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

I am grateful for the opportunity to present this request for Supplementary Estimates for 2015 to increase the Department of Agriculture Food and the Marine Vote net of expenditure. This Supplementary Estimate will provide funding to address the exclusion by the EU Commission of €67.6 million from EU funding of various agricultural schemes for the seven year period from 2008 to 2014. It will provide for a transfer of savings from certain areas of the Vote to fund expenditure under the fisheries harbour scheme, the areas of natural constraint scheme, the world food programme and a top-up to the EU market volatility payment. It will also provide an increase of €39 million in the Department's permitted net expenditure to deal with a Commission decision, applying to all member states, to delay payment of some of their expected 2015 rural development receipts.

In mid-November the EU Commission adopted a decision to exclude a total of €278 million from 18 member states. The net Irish disallowance amounted to €67.6 million from EU funding of various agricultural schemes for the seven year period 2008 to 2014, inclusive. This consists of two elements; a €64 million exclusion for the period 2008 to 2012 and a €3.6 million exclusion for 2013 and 2014. It represents 0.57% of the €12 billion in EU funding for these schemes in this seven year period. The exclusions relate mainly to Commission findings that some aspects of Irish control systems are insufficiently robust in excluding ineligible land from payments to farmers and EU funded schemes. Other significant exclusions in the EU Commission's decision include €53 million for the Netherlands, €51 million for Italy and €37.9 million for the UK.

This decision is the outcome of a prolonged process which began with a proposed exclusion of €181 million for Ireland for the five years 2008 to 2012, suggested by the Commission in May 2014. At the outset the Department opposed the application of the proposed flat rate correction and sought a hearing with the EU conciliation body. The conciliation body acknowledged the amount of work done by the Department in reviewing over 900,000 land parcels using the land parcel identification system to identify and exclude ineligible areas in order to calculate the risk to the fund. The report of the conciliation body in early 2015 concluded that the Commission and the Department should continue discussing the matter with a view to a settlement.

During the year the Department undertook considerable additional work at the request of the Commission to give assurances to the calculated risk and it was subject to further verification and audit by Commission officials in May 2015. The reduction of over 60% in the final correction clearly indicates the Commission's acceptance of the Irish approach. It is important that this disallowance be considered in its proper context and in the manner in which other member states have performed in this respect. Since 2004, statistics have been collated which place Ireland in the best performing quartile of EU member states in this regard. A figure of 0.9% of total EU expenditure has been subject to disallowance in Ireland since 2004, a significantly lower figure than the EU average of 1.96%. The Department already has approximately €3 million set aside in the Vote as a contribution to this disallowance and that, along with the additional €65 million sought here today, will be used to address the implementation of EU funding.

While my Department has collected some €4 million in respect of overpayments but not penalties, following the review of land parcels, my clear preference at this stage is that the cost of the disallowance be borne by the State. This would be in line with similar decisions taken by many other member states on disallowances applied to their EU funds. There are a number of technical and accounting issues that arise which are secondary to the need to clear the disallowance, which is now a mature liability, being discussed. I have asked my officials to examine the matters involved.

On additional payments relating to the areas of natural constraints, ANC, scheme, the World Food Programme and the EU market volatility top-up payment, I am also seeking the committee's approval to use savings in the Department's Vote to fund other desired expenditure, while not changing the total allocation for the Vote. The proposed transfers and expenditure involve relatively significant changes to the original 2015 Vote allocations and it is important to seek the committee's input and approval. Specifically, I am seeking to transfer funding into existing subheads for the World Food Programme, areas of natural constraints and fishery harbours. I also wish to establish a new subhead in the Vote for a top-up on the EU market volatility payment. The €35.74 million in current funds and €3.5 million in capital funds required would be transferred from various subheads where, owing to changed circumstances, savings have emerged, most notably in the beef data and genomics programme, the seafood development programme and across a food safety, animal health and welfare programme.

The beef data and genomics programme is part of Ireland's rural development programme. There are 27,000 farmers in the programme which aims, over a six year period, to develop through a rounded multi-trait breeding strategy a national beef herd characterised by higher genetic merit animals. The aim is that this would not only reduce greenhouse gas emissions per kilo of output but would also result in improved production efficiency. For 2015, the first year of the programme, the allocation was €52 million. However, payments are expected to total €35 million, yielding savings of €17 million. This is primarily because a significant percentage of the applicants will not have confirmed completion of their requirement to submit performance data for calves up to five months of age owing to the timing of calvings on their holdings. Hence, they cannot be paid in the final 2015 payment run to December. Payments, however, will issue early in 2016 to these applicants with late calvings as they confirm their compliance with the requirements for 2015 born calves. In other words, farmers are receiving these payments, but it is bridging from December into January and from one year into the next. It is not the case that farmers are losing anything. They will be getting it a few weeks later because their calves were born a few weeks later. I understand one of my colleagues will be present later to discuss the beef data scheme in some detail.

Some €9 million was allocated in 2015 to meet current expenditure on the EMMF seafood development programme. It is anticipated that savings will arise owing to delays in the adoption by the Commission of the operational programme which, in turn, has delayed the launch of the new schemes by the Department. I am delighted to announce that our comprehensive €241 million investment package for the seafood sector has been adopted in law by the Commission and that the programme can now be implemented in full. This has just happened within the past two days. My Department has been working for some time towards this with stakeholders and the State agencies that will deliver the programme. I expect schemes to be rolled out from the beginning of 2016 to assist seafood enterprises to substantially grow their production, add value to our seafood exports and create much needed employment in coastal communities. The seafood sector is worth in the region of €850 million annually to the economy. I am aiming to achieve €1 billion in sales by 2020. It is expected that expenditure of €1.9 million will be achieved in 2015, allowing for a saving of €7.1 million.

It is also anticipated that savings of just more than €6 million will be achieved in the animal health and welfare area owing to a reduced incidence of disease.

This is a very positive story. These savings are mostly in the TB and brucellosis eradication area, where progress at reducing the incidence of TB has been maintained and the positive brucellosis situation continues. Expenditure on the control of horses scheme is also lower this year and there is a small reduction in the fallen animal scheme costs. Again, this is connected to positive animal husbandry and a lower incidence of disease. Almost €4 million in savings is expected from Teagasc and Bord Bia. These relate to savings on the 2015 pension allocation for these organisations, possibly as a result of the extension of the grace period for public sector retirements. Other savings are in the early retirement scheme and rural development technical assistance. Overall these current expenditure savings amount to just in or about €35 million and these savings, with the committee's approval, will be transferred to fund a number of measures.

The World Food Programme, WFP, is a United Nations organisation responsible for the delivery of food assistance to the poorest and most vulnerable people in the world. It partners with other United Nations agencies, international organisations, non-governmental organisations, civil society and the private sector to enable people, communities and countries to meet their own food needs. The Department of Agriculture, Food and the Marine is the lead Department in Ireland's engagement with the WFP. In recent years, my Department has provided €9.96 million in core multilateral funding to WFP. This amount is included in the Department's voted allocation.

On 6 September, Ireland co-hosted with Italy an event at Expo15 in Milan to promote the work of the World Food Programme and encourage donors to optimise their support for WFP by providing unearmarked funds to allow the WFP maximise flexibility to provide rapid responses to crises such as the Syrian refugee crisis. At the event, I made a commitment on behalf of Ireland to double its core annual multilateral contribution to WFP from €10 million to €20 million for the next three years. This commitment is a key commitment of the Government's enhanced and increased response to the ongoing refugee crisis associated with the conflict in Syria and represents a significant part of Ireland's contribution to the European Union's response to the refugee crisis.

In response to a significant price deterioration for primary producers in the dairy and pig sectors this year, the European Commission proposed a package of support measures worth €500 million. The Commissioner did a great job in that regard. Dairy prices in Ireland have dropped by 21% in the past 12 months and dairy farm incomes are expected to be down by up to 50% in 2015 compared to last year. This package of support measures was agreed by the Council of Ministers at its September meeting. Some €420 million of the funding is to fund direct aid for primary producers in the dairy and pig sectors. This funding was divided among member states based on certain criteria and Ireland's allocation was €13.7 million.

To reflect the fact that the package is intended to only partly cover the losses suffered by primary producers, the regulation allows for member states to supplement the allocation by up to 100%, which is, in Ireland's case, an additional €13.7 million of national funding. I am proposing to fund this national element with the savings on the 2015 Vote. Given the severity of the income decline, this additional national allocation will help to alleviate the risk coming in the pivotal period immediately after a quota abolition. This decline would undermine the potential contribution of the dairy sector to sustainable growth in output and employment in rural areas.

Deputies will be aware of the importance of the scheme of support for those farming in areas of natural constraints, heretofore referred to as the disadvantaged areas scheme. I am seeking the committee's approval to increase the 2015 allocation to this scheme to cover payments to farmers which relate to previous years. Payments under the ANC scheme start in late September but payments to some participants inevitably spill over into the next calendar year for various reasons.

It will inevitably spill over into the next calendar year for various reasons. That happens with schemes and it is happening with the beef scheme now. Accordingly the accumulated spillover from the 2013 and 2014 schemes into the 2015 financial year results in €195 million provided in 2015 being inadequate to fund all of the liabilities. The introduction in 2015 of the new islands category within the ANC under the RDP must also be accommodated.

On the capital expenditure side of the Vote, some savings will arise from the farm safety scheme, the final scheme to be launched in TAMS 1. I introduced the scheme in response to a number of farm debts last year - far too many unfortunately. While the scheme proved popular with approximately 4,500 approvals, expenditure has lagged behind as not all farmers approved had submitted claims by the scheme closing date in September. I have provided again for the safety measures under the animal welfare, safety and nutrient storage scheme in the new TAMS 2, which was opened to applicants in recent months.

Some €11.5 million was originally allocated to fisheries harbour centres in 2015. However, additional funding of €6.8 million has been required to complete the necessary capital works, €5.1 million of which has been found within the fisheries subhead. The additional €3.5 million required will, with the committee's approval, come from the unspent TAMS fund. The extra funding requirement is due in part to expenditure this year on some projects connected to storm damage that occurred in 2014: a delayed €6.4 million expenditure on a major dredging project in Dunmore East, planned for 2014 but which must now be funded in 2015; the local authorities harbour development programme; and the local authorities storm damage programme.

As well as having economic and developmental benefits in remote coastal areas, much of the work undertaken on harbours has health and safety advantages for seafarers and others. The Department's budgeted total appropriations-in-aid for 2015 come to €469 million, the vast bulk of which represents claims in respect of rural development expenditure for 2014 and 2015. It is now forecast that €430 million will be accounted for as appropriations-in-aid, which would represent a shortfall of €39 million in current receipts. This shortfall is due to a decision by the European Commission in mid-November that due to a higher than expected expenditure on new programmes in all member states, there would be insufficient EU funds available to pay all rural development claims fully in 2015. Obviously, that posed a problem for us because we had anticipated that money would come in.

It was announced that for member states' 2014 to 2020 rural development programme claims made in November 2015 a payment of one third would now be made in 2015, with the remaining two thirds to follow early in 2016. The November claims receipt would have been received in December 2015 and is critical to allow the Department to balance its net expenditure in line with voted expenditure figures for the year. The Commission decision creates a shortfall which this Supplementary Estimate will now address.

The Commission has assured member states that these receipts, which are not being paid in 2015, are protected and will be paid in 2016 from the EU 2016 budget. Our 2016 Revised Estimates, which will be published this month, will show an increase in appropriations-in-aid, above that which was produced in the Estimates Volume, to reflect this. Hence the issue is one of timing rather than amount to be recouped.

The amount being sought from the Dáil is €104 million and is essential for my Department to deal with the issues I have just outlined. I earnestly recommend the committee to give its support. I will obviously try to provide clarification or answer any questions members might have. I am conscious that this is a much bigger Supplementary Estimate than the Department of Agriculture, Food and Marine would normally have.