Michael Creed (Cork North West, Fine Gael) | Oireachtas source

I am very pleased to meet with the committee and to update it on a review of spending under the rural development programme carried out by my Department.

As members are aware, there is an allocation of some €4 billion under the current programme, with €2.19 billion of this coming from European Union funds and the rest from the Exchequer. The programme runs up to the end of 2020, though some existing multi-annual commitments may run beyond this date as I will explain later.

The substantial investment required over the lifetime of the programme will help to underpin continuing growth and development in rural Ireland and forms part of the vision for strengthened rural economies and communities as contained in the Government’s recently launched Project Ireland 2040. The range of measures and supports available under the rural development programme is extensive. These include advice, training, payments for public goods, support for on-farm investment, support for animal welfare, initiatives to encourage innovation, partnerships and membership of producer groups and support for local projects under Leader. Delivering on such a diverse programme is challenging and I am delighted to say that Ireland is performing very well in this regard.

Of all European Union member states, we are second overall in terms of drawdown of European Union funds to date. Our drawdown of European Union funds, at 53%, is well above the European Union average of 33% and we are one of only two member states to have passed the 50% mark. Our reputation in Europe is 'to leave no euro behind' and I am confident that this will continue under the current rural development programme.

At the outset of the rural development programme, indicative allocations were included in the financial plan, in line with identified priorities. It is against these allocations that my Department conducted its review, using expenditure to date and best estimates of future projections to determine whether the entire budget would be spent. They found that some measures will meet their allocation, others will exceed it and still more will not spend it in full. I will start by updating on the overall budgetary situation before commenting on the main individual schemes.

It is expected that almost all of the entire €4 billion allocation will be spent by the end of 2020 with some spend in 2021. However, under European Union regulations governing the programme, funds for multi-annual commitments entered into by the end of 2020 may be claimed up to the end of 2023. Rural development programme spending is, of course, also subject to the annual Estimates process and budgetary rules. Based on current projected spending across all schemes under the programme, this required carryover to the next rural development programme to cover our commitments under our multi-annual schemes will be €105 million. In other words, we are currently committed to spending €105 million over and above the €4 billion allocation to the rural development programme. Added to this will be a possible areas of natural constraint, ANC, allocation of €227 million for 2021, bringing the total carryover required to €332 million.

Transitional funding arrangements are the norm between programming periods and an indicative figure of €637 million was included in this rural development programme to cover commitments from the previous one. Increasing the commitments to be funded as part of these transitional arrangements would not be the prudent thing to do in my opinion, given the different circumstances which apply to the next proposed programme, for a number of reasons. Firstly, the transitional funding arrangements to be put in place between this programme and the next are not yet decided at European Union level. More important though, the recently published multi-annual financial framework proposal to 2027 indicates a cut to the Common Agricultural Policy, CAP, budget, under the impact of Brexit and competing priorities. In light of this the introduction of new measures or entrants to current schemes is not possible at this stage.

Turning to individual schemes and supports, I will address those which have attracted the most commentary in terms of original allocation, participation and projected spending. I am, of course, open to questions on other measures within the programme but for now will deal with these which appear to be of most interest.

I will start with GLAS, our highly successful agri-environmental scheme which is expected to deliver significant environmental and climate friendly benefits as a result of farmer action and engagement. When GLAS was opened, it was hoped at the time that 50,000 farmers would join the scheme and that milestone was reached sooner than expected in December 2017. The indicative budget at the time of €1.4 billion included an amount of €390 million for legacy agri-environmental schemes under the previous rural development programme, RDP, the rural environment protection scheme, REPS, and the agri-environment options schemes, AEOS. This was to honour our commitments to those farmers who were participants in these schemes. The total expected combined spend on GLAS and these measures is €1.4 billion, as originally indicated, and no savings are projected. As of today, over 99% of all eligible GLAS participants are fully up to date with their GLAS payments and weekly pay runs are continuing.

The beef data and genomics programme is an ambitious and groundbreaking approach to enhancing the sustainability credentials of the beef herd. The programme had an estimated cost of €300 million. I reopened it in 2017 to maximise participation and I am more than satisfied that 24,600 farmers have joined. The expected spend during the lifetime of the programme is €290 million. Knowledge transfer is a key priority of this rural development programme. Indicative funding of €100 million was allocated in the RDP to participate in knowledge transfer groups. As with all such initiatives, it is demand-led. Based on the current levels of uptake of 19,000 farmers, the expected total spend is €69 million. The upskilling of these farmers will be a significant achievement, with ongoing and positive implications for both the farmers and the sectors involved.

The targeted agricultural modernisation scheme, TAMS, is a grant-aided scheme which provides much-needed capital investment for farming enterprises. There has been some concern that the entire allocation of €395 million for TAMS will not be spent, as there were savings in the annual budget in the early years. However, this trend has reversed and expenditure is now running at an average of over €1 million a week for the past eight months. There are almost 10,000 existing approvals from my Department for farmers, on which funding has to be drawn down by the approved applicants. Some of the early approvals have started to expire and the first of the three-year approvals will begin to expire later this year, which means that the budgetary position will become clearer. The new one-year approval system which was introduced in January 2017 will assist with the accurate assessment of outstanding commitments. TAMS continues to be open to new applicants, with significant interest shown, and I am working on the assumption that the entire allocation will be fully spent over the lifetime of the scheme.

The allocation under the RDP financial plan under the organic farming scheme is €56 million over the lifetime of the programme. It aims to achieve a figure of 62,000 ha under organic production. The scheme has proved to be more popular than first expected and, based on current projections, the total spend under the scheme is expected to be €66 million, with approximately 72,000 ha of land under organic production. I have also made changes to the rural development programme where need has arisen, including the introduction of new schemes which have also required additional expenditure. The main example is the sheep welfare scheme where I added an additional €100 million in national funds to the RDP budget, with a view to accommodating all sheep farmers, should they wish to join. Based on the current uptake of 20,000 applicants with 2 million ewes, the total projected spend is €80 million, which represents a substantial investment and commitment to the sheep sector. I have also provided an extra €25 million for areas of natural constraint, ANC, farmers this year, again from national resources.

Another programme which has attracted intense interest is the hen harrier programme which seeks to save one of the Ireland’s most endangered birds. Both it and the freshwater pearl mussel scheme which aims to protect the critically endangered freshwater pearl mussel are two designated European innovation partnership, EIP, projects. A budget of €35 million was originally indicated for both the hen harrier programme and the freshwater pearl mussel project, with an anticipated allocation of €25 million for the hen harrier programme and €10 million for the freshwater pearl mussel scheme. That is what we expect to spend. Two impressive project teams are in place and I look forward with interest to the results of these collaborative efforts across the advisory, research and farming communities.

As members are aware, the rural development programme also provides funding for the Leader programme, to the amount of €250 million. The Leader programme is implemented by the Department of Rural and Community Development under the Minister, Deputy Michael Ring, and it is my understanding it expects the full allocation to be spent over the duration of the programme.

This has been a brief overview of RDP spending. As members are well aware, there is a perception that spare funds are available to open new measures under the programme. As this review shows, nothing could be further from the truth. Our commitments, as outlined, are already such that they will require an allocation under the next programme. I am keeping the matters under ongoing review to ensure the entire budget will be used and that RDP objectives will be met. I thank committee members for their attention and look forward to the discussion.