Charlie McConalogue (Donegal, Fianna Fail) | Oireachtas source

I thank the Chairman and members for the opportunity to attend today and present this request for a Supplementary Estimate for 2021. This technical Supplementary Estimate is required to make use of savings on the Department’s Vote to provide for spend over several headings. To allow a technical Supplementary Estimate to take place, a token €1,000 will be added on to my Department’s Vote. No additional funding is being requested.

I propose moving €49.8 million in savings across other subheads. As these proposed transfers and expenditure involve changes to the original 2021 voted allocations, I believe that it is important to seek the members' input and approval.

The areas where savings have emerged reflect the dynamic and uncertain environment in which the sector and the Department have operated in this year. Despite the continuing challenges of the pandemic and Brexit, we have continued to carry out our business as usual. Since September 2021, more than €960 million has been paid to farmers in respect of this year's basic payment and areas facing natural constraints, ANC, schemes. The Department issues these advance payments at a rate of 70% and 85%, respectively, to farmers at the earliest date possible under EU regulations. The remaining balancing payments at a rate of 30% and 15%, respectively, are due to commence in early December. Payments under the sheep welfare scheme, the protein aid scheme and the straw incorporation measure are also due to commence in the coming weeks with the sheep welfare scheme due this week. Targeted agricultural modernisation scheme, TAMS, payments are ongoing, with some €56 million paid to date this year.

I will outline where the savings, which we propose to use, have emerged, starting with the information management technology saving of €5 million. In December last year, the Department issued two new procurement competitions for the upgrade of the Department's core systems and the development of systems to cater for the new Common Agricultural Policy, CAP, post 2022.

The incumbent company for the existing contracts was not successful in either of the two new procurement processes and initiated High Court proceedings in the matter. This resulted in the Department not being able to source the additional resources identified for a significant lead-in period, circa five months in total, until the High Court proceedings were resolved as a result of the company withdrawing the proceedings. This delay resulted in the Department being unable to progress system development as planned, which also had the effect of resources from other contracts not being taken on in both the number and at the time originally envisaged.

Savings of €3 million in travel and incidental expenses have also been identified due to the reduction of the volume of travel undertaken by my Department during recent months understandably as a result of the pandemic.

Under the subhead B3 agri-environmental schemes, total current savings of €21.35 million are being redistributed. The savings set out below are offset by an increase in the subhead's capital allocation by €2.5 million. Some €1.55 million of these savings arise from the organic scheme and €22.3 million are from schemes due to be funded by the EU’s recovery instrument funding, EURI. Some €56 million of EURI designated funding was provided in 2021 to cover a suite of new agri-environmental schemes, including a new organics scheme, a straw incorporation measure, new European innovation partnerships, EIPs, and for an environmental tranche of TAMs. Funding for EURI schemes is provided by the Exchequer in the first instance, then reclaimed at a rate of 100% from the EU. Commencement of these schemes was delayed until an amendment to the rural development programme could be fully approved by the European Commission, which did not happen until mid-year. EURI funding is subject to what is known as the N+3 rule, which means it can be spent in the three years from the date of programming.

I assure the committee that the EURI funding will spent over the coming years and that the money available to farmers has not been lost. The Exchequer funding attributed to these EURI schemes as part of the Vote will thus be utilised under other subheads.

In the areas of natural constraint, subhead B4, there are savings of €1 million due to of the level of eligible claims received.

Under capital expenditure, my Department continues to operate the large on-farm investment scheme, the targeted agricultural modernisation scheme, TAMS II. TAMS is made up of a suite of seven measures and was launched under the Rural Development Programme 2014-2020 with a budget of €395 million over the full period of the rural development programme. Payments under the TAMS II scheme continue to issue on an ongoing basis. To date in 2021 we have issued payments of €56 million. However, there have been some impacts of the Covid-19 pandemic on investment works, particularly building works, during the restrictions. As a result, I am utilising a saving of €3.3 million from the 2021 allocation to fund expenditure elsewhere.

My Department has actively encouraged all approved applicants under the scheme to submit payment claims including by contacting approved applicants individually by text message on a number of occasions and reminding approved participants to submit their payment claim as soon as they are in a position to do so. However, as TAMS II is a demand-led scheme, the timing of the completion of works and submission of payment claims within the timeframe set out in their approval letter are matters for the farmers themselves. In general, participants have 12 months from the date of approval to complete works and submit a payment claim with a shorter timeframe of six months for the equipment involved.

Also on the capital side, we are seeking to move €7 million in capital expenditure from the forestry allocation. This saving has arisen because new planting has been much less than anticipated at the beginning of the year. I am aware that the current licensing delays are a contributory factor to the reduced levels of planting. We are addressing the current delays in a robust way with additional resources, a dedicated project plan and a reformed appeals system. We are also looking at ways to re-engage farmers so that they see forestry not as a displacement activity but as complementary to their farming enterprise.

In the subhead B12, market volatility, a capital saving of €300,000 has been identified. Subhead C11, other services, has savings of €2 million coming from a number of areas including savings on legal expenses.

Projected savings of €4.9 million are available in the fisheries subhead. Fisheries expenditure will be monitored on an ongoing basis over the remaining six weeks of the year to ensure spend is maximised in 2021. The Sea Fisheries Protection Authority subhead has savings of €2 million as a result of Covid-19 pandemic impacts on recruitment and travel.

Regarding how the reallocated funding will be used, utilising savings from TAMS and forestry this year will ultimately free up funding for 2022 as we prepay some commitments relating to next year now. This will leave us better able to take on the many challenges that face the industry next year. Some €7.3 million of the capital savings described will allow my Department to provide access to finance. Finance is a crucial business need and, as well as liaising with the main banks on issues relating to the agrifood sector, we work closely across Government to provide important supports for businesses, including farmers, fishers and food businesses. Most recently this has been to ensure that they have access to finance during the pandemic and also to help deal with the challenges brought about by Brexit. These supports have been delivered with the Strategic Banking Corporation of Ireland.

My Department co-funds the future growth loan scheme with the Department of Enterprise, Trade and Employment. It supports strategic long-term capital investment by small and medium-sized enterprises, farmers and fishermen. It has been in high demand and 1,595 loans or 46% were drawn down by the agrifood sector, with a value of €235.8 million or 32% of the overall pot. The transfer of €7.3 million in my Department’s Supplementary Estimate will facilitate an advance payment for my Department’s contribution under the scheme for 2022. The Covid-19 credit guarantee scheme provides an important source of working capital finance. The 2021 allocation of €800,000 has been converted to capital funding to align how this scheme is accounted for by the Department of Enterprise, Trade and Employment.

We recently launched the Brexit impact loan scheme, which is a medium-term, lower-cost scheme to fund working capital and investments for businesses, including primary producers and food businesses, impacted by Brexit and the Covid-19 pandemic. The scheme opened for applications on 14 October. The remaining capital funding of €2.5 million has been allocated to the soil sampling scheme to cover 2021. The soil sampling programme will provide information to farmers on their soil fertility and also soil pathogen assessment. The programme will measure baseline soil carbon levels which will guide future actions to support carbon farming. It will also provide the basis for the next generation of soil-specific nutrient management advice and underpin targeted fertiliser and organic manure applications, ensuring the right nutrient type, right application rate, right time and right place across all farming systems.

Some €11 million of the reallocated funding will go to a Brexit temporary fleet tie-up scheme. The scheme will help mitigate the impacts of quota cuts on the fishing fleet arising from the trade and co-operation agreement agreed between the European Union and the UK. The scheme delivers on a recommendation of the seafood sector task force and is targeted at white fish vessels in the polyvalent and beam trawl segments. The scheme will be managed by Bord Iascaigh Mhara and under it, vessels would tie up at the quayside and cease all fishing activity for that month. In return, the vessel owners would receive a payment compensating for the lost fishing income during that month. The vessel owners will in turn be required to distribute one third of that payment to crew.

The Marine Institute is seeking a once-off allocation in 2021 of €5 million to enable costs related to the data collection framework, DCF, which is funded on an annual basis by this Department under subhead D, to be met on a current-year-payment basis with effect from 1 Jan 2022.

Due to the timing of approval of the 2014 to 2020 DCF programme and funding, a position developed whereby the Marine Institute receives funding for a particular year’s European Maritime and Fisheries Fund-funded DCF expenditure one year after the spend is incurred. Therefore, funding is received one year in arrears. As it currently stands, the 2021 Estimate includes €5 million for the 2020 costs, and the 2021 costs would be paid in 2022. If the proposal is approved and the savings are available, the 2020 and 2021 costs could be paid in 2021, with the 2022 costs paid from the 2022 allocation.

The sheep welfare subhead B.8 will be increased by €1.5 million under today's submission. The reference period, which determines the maximum number of animals paid under scheme, was recently changed from 2014-15 to 2017. This change is also in line with existing commitments set out in the programme for Government, which includes the commitment to build on schemes such as the sheep welfare scheme in a way that enhances farm incomes and animal welfare objectives, recognising their significant contribution to net farm incomes. This commitment reflects that sheep farming contributes to both economic and environmental sustainability, in particular on more marginal land, with sheep grazing being an important land management tool in parts of the country where land usage options are relatively limited. Given that this change requires additional funding of €1.5 million for 2021 above the allocation agreed in this Department’s Vote for 2021, I am increasing the allocation from €17 million to €18.5 million.

The United Nations World Food Programme is the world’s largest humanitarian organisation, saving lives in emergencies and using food assistance to build a pathway to peace, stability and prosperity for people recovering from conflict, disasters and the impact of climate change. The World Food Programme assists 115 million people in 84 countries through food or cash distributions in emergencies and nutrition support programmes.

The World Food Programme was awarded the Nobel Peace Prize in 2020 for its efforts to fight hunger and its contribution to enabling conditions for peace in conflict-affected areas. It relies entirely on voluntary funding, with governments being its principal donors. Ireland has long been a supporter of the World Food Programme and my Department is the lead Department for the relationship with it. The aggregate value of Ireland's contribution to the World Food Programme in the 30 years from 1991 amounts to some €550 million. Ireland commits funding through three yearly strategic partnership agreements with the World Food Programme, which for the period 2019 to 2021 committed €70 million. My Department is currently finalising the strategic partnership agreement for the years 2022-2024 under which it is proposed to commit €75 million. This €25 million allocation represents an advance on that commitment and it will help save lives by supporting food security and nutrition, and rebuilding livelihoods in fragile settings. It reaffirms Ireland's role as one of World Food Programme's most engaged partners.

I believe this is a necessary and important Supplementary Estimate which I earnestly recommend to the committee for support. I am happy to respond to any questions members may have.