Mr. Denis Drennan:

I thank members for the opportunity to address them. We are delighted they are taking this as such a serious issue, which it is for all of rural Ireland. As members will have seen in the past number of weeks, farmers our there are hugely frustrated. We have a declining CAP budget, output prices do not reflect the cost of producing food to an EU standard and we also have the threat of the Mercusor agreement hanging over us, where we may end up with substandard food competing with the very high-standard food produced within the EU, which is a huge contradiction within EU policy.

To address the questions the committee has laid out for us, on the economic side of this, we have 17,000 farms. We are going to address mainly the dairy farmers because they are the majority of people who are in derogation. By no means do those farmers meet the image a lot of people have of owning 300 to 500 cows. The average herd size in Ireland is 90. It is a unique system in Europe. It is a very grass-based system where cows are out probably ten months of the year and 95% of the feed that comes to the cow is produced on-farm as grass. The effect of the derogation cuts so far, if we take the average-size Irish farm of 35 ha or 87 acres, means somebody in band 3 stocked to the maximum, who was up to now allowed carry 98 cows, which is more than necessary to support the family farm, has reduced his or her herd to 73 cows. Were we to lose the derogation completely and go back to 170 kg N/ha, that farmer would end up in a position where the maximum number of cows he or she could milk would be 56, which would deem that farm unviable. A bigger issue is the competitive advantage we have above everybody else in the world is our ability to grow grass. A farmer in that situation, using the latest technology and using ryegrass and clover mixtures or multispecies swards as in the trials carried out in both Moorepark and Johnstown Castle, is well capable of growing enough grass for 98 cows as things stand. Our competitive advantage and the reason we produce the most sustainable beef and dairy in the world is our ability to grow grass but we need to have the livestock to eat that grass and there is no point in being in a position grow the grass if we do not have the livestock too. The economic situation is if we lose the derogation from 220 kg N/ha any further, we end up with a huge number of farms that are no longer viable.

If we move to question No. 2 dealing with the social implications of that, a huge number of the smaller towns and villages are depending on farming. Charleville, County Cork or Ballyragget, County Kilkenny do not have Intel, Microsoft or any industry there. There is no other industry in those towns except farming and dairying and they are the economic drivers of those small towns. It would be catastrophic not only for the farmers in those areas but also the towns, villages and rural communities that are supported by the industry. We also have a huge issue with generational renewal. I spoke to a farmer on the way up whose son has decided to stay at home. They increased to 80 cows and now they are going to be faced with reducing to 63 cows. The son is regretting staying home and we are going to have huge pressure coming on farmers for sons and daughters or the next generation taking over. The directive will have huge implications for generational renewal.

The third question was whether we can maintain the derogation and also improve water quality. The answer is, "Absolutely". The Teagasc modelling has shown the cut from 250 kg N/ha down to 220 kg N/ha has had minimal effect on nitrogen leaching, so what is the purpose? Is this a water quality issue or not? If we look at the agricultural catchments programme work it has carried out over the past 14 years, it shows loading, which is the animal numbers per hectare, has one of the lesser implications as regards nitrogen leaching. Hydromorphology, soil type and weather events are far more relevant to nitrogen leaching than cattle numbers on a farm, so we really need to look at whether we are putting the most effective measures in place. If we look at the results from the Timoleague catchment, animal numbers have increased yet the water quality has also increased in that situation.

The fourth question is whether the NAP is fit for purpose. The plan has become too complex. There have been more than 50 more regulations enforced on derogation farmers on top of the normal regulations for farming. It is becoming unworkable and unmanageable. What we really need is a catchment-by-catchment assessment to see what issues are causing the problems in each catchment and to address those specific problems in each catchment.

There is no point in having blanket enforcement or rules across the whole country if those rules are not relevant to the catchment and if the issue that those rules are meant to sort out is not affecting the catchment. We need catchment-by-catchment assessment and we need to address the specific problems within those catchments with relevant rules.

I will move on to supports. As Mr. Gorman said, slurry storage is a major problem on farms but we also have a complete clogging of the planning permission system at the moment. We have everybody and anybody in a position where they can object to planning permissions, and people living 300 miles away can object to planning based on their distance from a special protection area, SPA, or a special area of conservation, SAC, which is ridiculous. Many NGOs are making a full-time job of objecting to farmers doing the right thing. On the one hand, a part of an organisation is saying that farmers need to spread slurry at the right times and have the proper facilities in place, yet, on the other, another wing of the same organisation can object and can become serial objectors to people who want to do the right thing.

At the moment, planning permission can take anything up to 18 months, even in a straightforward case. That is completely unacceptable for people who want to do the right thing. The targeted agriculture modernisation scheme, TAMS, system is clogged up. Since the closing of the first tranche of TAMS and the new cap on 30 June last year, approximately 2,500 farmers want to engage with and avail of TAMS, although, admittedly, it is a TAMS where reference costs are completely outdated and that needs to be addressed. Nonetheless, more than 2,500 farmers were willing to do the right thing and put the slurry storage in place, having gone through the planning system, yet less than one third of those have been approved nine months later. If water quality is a priority for the Government, we need to see a complete unchoking of the planning system and the TAMS system, and we need a fast track in planning, even for planning exemptions where a farmer is building onto an existing farmyard. We cannot have a situation where getting planning permission takes up to 18 months and approval for TAMS takes another nine or ten months. People are almost three years in the system before they can put a shovel in the ground and start to do the right thing, which is unacceptable.

VAT is also causing huge issues at the moment, in particular the refusal of the Department of Finance to refund tax that could be reclaimed until now. We ask that VAT be refundable or exempt on any item that is of environmental benefit, be it for air quality or water quality, and it is water quality that we are focusing on here.

There is also a need for an expansion of the agri-climate rural environment scheme, ACRES, for which 50,000 applicants have been accepted. If we were to go back 30 years, there were 70,000 people in the rural environment protection scheme, REPS, which was far more valuable back then, with an average £5,000 payment, whereas ACRES has a €6,000 payment. What is the buying power or relevance of €6,000 now versus £5,000 30 years ago?

ASSAP is proving very successful in improving water quality throughout the country. We need further resources and supports so more ASSAP advisers are available from Teagasc and the co-ops, funded by the Government. The scheme is proving that one-to-one advice for farmers, and making farmers aware of the right and wrong things to do, is very successful.

On the sixth question, which addresses the resources for inspections, there have been a huge number of inspections between derogation inspections, BISS inspections, local authority inspections and SDAS inspections every 18 months. The risk of inspection is huge and there are also satellite inspections. What we really need is proper engagement and advice on a one-to-one basis for farmers. The lack of respect shown to farmers with the derogation cut announced in November, where farmers had to have their stocking rate right by 1 January, was unacceptable. If Irish Water causes a problem with municipal wastewater, it has up to 20 years to sort out the problems, but farmers get two months. How can that be justified?

We have rules coming out of our ears but what we really need is the reassessment of the current rules to see if they are fit for purpose and if they are going to deliver the results they were intended to. We need a reassessment of the rules. If they are fit for purpose and are going to deliver the results, that is okay, but if they are not, they need to be removed and some of the onerous burdens taken off farmers.

In conclusion, the retention of the nitrates derogation is critical to the future not only of the dairy sector but the wider agricultural sector. We in the ICMSA firmly believe that water quality can and will improve while retaining an economically viable and important agricultural sector. However, the policy of the Government must move from a policy of regulation to a policy of support and proper engagement with farmers.