Simon Coveney (Cork South Central, Fine Gael) | Oireachtas source

Let me explain that. On that question first, if we do not make the savings we had hoped to make on DAS, we will be paying out everything that we would have been paying out on DAS but we will have to make those savings from other areas this year. We have had to re-jig our figures through the year, as we saw those savings or non-savings materialising. We have had to factor that in. In other words, if we save €15 million rather than €30 million this year on DAS we can deal with that in this year's budget. All the payments that should and will be happening will be on schedule. In fact, we are ahead of schedule on DAS payments.

However, it has an implication for next year. If one were to reduce the cost of DAS from €200 million to €190 million, which was the plan, and if one has only made €15 million in savings rather than €30 million, instead of it being €90 million it is €105 million next year. Therefore, the starting point is higher which puts one under more pressure in terms of calculating knock-on savings from a smaller scheme. That makes the budget arithmetic a bit more difficult. It also means that the Department of Public Expenditure and Reform will be saying, and is saying to me: "Look, you said you were going to downsize this scheme to €190 million rather than €230 million; now you have to go ahead and fulfil that commitment." There are knock-on consequences of the decisions we made to try to be more surgical in making savings and being as fair as we possibly can to farmers.

There are pros and cons in trying to do that differently. It is easy to make a calculation on DAS if one just takes 5% off the top from everybody. Maybe that is something we can discuss in more detail if we come back again. We can specifically focus on DAS if members so wish, but that is the current position.

I wish to answer some of the other questions to try to be fair to everybody. A number of committee members have talked about the pros and cons of live cattle exports. My preference is to produce, raise and kill all the animals that we can in Ireland. The jobs are in Irish factories, along with the added value. That is where we control the Irish brand in terms of beef - which is a growing brand at the moment - quality and new markets.

It is important to have the option of live cattle exports as a release valve. As people keep saying, we have had a difficult year. If we have a wet week an awful lot of farmers cannot afford to hold on to their animals. They do not have space inside and they are forced to take animals to the factory. They are vulnerable as regards the price they may have to accept for their animals, so we need an alternative. That is why we are working hard on trying to get a boat to Libya or Egypt before the end of the year. I need to impose acceptable and high veterinary standards on any such boat. I have spoken to a number of potential live cattle exporters, some of whom have successfully done this in the past. People are now actively looking at chartering a ship to take shipments of live cattle from Waterford and Cork. They are hoping to do it in the next six weeks, if they can put the whole package together. The Department has worked hard to put veterinary certificates in place with Libya most recently, but also with Egypt, to provide for that market if someone can put the business plan together to make it happen. Farmers would really like that to happen because it would give them an outlet, particularly for the lower quality beef coming from the dairy herd where markets in the factory might not be as strong as they were previously.

I wanted to let the committee know that that is happening and it is a positive story. It is not something that we want a lot of but we do want it as an alternative option for farmers to ensure they get the value for their animals that they deserve in the market place.

As regards productive assets, I do not want to be overly political but if one understands farming one will understand that a lot of farmers across the country are asset rich but cash poor. The average farming income is approximately €24,000 per year. It is a lot higher for full-time farmers but many farmers do other things as well. The idea that one could accurately measure a farmer's capacity to deal with the cost of sending sons and daughters to college by calculating that capacity to pay on the back of land assets and agriculture is not realistic. The Minister for Education and Skills, Deputy Ruairí Quinn, is doing what everyone expects him to do, which is to look at ways of making savings and ensuring that the money he has to spend on third-level grants goes to those who need it most. Therefore, we need to go through that process. My view, as it relates to farming, agriculture and small businesses generally is that one needs to be careful how one manages a family's ability to pay for the cost of third-level education. Including assets in that mix is not an easy thing to do, so we need to be careful of it. We are being careful of it, which is why there has not been any announcement to date. I have spoken to the Minister, Deputy Quinn, about this on numerous occasions and he clearly understands my view on it.

As regards the co-funding issue and ceilings, many people ask me why does money from Europe count against the country's expenditure ceilings. It is a fair question. When payments are 100% paid from the EU, like the single farm payment, they are not factored into ceilings. However, all the co-funded schemes - even if they were 95% funded by the EU in terms of rebates - would still be counted as 100% against our ceiling. That is the deal, I am afraid. Essentially, the troika programme is about trying to reduce the size and scale of Government expenditure across the board, so that is why the ceiling applies to co-funded schemes as much as to schemes that are 100% funded by the State. Of course, we need to be clever about how we manage that. Obviously it makes sense for us to try to increase the co-funding element of schemes for the general Exchequer. If I can do that it helps me to argue for an increase in ceilings, which is what we are trying to do.

While some people might say it is easy, in terms of expenditure ceilings, to introduce a new agri-environment options scheme, AEOS, because 70% of the money comes from Europe, it is not. It is 100% of the cost but we have had that discussion in this committee before.

If we were to continue the suckler cow welfare scheme, the cost is about €25 million annually. If we do not reintroduce the new scheme, we will still be spending €12 million next year. That is because calves being born at the moment that are eligible for payments will be getting those payments next year. That is the way it works. Even if there was no suckler cow welfare scheme next year, nearly half the money we would normally be paying would still be paid out. There are strategic aspects of the suckler cow welfare scheme which have been beneficial for Irish agriculture, yet were not anticipated at the start, such as data collection on breeding, how animals respond to feed conversion efficiency and age. A whole series of others things also help us to make commercial strategic decisions that can help farmers make more money from their business. The suckler cow welfare scheme has made a significant contribution to that type of strategic thinking due to the data it provides into the system. We simply would not get those data from farmers if they were not in this scheme. We need to weigh up how we can hold on to what has been really important for the scheme.

If we are going to have any replacement scheme, we need to know how we might be able to afford it. The Deputy knows the figure at this stage. If we add another €12 million, then that is another €12 million that has to be added to the €114 million along with the cost of the agri-environment options scheme, AEOS.

My Department has been asked to cut 8.5% of its budget. If we discount the increased ceiling we got last year, the cuts come to 8%. Compared with other Departments, the Department of Communications, Energy and Natural Resources has to cut by 9%, the Department of the Environment, Community and Local Government, 11%, and the Department of Transport, Tourism and Sport, 6.5%. There are other Departments which are higher but we are in the top third. These are the figures at the moment. It is up to the Government to decide whether to rejig those expenditure ceilings and change priorities, a process which will go on over the next six weeks.