Professor Gerry Boyle:

In the interests of time, I do not propose to read my entire statement.

Teagasc has six operational programmes on animal grassland research and innovation; food research; crops environment and land use; the rural economy; advisory services; and education. Members probably know that we have 51 advisory offices throughout the country, down from 90 following the rationalisation programme.

We have four colleges of further education and seven research centres. We also subvent three private colleges in Pallaskenry, Mountbellew and Gurteen.

On our finances, last year our total expenditure was approximately €187 million. We are obliged every year to match expenditure with income. I draw the committee's attention to a somewhat unique feature of Teagasc as a non-commercial body in having a relatively large proportion of non-grant-in-aid income, amounting to some €56 million in 2017. This income comprises: various grants Teagasc receives as a result of success in competitions for research and advisory funds both at national and EU level; advisory fees paid by farmers; education fees; significant farm operations; a small amount of levies from industry; and the sale of a variety of professional services. In 2017 Teagasc received €125 million in grant-in-aid for current expenditure purposes and a further capital grant of €3.15 million. Teagasc uses, unlike many public bodies, part of our grant-in-aid to defray the cost of pensions and we have a large number of pensioners, given the age of the organisation. The total pension Bill amounted to €43 million in 2017. If pension costs are excluded from current expenditure then non-grant-in-aid income was about 45% of the 2017 level of current expenditure.

I will now turn to performance metrics. Teagasc, as a public body, is obliged to operate a rigorous performance and evaluation system that has several layers. We conduct, for example, external peer reviews of all of our programmes on a regular basis including our administrative programmes. We monitor and track key performance indicators across the organisation. I will not go into detail, but set out in the appendices is the bottom line for us as a non-commercial body. We look at performance on the research side and how internationally competitive we are as to publications and securing external funding for our research. As the committee can see, there is a healthy trend shown.

On the advisory side, we have approximately 43,000 clients - this fluctuates marginally from year to year - who paid Teagasc close to €21 million in charges in 2017. We have about €5 million from education fees. We conduct, by way of communicating knowledge, several activities such as open days, farm walks, conferences, media communications - increasingly through the use of social media - and all of these channels are freely available to all interested parties. We also operate a highly successful fellowship programme for the training of PhDs. At present we have the single largest group, of about 250 students, studying for PhD level in a single subject area, which are all undertaken in partnership arrangements with national and international universities and research agencies.

I should add, Chairman - I neglected to put this in my opening statement - that we also have approximately 20 MSc students in a collaboration with UCD for the training of knowledge transfer or advisory specialists.

Finally, I draw the committee's attention to the various trends in enrolments in Teagasc colleges and at regional offices through our part-time programmes. From 2008 until recently, the numbers exploded in our agricultural colleges. Going back to 2014 approximately, the increase in enrolments in 2008 had been about 250% for year 1.

As the economy has begun to pick up again, these enrolments have fallen back, especially for what we call the further education students. As the Chairman is probably aware, Teagasc partners with a number of institutes of technology in the delivery of degree programmes and with University College Dublin in the delivery of higher education programmes. Enrolments in the higher education courses have been fairly stable. Following the various incentives for young farmers to re-enter education enshrined in the rural development programme of the CAP, there has been a substantial increase in enrolments in part-time and distance education courses. In fact, enrolments are now running at over three times the level that prevailed prior to the rural development programme, RDP, measures. The demand continues to be exceptionally strong, particularly in the north east and north of the country.

I will make a few comments on financial management as they were raised in our annual report. I wish to bring it to the attention of the committee that in the absence of access to borrowing facilities, Teagasc has faced significant challenges in recent years in funding working capital requirements. This issue has become more acute as our non-grant-in-aid income has increased significantly and we might not always be paid promptly. We have to finance the capital involved while we are waiting for payment. Similarly, in the absence of a borrowing facility, longer term capital funding for our research and educational infrastructure is even more challenging. Our grant-in-aid typically earmarks a relatively small amount of funding for infrastructure purposes which is only sufficient to partially cover maintenance costs and some minor capital works. Last year, for example, the capital allocation was €3.15 million. More substantial infrastructure needs are funded as the opportunity arises through the sale of assets that are no longer programme priorities, or through once-off special capital grants from Government. Reliance on asset sales as a funding mechanism is not a sustainable basis on which to fund ongoing infrastructure needs. While we are always appreciative of special capital grants, the process does result in an episodic funding schedule. This approach inhibits Teagasc’s ability to meet its strategic investment needs on a planned and timely basis and our ability to respond rapidly to changing needs, for example climate change, is curtailed. It is not really possible to commit to a medium-term investment plan as grant-based funding requests have to be progressed on a case-by-case basis. Access to longer-term investment funding would be a highly welcome innovation. We do make our case from time to time; in the budget 12 months ago we got a significant capital allocation that we had been seeking for a number of years for a food innovation hub.

There is reference in the statement of internal control to procurement issues and difficulties that we faced. I assure the committee that we are making every effort to be as compliant as possible in respect of procurement practices. Significant improvements can be reported in recent years through the recruitment of specialist staff and the establishment of robust systems of control. It is complex in Teagasc due to the diversified range of activities and the fact that our locations are dispersed across the country. The exceptions reported in the financial statements were brought to the attention of Teagasc itself by the Comptroller and Auditor General. There are really two reasons for their occurrence, neither of which is satisfactory. Quotes being sought from a number of local suppliers rather than advertising through etenders.gov.ie, as was strictly required for the amounts involved. We are nonetheless quite satisfied that this did not adversely affect value for money given the number of quotes sought and the type of services procured. The other reason was the extension of existing contracts for services where the requirement was being reviewed, where there were delays in the implementation of the Office of Government Procurement process or where a similar service had already been procured from that supplier.

I want to stress that while no exceptions can be tolerated, it should be noted that the exceptions amounted to tender values of €1.35 million from a total amount of transactions of €42 million, representing just over 3% of the total.