Oireachtas Joint and Select Committees

Tuesday, 13 November 2012

Joint Oireachtas Committee on Agriculture, Food and the Marine

Pre-Budget Submissions: Discussion with Irish Creamery Milk Suppliers Association

2:15 pm

Photo of Éamon Ó CuívÉamon Ó Cuív (Galway West, Fianna Fail) | Oireachtas source

I will deal with the topics in reverse order, I agree with the concerns of the ICMSA on conveyancing. I tabled a parliamentary question to the Minister but I did not get much joy. I believe this issue should be discussed.

At this time of the year everybody comes in with the shopping list. At this stage it is normally way too late but I suggest the committee should look at the issue of the tax ramifications of land consolidation. This is a very important issue for dairy farmers. We need to develop a policy, and argue it out well in advance of a budget. I can guarantee that little will be added to what is already in the budget. As a committee we should set out early next year to consider our policies on these proposals and examine all the implications in order to ensure that barriers to the development of farming, such as land consolidation and the tax regime and so on are looked at. We should not wait until the last minute when it is too late to influence Government.

The delegation from the ICMSA obviously did not read the expenditure report issued by the Government last year, in which it was stated there would be a 6% cut in agriculture next year. I see from the ICMSA shopping list that more money and not less is required. It is a very handy ploy because no matter what happens, it is on a winner. We too can play the same game when talking to the Minister, but one does not influence the game that way. I think the 6% cut is probably disproportionate, I recognise there will be a cut, as there is less money. The first thing to do is to try to make as many savings as we can from administration. We can try to handle the money a bit better and ensure there is no carry forward of unspent cash, which disappears into the ether leaving just a liability.

I still believe the Minister will not be expanding the scheme when all of that is done. We have an awkward decision to make. The Minister has an even more awkward decision to make. Should we recommend the retention of the suckler cow scheme, for example? If we do, where will the money come from? I do not think extra money will come from the Exchequer. I would like to know where the association's priorities lie. If cuts are needed, do the representatives of the association have any thoughts on how they should be made? It is their prerogative not to answer that question if they like. I reiterate that those who do not answer such questions when they know the realities cannot really complain when Ministers make decisions they do not like.

I was interested to hear what the witnesses had to say about the Common Agricultural Policy. It is interesting to examine the derogation figures for people involved in the disadvantaged areas scheme. The people in the mountains have had the fewest rejections. In fact, there are more rejections in severely disadvantaged areas than in the mountains. Proportionately, there are as many rejections, if not more, in the less favoured areas. That seems to indicate something about all this talk about armchair farmers. I do not know where such farmers are to be found, but they are not in the mountains. All of these farmers had to make a case to prove they were farming their land to the capacity of that land. It seems to me that there are two handy ways to be an armchair farmer, to be blunt. If one has a huge single payment, one can lease out the land and the single payment, making sure to build a good return from the single payment - 80%, say - into the single payment lease, and do nothing. When I go around the country, it seems to me that the farmers who take that approach have the good land rather than the bad land. The other way to make a whole heap of money from a large single payment is to contract out the sowing, fertilising and harvesting of one's tillage lands. A farmer who does that will continue to get the single payment.

I am very worried. We are talking about active farmers. When I examined the European definition of an "active farmer", I noted that small part-time farmers on marginal land are specifically included as being active farmers. I get the impression from the farm organisations that they are trying to edge out such farmers in some way. If a different definition is used, it will quite rightly exclude corporate entities like conglomerates and airports. I agree that they should be excluded. I do not see why they are getting State money to farm. When I studied the 2008 single farm payments, I noted that the biggest payments were going to certain well-known corporate entities. They were not all connected to the farming industry. If the association has a definition of an "active farmer" other than the definition proposed by the EU, which specifically includes the people with small farms on marginal land, I would be interested to hear about it.

I would like to mention an issue that is coming more and more to the fore. The association has shown us this proposal. The farming organisations seem to favour the proposal from the Minister, Deputy Coveney. They have justified payments of €150,000 or €200,000 to farmers under the single payment scheme. The same people complain about Deputies getting €80,000 for working seven days a week. It seems to me that the argument being made is that those in receipt of single payments of €150,000 or €200,000 are losing money by farming when such payments are taken out of the calculation. I cannot justify the payment by the State of farm incomes of €200,000 from the public coffers. If we have come to the stage that the more intensive a farmer is, the more money he or she is losing - when the single payment is taken out and put aside - I suggest that farming has become a nonsense. That seems to be the proposition that is constantly being put to me by highly intensive farmers. If we do not rectify that issue, the whole game is crazy.

If one could earn the €200,000 that one is being given just by keeping a minimum amount of stock on the land, all one has to do is get one's minimum payment and not worry about stocking levels. Why would one continue to invest and invest in order to lose more and more money? If that is what is really happening, it does not make any sense. I would love to see the farm accounts of some of these people. If it is the case that the more intensively one farms and the more land one buys, the more money one loses, it just does not make any sense. I know people are very generous, but I am not sure they are that generous. I have to believe the intensive farmer is actually making money before the single payment is taken into account. If he is not, it is a nonsense for him to get more and more intensive. I believe in the principle of equity that is applied to other grants. Therefore, there is a very good case to put a cap on the single payment, just as people want to put a cap on public service wages, etc. We could allow farmers to make as much money as they want beyond the cap as long as they make it from farming. That would reduce the number of very profitable armchair farmers who get the payments but do not really have to do an awful lot. They get somebody else to do all the work.

If we were to impose a cap on the payments received by the 2% of farmers who get 12% of payments - we could also apply it to the guys who are stacking, but I will come back to that in a minute - we could give every farmer an extra €30 on the first 20 hectares of land. That would represent an extra €600 for a farmer with 20 hectares or more. It would help the genuine middle-ranking farmers in the country, but not the 2% of guys at the top who should be able to make their money anyway, especially as €50,000 is a good start. I know this is being vehemently opposed, but I reiterate that it would be better for 98% of farmers and worse for 2% of farmers.

It has been suggested that an increase in payments at the bottom end of it would result in farmers with acres and acres of bad land suddenly getting a fortune because they all have huge farms. When one assesses the farm size statistics, one finds that those who receive the lowest payments per hectare are also those with the smallest farms. As the money per hectare increases, so does the average farm size, with the exception of the people at the very top who get over €500,000 a hectare. I am not talking about those who get the biggest payment, but about those who get the biggest payment per hectare. They actually tend to have smaller farm sizes than people in the next three categories, which indicates to me that people who get over €500 a hectare are stacking. In other words, they had land leased in the reference year but they do not have it leased any more. They are stacking the payments. There is no logic in the way these payments gradually increase along with average farm size until one reaches the highest level. The obvious explanation is that they were not really making €500 a hectare in entitlements from their land in 2001 or 2002 or whenever. They were actually making it from double that amount of land and stacking the entitlements. That explains why those with smaller farm sizes get higher grants.

We have been told that people in the west get all of the disadvantaged area payments. I am as interested in Wexford farmers as anyone else. We are being told we cannot touch people who get single farm payments of €50,000, or set a limit that does not allow them to get €100,000 or €200,000. The limit for a farmer who is depending on the disadvantaged area is €3,400. That is the maximum he can get, even if he owns the mountains of Donegal and the hills of Dublin.

The maximum area under REPS was approximately 100 acres or 40 hectares and the maximum payment was €11,800. I do not believe it will ever go near this again because the type of costings built in previously could not be justified under the greening process. Even if a new REPS were introduced I could not see it giving anybody more than a maximum amount of €4,000 or €5,000.

The pillar 2 budget is now negotiated in a multi-annual framework and is very vulnerable to Government cutbacks. Figures that will surprise some people are as follows: 17% of disadvantaged area scheme payments are made in Leinster and every county in Leinster is included; 26% of payments are made in Munster and every county is included; 17% of payments are made in Ulster, which includes Cavan and Monaghan; and 36% of payments are made in Connacht. There is not a county in Ireland from Dublin to Galway and from Donegal to Wexford which does not have farmers who receive disadvantaged area scheme payments. A myth is perpetuated that it is a west coast payment, but half of payments are not made there no matter how one defines the west coast. Does the west coast comprise Kerry where there is some great land, Clare, Connacht and Donegal? Does it comprise Connacht and Donegal? We should be honest that disadvantaged area scheme payments are made throughout the State to farmers on certain types of land and all counties, including Wexford and Kilkenny, get their fair share of payments relative to the land. It is a very small payment anyway compared with a decent single payment.

Unfortunately I must attend another meeting. I do not know which saint was able to be in two places at the same time but I am no saint so I cannot pull off that trick. Why should low-income farmers who are struggling and working hard on bad land, many of them full time, be asked to tell the Commissioner they do not need the money in favour of people receiving single payments of €50,000, €100,000, €150,000, €200,000 or €250,000? I do not understand this. My honest opinion is that when it is put clearly on the table, as it was in Leitrim, farmers do not understand it either. The same will apply in Wexford, Kilkenny, Carlow and Meath because the vast majority of farmers in these counties do not receive large single payments or high rates per hectare. The vast majority of farmers in every county do not receive high rates per hectare or large payments. My agenda is not a west of Ireland agenda. It is an agenda for the struggling masses as against the very well-paid elite of Irish farming.

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