there, we will do it, but the first priority must be to eradicate TB. If it is possible to relax some of those limitations or to extend the testing period from four months to six months and it makes sense to do that, we will do it, but if it does not, we will not be able to do it. We will make decisions on that in the next few weeks.
On programme C4 covering land mobility, early retirement and installation aid-----
Are we dealing with programme C now?
We have not moved on to programme C yet. If there are no further questions on programme B, we will move on to programme C. Are members satisfied regarding programme B?
Yes. We have finished dealing with B and we can move on. We are catching up.
We will move on to C4.
For 2011, the figure is €35.960 million, the outturn is €27.7 million and the estimate for 2012 is €24.150 million. This covers the early retirement scheme and the installation aid scheme. How does that sit with the intention of the sub-committee, the Minister and the Government to encourage more young people to enter farming and to change the profile of young people in agriculture? It seems that far from supporting that, supports that are in place will be removed.
People can no longer apply to participate in the early retirement scheme and the installation aid scheme. These are essentially payments that are being made on previous schemes that are still in place, in respect of which we still have an obligation to pay. If I could afford to do it, I would continue to have an installation aid scheme, but we do not have the budget for that. That is why we have lobbied the European Commission to ensure we have something like the equivalent of an installation aid scheme as part of the CAP reform. What is being proposed in terms of direct payments is that countries would be required, on a mandatory basis, to set aside 2% of their direct payments for young farmers under the age of 40 in order that they would get a top-up payment for five years on their single farm payment of up to 25%. That would not apply in all cases because in the case of a very high single farm payment, a ceiling would apply. It was because of Irish lobbying that the European Commission agreed to that.
The Deputy is correct in what he said. We have a generational problem in Irish farming. Only 7% of Irish farmers are under the age of 35, although that is not absolutely accurate because many people under the age of 35 are farming in Ireland but they do not control their farm businesses. Therefore, 7% of farms in Ireland are owned and managed by people under the age of 35, but it is still not enough. In the case of entrepreneurs in other sectors, those sectors are being driven by people in their 30s. That is not to say that people in their 70s and even in their 80s are not good and modern farmers, in some cases they are, but if we are going to be as ambitious as we are being in regard to agrifood sector, we need a new generation of people with new ideas, energy and drive to push this industry forward. Last year there was a 27% increase in the number of young people choosing to go to agricultural college or study food science or agricultural science in university. During the past three years there has been a 100% increase in the number of third level students attending agricultural colleges, universities or institutes of technology studying food science or taking food-related courses. Many people are investing time and education in the food industry and we need to ensure they have access into the industry. In the last budget we used the tax regime to encourage generational change, more land mobility and more farm partnerships. That is sensible strategic thinking.
Programme C4 is a reflection of the fact that early retirement and installation aid schemes were in place in the past and we still have an obligation, particularly in regard to the early retirement scheme, to make repayments to people who had signed up to that scheme in the past and in respect of whom there are still payments to be made. The fact that the figure is less this year than last year is a reflection of the fact that some people are no longer claiming because the scheme no longer applies to them, they have passed away or whatever. That is not to say we do not have a series of measures to support young farmers, which we do, particularly in terms of the CAP reform, both in pillar 1 and pillar 2.
There are a few issues regarding programme C. REPS 4 is due to finish and the Minister outlined his plans for its replacement. I would like to move on to the forestry sector. Does that come under this programme?
Yes. Forestry comes under programme C6.
With regard to the Minister's plans for the forestry industry, we are talking about the sale of Coillte. Is it a good time to sell Coillte and what is the position regarding the sale? I understand that a review or an evaluation is under way.
At the last meeting I raised the issue of the millennium trees, the legal status of the trees that were allocated to more than 1 million people, and how that will affect the sale of Coillte. I also raised the biomass issue with the Minister and he might indicate how he sees that industry developing, as it is now on its knees.
I understand that aquaculture and fisheries also come under this programme. There is a need for the development of the aquaculture industry. BIM is applying for a deep-sea fish farming licence in Galway. The Minister might outline BIM's approach to this area. Is this a once-off intervention or will BIM be further involved in the aquaculture industry? What is the position regarding the Common Fisheries Policy?
The Deputy has raised a good deal of points and I will try to answer some of them.
The Minister can do so briefly.
In terms of forestry and bio-energy, we have more of less maintained the planting rates in forestry that we had last year and we have not had to touch the forestry premium. If we had done that, it would have sent a very negative signal. There is a difference between forestry premium and some of the other schemes we have in that decisions to enter forestry are long term. They are 30-year choices whereas with many of the other schemes, people enter or leave them or they are three or five-year schemes. I was anxious not to send out a signal that we were going to keep cutting forestry premium, particularly at a time when farmers who produce food and are engaged in agriculture are doing quite well. I felt it would be difficult to attract the kind of response to new afforestation that we need in Ireland if we did not send out a strong signal that we would try to protect the forestry budget. That is why I was anxious to carry over the capital savings from last year into this year. We have a problem in regard to that issue this year. I do not believe we will be able to make the kind of capital savings that were made last year again this year. That is a problem for me and I do not want to pretend otherwise. We will have to examine that in the same way as we did last year by meticulous and tedious preparation in terms of how we can find money.
A decision has not been made to sell Coillte. We are examining options just as we are examining options in other areas. This is not in the same category as Bord Gáis Energy where a decision has been made. The decision in regard to Coillte was to value it in terms of the value of the timber and its forestry - there is no question of selling Coillte land - and how that type of sale might proceed in a way that would not undermine any strategic interest the State may have in the ownership of forestry or land, or the carbon sink value of forestry in the future. I refer, for example, to the 7% of Ireland's landmass controlled by Coillte for purposes such as participation in wind energy projects, the provision of telecommunications masts or all the other things in which it is now involved. It is a highly strategic company. While I have preliminary estimates of the valuation of Coillte, a great deal more discussion is needed with NewERA and the NTMA in this regard because the Government should not proceed with the sale of Coillte unless there is a significant dividend for the State arising therefrom. Significant liabilities also attach to Coillte in respect of a pension scheme deficit and debts associated with some of its commercial activities regarding SmartPly, Medite and some other loans it has financed. The Government must make a political decision at some stage during the summer after it has acquired a satisfactory valuation. In this context, I have received a number of valuations for Coillte and there is a huge variation between them. Consequently, when NewERA and the NTMA are satisfied they have an accurate valuation, I will be obliged to put together a recommendation and take it to the Cabinet. I would like to be able to do this at some stage during the summer to avoid the indefinite continuation of the uncertainty about the future of Coillte.
I take it the Minister is not in favour of selling it.
No; I have an open mind on these matters and was the person who progressed this process. While I do not have an ideological problem with it, I am highly protective of, for example, public access to Coillte lands. I am very protective of the strategic asset that is Coillte land which may be used for all sorts of purposes, forestry and non-forestry. Everyone involved in the Government has an obligation to consider all of the assets the State controls under the aegis of his or her respective portfolio. Each Minister must ask whether it is appropriate for the State to continue to own that asset or whether value could be realised from it to spend money in building new assets the State should own. For example, the State is about to develop a new and very large water company. I have other ideas for semi-State companies my Department potentially should be setting up in the food sector to sell food systems and food safety expertise around the world in a manner somewhat similar to ESB International in respect of energy supply. In other words, I have an open mind on this question. However, I must be convinced that there is a significant financial dividend in selling Coillte before doing so because the hassle involved and the disruption for the company that would be caused in its sale must have a significant financial dividend for the State. Instead of moving in that direction with Coillte, perhaps the Government should consider seeking special dividends from the company for the next three years. However, this is a matter that must be discussed with both the NTMA and Coillte and that will be done.
As for fisheries and aquaculture, perhaps I will focus on the latter which I consider to be a really exciting area. Members may have noted that some of the unspent moneys last year related to aquaculture. One reason the Department has made savings is it has had a frustrating time in launching and facilitating new applications for aquaculture projects nationwide. This is because of the manner in which aquaculture licensing has been managed historically in Ireland, which has not been good. Essentially, the European Commission took Ireland to court and won. In consequence, it can impose fines at a given moment if it so chooses. We are under the cosh in putting in place a gold-plated aquaculture licensing system. This is expensive and involves a lot of assessments of practically every bay in the country, which, with one or two exceptions, are categorised as Natura scheme areas. A licence application cannot even be accepted until an environmental impact assessment has been carried out in each bay. This process is under way, but it is expensive and time-consuming. Consequently, this is the reason the Department has not been able to spend as much money in supporting the aquaculture industry as one would have wished. However, I hope this will change in the next couple of years. Such change will take place alongside supporting existing industry and the players therein that wish to expand and grow. I refer to those organisations which play by the rules as there is no place in Irish aquaculture for those which do not. However, I wish to support those companies which respect the licensing system to expand and grow.
The new element in aquaculture and finfish farming on which Bord Iascaigh Mhara, BIM, the Marine Institute and my Department are working is the idea that instead of private sector companies applying for large-scale salmon farming licences further offshore, the State will lead this development through BIM. BIM has worked with the Marine Institute to find the perfect sites that do not damage the ecosystem, do not cause pollution problems, are not in the way of commercial fishing or commercial ferry activity and which will not cause significant visual amenity problems for those who live on the coastline and might object. Such sites instead can allow salmon farming to develop on a much bigger scale. For example, the current licence application from BIM for a site 5.5 km off Galway and 1.5 km east of the southernmost of the Aran Islands is for a 15,000-tonne salmon farm. At present Ireland only produces 12,000 tonnes in total. This is a new generation of salmon farming that can be both environmentally sensitive and responsible, while at the same time developing a really exciting industry that provides organically-produced salmon. Were this project to get through the strenuous licensing procedure, at current salmon prices, it would have a turnover of approximately €103 million per year and employ between 300 and 400 people on the west coast. Moreover, this is not a one-off project as the Department wants BIM to apply for more. However, those involved must take their time and work with the Marine Institute and the available science to ensure sites are picked that are absolutely suitable in respect of protecting the marine environment for the development of such infrastructure which can employ a lot of people, particularly in the west in areas that do not have many other options. As members can gather, I am quite excited about the potential of salmon farming. However, I am also the person who grants the licence and consequently, regardless of my personal views of this industry, I must examine a licence application on the basis of the available scientific data. The Department will make its recommendations on licensing on that basis.
Deputy Colreavy has indicated that he wishes to ask a brief supplementary question. I am conscious that less than half an hour remains to us and that there may be votes in the Dáil Chamber.
I have a question on the specified public service activity, "Implementing the 2007-2013 Rural Development Programme".
To which programme does the Deputy refer?
I refer to programme C which deals with the rural economy, environment and structural changes. Will the troika limit as described by the Minister have an impact on the funding of, or potential expenditure under, the rural development programme?
The Minister has partially answered my second question. I refer to the targets set in respect of fishery harbour centres, in supporting aquaculture and seafood processing and developing Ireland as a European hub for seafood processing. I could not reconcile these goals with the reduction from €17 million in the 2011 Estimates to €13 million in the 2012 Estimates because we appear to be going in a different direction.
On the fisheries question, the reality is we do not have the money. That is the simple answer. Had I more money available, I would spend more on fisheries harbours, but I do not. This is capital expenditure. As I outlined, the Department must find a carry-over, even to be able to maintain forestry premiums. A lot of money has been spent on fishery harbours in the past ten years. Harbours such as Killybegs and Castletownbere have enjoyed huge investment, comprising tens of millions of euro or, arguably, hundreds of million of euro, when taken together, and now have reasonably good infrastructure. Other harbours such as Ros á Mhíl, for example, have seen the investment of significant amounts of money in recent years, while some money also has been invested in Greencastle and Dingle. There has been major capital investment in fishery harbours, although, unquestionably, more is needed. If one looks at Howth, for example, there is a need for more investment there. I am very committed to the marine area but I can only spend what I can afford. If the Deputy is seeking a commitment to the fishing industry, the only agency under my Department that saw an increase in its budget this year, over last year, was BIM. That is because BIM is the developmental agency for the seafood industry. We have just discussed the work it is doing on aquaculture and fin-fish farming. Even at a time when we have to make dramatic cutbacks, I have increased BIM's budget. I agree with the Deputy, however, when one looks at the amount of money that is going into fishery harbours, it is less than in the past, but hopefully I will be able to reverse that in the coming years. For the moment, however, we have to cut our cloth according to our measure.
Despite all the investment in harbours, there seems to be a lot of unused State-controlled property around the harbours, which is a cause for serious concern.
There is some unused property, but not as much as some people would suggest.
Does the Minister have figures on that?
I do not have figures with me but I can get them for the Deputy.
I would like to have them.
We have just been through a new re-evaluation of our charges within fishery harbours. There seems to be a view that we can continue to pump money into fishery harbours but not run them as a commercial operation in terms of rents, docking fees and landing fees. We have been through a public consultation process and the original document is going to be changed. I think the industry will be quite happy with the changes, but we need to have a level of commercial charges to ensure that harbours can pay for themselves. There will always be friction between harbour users and operators over commercial charges.
If empty properties could generate income for those harbours we should obviously be progressing that idea. There have been court cases concerning properties in certain harbours where people want security of tenure, yet they have not been paying rent. I need to be careful in what I say on that because there are court cases concerning some of them. We are trying to be as fair as we can to all our tenants, as any State landlord should be. At the same time, however, we must operate our harbours as commercially as possible.
We must move on.
I have two brief questions for the Minister.
I did not get an answer to my question on rural development.
I am sorry. As regards rural development, I can assure the Deputy that we will not be leaving any available European funding behind us.
So the troika limit will not impact in any way on the overall expenditure for rural development.
No, I do not think it will. As I said earlier, however, I would like to have the flexibility on how ceilings are applied. We should be careful about how we use language. This is not about a big, bad troika forcing us to do X, Y and Z. This was a negotiation. The programme we signed up to had expenditure ceilings. There is a specific problem within my Department concerning how those ceilings operate because we have so many schemes that are co-funded. We need to get a specific answer concerning the flexibility around them. It is not as if there is a deliberate attempt by the troika to make life difficult for us. This is something we need to make a case for and I am making that case at the moment.
I am not using terms such as "the big, bad troika". Could we be spending more money on rural development if a different approach was taken, and if only Exchequer expenditure was taken into consideration? That is my sole concern.
That is an absolutely valid and reasonable question. My information is that no money is available in Europe that we are not planning to draw down at the moment. We would have more flexibility in putting budgets together if we changed the way ceilings operate. That may create other expenditure opportunities in other areas. If, for example, our ceiling limits do not count EU contributions towards co-funding, that may create more expenditure opportunities in other areas. As regards rural development funding around co-funded schemes, my understanding is that we are drawing down the full amount of money that is available at EU level.
A quick supplementary question from Deputy Browne.
I have a few quick questions for the Minister. Will he let us know the outcome of the report on BIM? There was talk of it being merged with Bord Bia, but has that been finalised?
Second, will the Minister talk to the Taoiseach about having Leader programmes transferred back to the Department of Agriculture, Food and the Marine? In their present format they are a disaster. When food projects arise in Wexford which cannot be funded, the explanation is that there are roadblocks and such funding is not allowed by the EU or the Department. As the Minister knows, there are some good food project ideas at the moment but unfortunately the Wexford local development company is not allowed to fund them. I am just wondering about that whole programme.
There has been some relaxation of that.
Yes, but it is not going far enough.
Before the Minister answers that question, can I have an indication of which members wish to pose questions on subhead D?
I have just one question on it.
I ask the Minister to continue.
The Leader programme has been an ongoing problem for nearly a year, although there has been some resolution of it. There is a food fund but it is limited; it is not as much as applied previously. We will have a new rural development scheme, hopefully for 2014, with a new CAP. My Department's responsibility is for the overall drawdown of rural development funds, but the Department of the Environment, Community and Local Government is very much involved in the Leader programmes.
It would make sense to have it in the Minister's Department.
Yes, but there is a broader rural development function in Leader schemes that does not necessarily relate to agriculture and food. It is important to recognise that.
What about BIM?
The BIM review will be ready within weeks. It will be done before the end of this month. I do not want to predict what will be in it. I will wait and see. I will have that on my desk within the next two or three weeks.
I want to raise an issue under subhead D.
Deputy McNamara has indicated that he wishes to speak.
I have a question on the Leader programme if it is appropriate to raise that now.
Before the Deputy continues, it is important to say that Leader is not my Department's responsibility.
No, but the question is not exactly on that issue. There is a lot of speculation at the moment that local development companies will be subsumed into local government functions. I wondered whether the Minister's Department is involved in the negotiations. His Department is presumably the one which is liaising with the EU.
Yes and no. My understanding is that recommendations will be coming to Government on Leader structures and functions at some stage over the summer. As people will know, under pillar 2 moneys, which are for rural development, there are essentially three different axes. Axis 1 is grant aid for the modernisation of farms. Axis 2 concerns schemes such as AEOS, REPS and disadvantaged area payments. Axis 3 is primarily Leader funding. Even though we are involved in the drawdown of that, the implementation and roll-out of those programmes is very much the responsibility of the Department of the Environment, Community and Local Government. The European Commission said that axis 3-pillar 2 moneys could not fund small food businesses, and it would have to be done under axis 1. That drew us into the debate because we spend money under axis 1. That is why both Departments have had ongoing discussions on this issue. We came to a sort of resolution, which allowed some money to be spent through Leader programmes on food projects, but not as much as would have been spent in the past. That is an ongoing discussion in the context of where we are going with the Leader programme. I have strong personal views on Leader but I want to see what the Department of the Environment, Community and Local Government is proposing and I expect we will have an active debate in Cabinet when the recommendations issue.
I ask the Minister to take a direct interest in the Department's offices at Johnstown Castle which were transferred there under the decentralisation programme by the former Minister for Agriculture, Food and Forestry, Ivan Yates. The transfer was very successful but staffing levels have been decreasing over recent years and the offices are now less than half occupied. I believe there is a desire at senior official level in the Department to close them by stealth. At the same time, however, I understand the Department plans to build a massive extension to its offices in Portlaoise. It is a blatant waste of taxpayers' money to build an extension in Portlaoise while the massive new offices in Johnstown Castle which were constructed only a few years ago are being run down. I ask the Minister to seriously consider the further development of Johnstown Castle instead of wasting money on the project in Portlaoise.
The Deputy asked a useful question because it allows me to explain what we are trying to do in Portlaoise. We are not deploying additional staff in Portlaoise. The reason the Department is considering the extension of the existing offices in the town is because staff are currently accommodated at approximately seven different locations. It is a real mess, with people all over the town in rented accommodation. Some of the accommodation is substandard not in terms of the conditions on offer but in terms of getting an efficient job done. It makes sense to house everyone under the same roof. Considerable persuasion was required before I would sanction expenditure through the OPW on a major capital extension in Portlaoise. We are not doing this to extend our operations in Portlaoise. We are trying to consolidate into one building and this consolidation process will more than pay for itself over a seven-year period. This is an isolated project which is solving the problems that have arisen in Portlaoise.
Staffing numbers have indeed decreased at Johnstown Castle. I visited the facility and found it very modern and impressive. If we can find ways of using that infrastructure by deploying staff there I am more than happy to consider proposals but our staffing numbers are being reduced all over the place. The units located in Johnstown Castle have seen significant reductions in staff numbers. We may have to consider sharing facilities with other Departments and Government services. I do not want to predict what will happen to Johnstown Castle but there is no suggestion we will downgrade it any further.
I suggest that the Minister should consider sharing facilities with other Departments. There is a great outcry for a new Garda station in Wexford. At least half of the facility is unoccupied and could be shared.
I will consider the suggestion.
I am merely asking the Minister to explore options with other Departments.
Where we have buildings that are modern and can serve a useful purpose, we are actively seeking to share facilities with other Departments. We have also engaged in this process in respect of Clonakilty, where a fantastic facility is located. I will certainly bear the Deputy's suggestions in mind.