Mr. Seán Finan:

I am grateful for the opportunity to attend this meeting and to outline issues affecting a cohort of young farmers referred to as old young farmers or forgotten farmers, who have been in farming longer than five years and receive low levels of support, or no support, under the Common Agricultural Policy. I am the national president of Macra na Feirme and I am accompanied by Mr. Bryan Hynes, chairman of Macra na Feirme's agricultural affairs committee, and Mr. Derrie Dillon, agricultural affairs manager.

The new CAP reform has brought positive and important incentives for young farmers, including the young farmer top-up for those who are within five years of set-up. However, the rules for establishing and administering young farmer schemes under the basic payment and rural development programmes have not had the same positive impact on old young farmers. Certain old young farmers have been particularly disadvantaged by the CAP. Many of them have either low or no basic payments under the CAP for a variety of reasons related to the historical model on which the single farm payment was based. This situation has been compounded by the introduction of a five-year rule for eligibility for support, with the result that they lack the support of the CAP system to help them manage income volatility or to facilitate investment in their farm businesses. The convergence model under the new CAP will bring them within 60% of the national average basic payment by 2019.

In terms of Macra na Feirme’s active engagement on young farmer issues and developments in the CAP process, we work closely with the European Council of Young Farmers, CEJA, which is the representative body for 2 million young farmers in Europe, and we are active participants at Irish and European level in developing policy on young farmers with the various institutions and stakeholders.

I will now outline the background to the situation in which these young farmers find themselves, following which I will describe a young farmer case study, and then I will summarise the key issues and possible solutions for these old young farmers. Historically, some of the most far-reaching and fundamental changes in the Common Agricultural Policy to date have arisen out of the Luxembourg agreement, which allowed farmers who previously claimed production-based premiums to receive a decoupled payment instead. This broke the link with production, and subsequent CAP reforms used historical data to determine the value of farmers' basic payments. We believe in the underlying principle that farmers should be rewarded for developing their businesses and generating economic activity. Basic payment allocations to farmers should reflect this principle. As a general principle, land and basic payment should be released from those who do not want to engage in agricultural production and made available to active farmers who want to produce food.

Our policy fundamentally differs from other proposals in the last reform in that we believe payments to individual farmers should move from being on a historic basis to being on a rolling reference year basis whereby farmers would continue to be paid a basic payment but according to their current level of farming activity. The main motivation for this approach is that over time the historic basis for basic payment becomes less equitable as farmers develop and change their enterprises, so that their activities now are different from their activities between 2000 and 2002. The only obligation on farmers currently is to maintain their lands in good agricultural and environmental condition, with no obligation or encouragement to maximise the productive potential of the land. Furthermore, the historic system does not adequately take into account new entrants and young farmers who did not establish a basic payment entitlement in the reference years.

The introduction of a mandatory young farmer basic payment scheme under Pillar 1 to deliver a 25% top-up of the average basic payment on a maximum of 50 ha for the first five years in farming was a very positive element of the reforms and a policy for which we had lobbied on behalf of young farmers.

The young farmer measure is worth approximately €800 million annually for European young farmers and up to €24 million for Irish young farmers, or €64 per hectare. The basic payment national reserve is also a very important mechanism to ensure young farmers get a fair start relative to their established counterparts in farming. For the first time, the EU Commission's proposals emphasise that national reserve entitlement shall prioritise young farmers who are commencing their activities. The change to prioritising the allocation of entitlements from national reserves to young farmers is particularly welcomed by the European Court of Auditors.

Young farmers who are potentially eligible for the national reserve include those who commenced farming since 2010 and meet the additional objective criteria such as off-farm income limits and educational requirements. An additional category in the national reserve is based on a hardship case for young farmers who commenced farming in 2008 or 2009, due to the fact that installation aid was suspended. Macra acknowledges the introduction of this category, but there are still young farmers who commenced before 2008 with low levels of basic payments. The rules of the basic payment national reserve, as implemented at member state level, can constitute a barrier to entry for certain young farmers and new entrants when applying for entitlements. Many of our members have been very dissatisfied with the level of single farm payment they were able to establish from previous national reserves.

Farmers who commenced farming activity before 2008 are not eligible to apply to the basic payment national reserve. These older young farmers who have low or no basic payments feel that the CAP system has failed them since many of them fell outside the criteria of various schemes in the past. The ongoing replenishment of the national reserve is also a concern and Macra has proposed that mechanisms should be put in place to guarantee that entitlements are available in the national reserve every year for young farmers applying for it. We need to learn the lessons from past national reserve and avoid a scenario of inadequate resources to meet the needs of young farmers. The experience in recent years has been that the national reserve does not provide sufficient payment to new entrants as it becomes depleted of funds as there is no sufficient ongoing mechanism to fund a national reserve.

In Pillar 2, the introduction of the 60% young farmer targeted agricultural modernisation scheme on certain capital investment for start-up young farmers within their first five years of set-up was also important in the absence of the introduction of an installation aid scheme. The key obstacles for young farmers starting up in farming in order of priority are: transfer costs, conveyancing, cost of stock and land improvement. Many young farmers are not in a position to make significant physical infrastructural developments within their first five years of set-up. They have had to prioritise investments that will give a short to medium-term return. Therefore, Macra believes that the 60% young farmer TAMS should be extended to all young farmers in order to benefit from the support.

The overall CAP package for farmers is positive but the measures for young farmers are restrictive and therefore more limited in their impact. This amounts to a missed opportunity to support all young farmers. Accommodating older young farmers in the national reserve, and all young farmers in the 60% young farmer TAMS was to deliver a comprehensive package for Ireland’s young farmers. The sympathies towards these young farmers need to be converted into action.

The EU Commission definition of a young farmer under the new CAP is a young farmer who has established in farming and generally activated a herd number within a five-year timeframe. This is a very restrictive definition, with the result that a young farmer who activated a herd number at 18 years of age is no longer defined as a young farmer at 23 years of age, while a farmer who activates a herd number at 39 is still defined as a young farmer at 43 years. The definition is also linked to both Pillar 1 and Pillar 2 of the CAP. Macra believes that the EU definition of a young farmer needs to be reviewed as part of the simplification of the CAP and the mid-term review.

The basic payment national reserve needs to be a real support for young farmers who find themselves with no or low entitlements. It needs to be available throughout the duration of CAP 2014-2020, so that as each year passes, a new tranche of young, trained farmers will have the opportunity to get into the reserve each year and get on the first rung of the ladder for a successful career in agriculture. Otherwise, this group of young farmers will become the next older young farmer group who will have missed out on the opportunity to access young farmer schemes. The national reserve must remain available to young farmers and further linear reductions on basic payments may be required to replenish the national reserve. Young farmers accessing the national reserve should not be tied up in red tape and ruled out by a range of restrictive criteria, which are generally implemented at the discretion of the Department of Agriculture, Food and the Marine.

In regard to the targeted agricultural modernisation scheme, farming is a capital-intensive, expensive industry for young farmers to develop their farm businesses in. The definition of a young farmer as one who commenced farming within the past five years to activate the 60% young farmer TAMS is restrictive. Many young farmers will have infrastructural deficits on farms that need to be addressed. Macra believes that the 60% grant rate should apply to all young farmers.

The new CAP reform will benefit many young farmers through the young farmers' top-up, the national reserve and the 60% young farmer targeted agricultural modernisation scheme. However, there is also a group of older young farmers who for a variety of reasons related to the historical model upon which the single farm payment is based fall between rules and miss out on measures intended for their benefit. I thank members for their attention.