Andrew Doyle (Wicklow, Fine Gael)
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Deputy Martin Heydon has sent his apologies.

We have two groups represented. I propose to hear, first, from the Irish Cattle and Sheep Farmers Association, ICSA. Its submission will be followed by a question and answer session with members. The sitting will then be suspended and the meeting will continue with a submission from the Irish Farmers Association, IFA, which will be followed by a question and answer session with members. I ask everyone to note that the committee room must be vacated by 11.15 a.m.

Joining us from the ICSA are: Mr. Gabriel Gilmartin, president; Mr. Eddie Punch, general secretary; Mr. John Cleary, honorary secretary; Mr. Edmond Phelan, beef committee chairman; and Mr. Billy Gray, CAP committee chairman. I thank the delegates for coming and bring to their attention the fact that they are protected by absolute privilege in respect of the evidence they are to give to the committee. However, if they are directed by it to cease giving evidence on a particular matter and continue to do so, they are entitled thereafter only to qualified privilege in respect of their evidence. They are further directed that only evidence connected with the subject matter of these proceedings is to be given. They are also asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against a person or persons or an entity by name or in such a way as to make him, her or it identifiable. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official, either by name or in such a way as to make him or her identifiable. I invite Mr. Gilmartin to make his opening statement.

Mr. Gabriel Gilmartin:

I thank the Chairman and committee members for the invitation to the ICSA to make a pre-budget submission in what has been a very difficult year for farming, in both financial and weather terms. We have prepared a document entitled, Ireland - Agriculture, a key part of our economic recovery, which sets out the steps we believe the Government must take to support Irish farming as it seeks to develop under the targets set out in Food Harvest 2020. Amid the doom and gloom, the farming sector in Ireland is still very much alive, with agrifood exports, according to Bord Bia, worth €8.8 billion in 2011. The key point is that the majority of the money earned from agrifood exports is spent in the local economy. As such, it is vital that the sector is nurtured and encouraged in order that it can continue to be a key player in Ireland's recovery.

As such, it is vital the sector is nurtured and encouraged so that it can continue to be a key player in Ireland's recovery.

It must be pointed out that in recent years the Department of Agriculture, Food and the Marine has gone much further than most other Government Departments in making savings in its overall voted expenditure, details of which are supplied. It will be extremely difficult for the Department to achieve any further reductions in expenditure without seriously compromising efforts to achieve the vision set out in Food Harvest 2020. This, in turn, will have implications for the wider economy. We are, however, realistic. We recognise that it is not possible for the Government to provide a financial stimulus to the industry in the upcoming budget. Given that this is the case, I call on it to do no harm and to refrain from making any further cuts to the Department's budget. In this context, particular priority must be given to the various farm support schemes which have for many years formed a crucial part of family farm income. The ICSA is of the strong opinion that no further reductions should be made to the funding relating to these schemes.

The suckler cow welfare scheme is a vital support for many farmers and must continue to be funded for 2013 and 2014 or at least until a meaningful rural development programme is agreed in the context of the new CAP. This scheme has made a huge contribution to the industry and is proving to be great value for money. It encourages proper weaning and is good for animal welfare. The latter is directly beneficial to our exports. The data that is being generated through the scheme is incredibly useful and is rapidly transforming beef breeding in Ireland. However, the funding for it has been cut in half. We insist that this funding must be continued at least until the new CAP regime comes into place. At the ICSA's annual general conference last December, I was delighted to hear the Minister for Agriculture, Food and the Marine affirm his commitment to the suckler herd. We call on him to ensure that this commitment will extend to the protection of the suckler cow welfare scheme in the forthcoming budget. The scheme typically costs approximately €30 million per annum but its support to the high-quality beef sector is immeasurable.

The position in respect of the disadvantaged areas scheme and REPS is similar. These schemes are of huge importance and I must emphasise the fact that the most marginal farmers are hugely dependent on them. While we normally hear that those who are earning the most in society should generally contribute the most in order to reduce the deficit, in this instance the opposite has happened and the most vulnerable farmers have been targeted for the severest cuts. The disadvantaged areas scheme has already taken a cut of more than 25% in recent budgets. In addition, 62,000 farmers are gradually leaving REPS. The latter will be closed down completely in 2014. Farmers who have been most dependent on REPS and the disadvantaged areas scheme and who have the smallest single farm payments have been particularly badly hit. There is evidence of this in every county but it is particularly obvious in the west.

We are of the view that it is now vital that a fund of €10 million be established in order to provide installation aid for young trained farmers. Bearing in mind the ageing population of the farming sector, these young farmers must be encouraged and supported if we are to be sure of the continued success of Irish agriculture. The Government must realise that an investment in this area would provide an excellent return for money and that it would also go a long way towards creating the environment in which Ireland can realise the potential identified in the Food Harvest 2020 report.

Provision must also be made in respect of maximising the number of farmers who will enter the agri-environment options scheme, AEOS, in 2013 when they have left REPS. We have also outlined a number of steps which would improve the outcome of the TAMS programme and we call on the Government to make no further cuts to the farm assist scheme, which has been of crucial importance to a large number of farming families during the recession. While it is not technically a budget issue as it is funded through CAP, I want to highlight the position in respect of the grassland sheep scheme. I consider it important that this scheme remain in place beyond the programme's stated end date of 2012. The scheme must be retained for 2013.

We urge the Government not to lose sight of the fact that farming is an export-oriented industry and that it drives activity in a significant part of our economy. It must be nurtured rather than hindered. I repeat the call I made earlier, namely, that the Government should do no harm in the budget for 2013 and should avoid imposing any further cuts on farming.

I will conclude on that point and hand over to Mr. Punch, who is going to discuss taxation issues, etc.

Mr. Eddie Punch:

Taxation is a major issue and the ICSA urges the Government to proceed with caution in the forthcoming budget. The trend has been to introduce all sorts of increases - not, I accept, in headline income tax rates but rather in many other areas. Capital taxation has been targeted in this regard. In recent budgets, all capital taxes were brought up to 30%. In our view, we are approaching the maximum here. There is no room for any further increases in capital acquisitions tax, particularly in view of the increase in the rate of and the lowering of the threshold relating to this tax in budget 2012. We believe that to apply any further increases to this tax would be counterproductive for the wider economy in the context of long-term export targets because such increases would basically undermine farm development and viability in circumstances in which a property is being passed from one generation to the next. To put this in real terms, the changes in last year's budget meant that a young farmer taking over a business whose land and other assets exceeded €2.5 million in value - which is not a huge sum in the context of farmland, stock, etc. - is at risk of a substantial tax liability on the excess at a rate of 30%. That is not a good incentive when one is only starting out.

We are calling for the reversal of the measures introduced in last year's budget which led to an upper limit of €3 million being placed on capital gains tax retirement relief in cases in which the farmer handing over the land and assets is aged over 66. In the first instance, such a farmer receives no benefit when he or she transfers the assets to the next generation. The idea in this regard was to try to encourage people to hand over their farms before they reach 66 years of age. The reality is that while early transfer is desirable, it is not always possible for a variety of reasons. These include age, the circumstances of the successor, etc. This is just a nasty tax.

It goes without saying that income tax is also a major issue. Despite the Government's stated policy to place more emphasis on expenditure reduction rather than tax increases, the reality is that this objective is hindered by the measures contained in the Croke Park agreement. The cumulative impact of all of the budgets introduced since 2007 is that income tax, combined with PRSI and the universal social charge, is at a level which is really damaging the incentive to work. In addition, it is extremely onerous for unincorporated sole traders such as farmers. The ICSA submits that there is a serious need to review this increase in the effective tax rate - where there is profitability - to 52%. When we say this, we are mindful that if a farmer buys a parcel of land adjacent to his property, he is obliged to pay for this out of after-tax income. It is continually stated that 12.5% is the maximum rate of tax we can afford to impose on companies. For many reasons, farmers do not want to go down the road of incorporating their businesses and they are being taxed at a much higher level as a result. Self-employed people and workers who help farmers, such as veterinarians and silage contractors, are all being affected by that to which I refer.

We are also concerned about the fact that the taxes on fuel are damaging to the sector. These have had a huge impact in the context of escalating silage costs, which, in turn, undermines the viability of cattle enterprises. It is also leading to increased purchasing of fuel outside the jurisdiction. I do not refer here to green diesel relating to silage but rather to live exports of cattle. All of these extra carbon costs are adding to farmers' overall costs. We call on the Government to suspend the carbon tax to alleviate pressure on businesses, including those of farmers. With the tax standing at over 6 cent per litre on green diesel - or €20 per tonne, up from €15 per tonne before 1 May 2012 - it is adding costs to the farming process and is definitely hindering farmers' ability to produce and export at competitive prices. The current rate of €20 per tonne is costing farmers €32 million per year. A double offset in respect of carbon tax and income tax was introduced last year but this is extremely difficult to administer.

It varies depending on which rate of income tax one is on, and the double offset applies on the carbon tax which came in after 1 May this year. It is limited because of the huge complications. It is just not working well.

Finally, on the issue of taxation, we propose that stock relief at a rate of 50% be made available to all farmers. The 50% rate was introduced last year for partnerships, which is a positive development, but in every sense of the word stock relief makes common sense for the Exchequer because it is an encouragement to people to expand their farms, which means that in the long run we are increasing exports and increasing our potential tax take, because as farms expand their stock numbers they will hopefully become more profitable. To our mind it should be available to all farmers, not just those in partnerships.

We are quite concerned about the environment for private pensions. For farmers and other self-employed people, pension planning is a huge challenge and the Government needs to tread much more carefully to avoid making it impossible. At a minimum we are calling for the removal of the 0.6% pension levy and also that the universal social charge and PRSI be fully offset against pension contributions, along with PAYE at whatever rate.

Andrew Doyle (Wicklow, Fine Gael)
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A mobile phone is interfering with the sound transmission.

Mr. Eddie Punch:

We also sound a note of caution on the cost of doing business and the impact that has on competitiveness. Much thought is put into cutting costs every single day by farmers. For example, we call for an immediate reduction of 10% in electricity costs, which are a huge burden on the sector. The Government must be much more proactive with ComReg in terms of examining how to drive down costs in areas in which they have some influence. We seem to be very quick to increase costs in quasi-public-sector utilities but not as conscientious about bringing them down.

The Government has been largely unable to tackle the issue of public sector pay as a result of the limitations of the Croke Park agreement. In our view a disproportionate amount of cuts are being made to vital schemes across all Departments, but this includes farming schemes, front-line services and capital investment, which has been hit more than current expenditure. That is unsustainable. The Government will have to face up to issues such as increments and allowances in the public sector. Farmers could rightly argue that payments from schemes such as the disadvantaged area scheme, DAS, and the rural environment protection scheme, REPS, form part of their core pay. There is a clear sense that this crisis is not being tackled in an equitable way at the moment.

Andrew Doyle (Wicklow, Fine Gael)
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I thank Mr. Punch and Mr. Gilmartin.

Michael Comiskey (Fine Gael)
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I welcome the witnesses and it is good to have this discussion. We have held a number of meetings and we all agree it is important to do so prior to the budget.

I agree that agriculture has helped us in our difficulties in recent years, particularly last year which was a very good year, but this year will not be as good because of the bad weather. Any gains made last year in agriculture will be lost this year as farmers will have to spend money because of the bad weather. I agree with the points that have been made and we will make every effort to ensure as few cuts as possible. However, we are told there must be cuts to the agriculture budget and there we have a difficulty.

The suckler cow scheme is very important and has built up much data for farmers over the years. It would be a pity if anything happened to it at this stage. Perhaps, as Senator Ó Domhnaill suggested, if a cap of 25 or 30 animals was introduced it would at least keep the scheme in place until we are in a better position in years to come. Perhaps under the new CAP budget and Pillar 2 more money will be put into it in a year or two. It has done a good job and is very important. Farmers have been very much involved, in particular with Teagasc, and have come together in groups. This helps farmers gain more information and we produce better quality cattle as a result.

We are very concerned about the disadvantaged areas scheme, which must be maintained. It was one of the first schemes introduced for farmers in the 1970s. The 12 western counties were the first to gain from the scheme and as the years went by it was extended into other parts of the country. It is very important to maintain it. An attempt was made last year to save money on the scheme but, as has been stated, much of this money will not be saved because of the derogation and the appeals process. Many farmers will be able to receive payments under the scheme. A small amount of farmers will lose out but most of them will receive a payment. The earmarked saving of €30 million in the scheme will not happen.

A factor which was not touched upon by the witnesses is the problem with stocking density on commonage. If the proposal were to go through it would have very serious consequences for farmers. I have received many calls in recent days about this and even now I hear my phone bleeping. Serious problems exist. Yesterday we were assured no letters would go out to farmers so this is good news and will give a little breathing space. REPS planners preparing AEOS plans for farmers will be given an extra two or three weeks to sort out this problem. Over the years there has been abuse on commonages and we must sort out this problem. If we do not do so Europe will come down on us, and we saw what happened with regard to septic tanks when we left matters drag on and did not deal with them. This problem has existed for ten or 12 years.

A number of commonages are still being overgrazed, while others are being undergrazed. This problem must be solved. Farmers must sit down around a table and a rural environment protection scheme, REPS, planner or departmental officials must become involved to help them to agree a stocking rate on commonages. This will be difficult, as a number of farmers on commonages might not be on good terms. If a blanket 10% cut was applied to all payments, it would have serious consequences. Therefore, we must be watchful.

I was involved in the negotiations on REPS 2, 3 and 4. Such environmental programmes are important. The agri-environment options scheme, AEOS, is in place and we would like to have a good environmental scheme in the Common Agricultural Policy. It may not be as good as the old REPS, but it should recognise and compensate farmers for their work in looking after the countryside for hundreds of years through planting trees, fencing, provding drainage, etc. As soon as a farmer receives money, he or she will invest in the farm and the money will be spent in local towns and villages.

It is good that our guests are present and I agree with them on the points they have made. We will do our best to maintain and safeguard all of the schemes and payments, but there is a note of caution, in that we have been told savings must be made somewhere. We will work with our guests on the matter.

Tom Barry (Cork East, Fine Gael)
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I apologise for my late arrival. I thank our guests for attending. I read their submission briefly and many of the points made make sense. As I went through them, I was struck by one, in particular. The budget is under pressure and there will be cuts. However, we must be realistic, as every Department is in the same position. It would be good if we could tell our guests that everything would be fine, but it will not, as difficult decisions must be made. Trying to keep inside current budgets is not easy.

I cannot disagree with the comments made on many of the measures in question or the costs involved. The upper limit of €3 million on capital gains tax for people over 66 years of age has been mentioned. The age profile of farmers is unacceptably high and we need to try to reduce it aggressively. For some reason, it has been creeping upwards. Perhaps it has something to do with the Celtic tiger of a number of years ago, but we need to start reducing it. Installation aid, retirement schemes and so on would be welcome and were fabulous while they were in place, but there is no money for them currently.

The proposal on making stock relief available at a rate of 50% is not a bad one. The pension levy has been in place since the jobs initiative and is working well in terms of tourism. One hopes some of the benefits will accrue to rural communities. We cannot do much about electricity costs. As our guests know, the price of green diesel has increased from 45 cent three years ago to 83 cent or more. It is a dreadful cost that every farmer must deal with in some fashion.

The submission criticises the Croke Park agreement. However, criticising it is easy. I am from the farming sector, but the public sector has seen more than 30,000 redundancies and must still deliver more services. The agreement is working, but we are borrowing €1 billion a month and will go through tough times.

I do not see any in the document, but do our guests have suggested solutions to the problem of active versus inactive farming? Many of the document's contents are aspirational. I have asked everyone who has presented to us to recommend solutions. Map farming, whereby two people live off of a single acre, is unacceptable. The industry needs to tackle the issue. It makes no sense for an inactive farmer to sign the single farm payment form. It is virtually criminal taxation of the active farmer.

The fragmentation of land is another farming issue. Do our guests have opinions in this regard?

Committee members understand it will be a difficult budget. Applying fair cuts and achieving a balance are the real issues. We understand that, although this has been a dreadful year weatherwise, which most of us did not believe would be the case, farming is the one bright area. I would welcome our guests' comments on these points.

Michael Healy-Rae (Kerry South, Independent)
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I thank the delegates for attending and making their presentation. They are right to highlight the fact that the public sector is protected by the Croke Park agreement and that it is a shame that the farming community did not have such a luxury afforded to it in recent years. What our guests are asking for can be summed up by the saying, "What we have, we hold". The farming sector has suffered as many, if not more, cuts as anyone else. It has taken a significant hit and is telling the Government that it cannot take any more and that the current schemes should be retained.

The Government could take simple measures that would make a difference. For example, I am glad to see that the carbon tax issue was included in the presentation. Proposing a carbon tax is nonsensical at this time. It would be stupid beyond belief to impose it on the people of Ireland, given the high cost of fuel.

Regarding what is occurring on the ground, there seems to be an attack on the farming community in the form of inspections. Farmers feel as if they are being criminalised. If a person in another walk of life fills in a form and makes a mistake, then it is a mistake. However, if a farmer makes a genuine error when filling in a form, it is an offence. It is as if he or she is a crook. I could never get my head around this. I am not referring to the Government alone, as successive Governments and Departments have treated farmers in this way.

Our guests are acutely aware of the pressure farmers are being put under everyday because of a combination of issues, for example, bad weather and silage pits being opened and found to be rotten. Each of our guests knows someone - I certainly do, and I am no exception to the rule - who has taken his or her own life owing to pressures at home on the family farm. It is shocking and awful, but it is happening. At this time having an overzealous inspection regime does not make sense.

I will always call a spade a spade. Although this is a pre-budget submission and my next issue has been touched on, I am disappointed by the proposals on commonages. This issue poses a major problem. Last week the Irish Farmers' Journal printed a report on the minimum and maximum numbers of sheep to be allowed on commonages and the impression was given that letters would issue shortly. On Tuesday night the Minister assured me that the letters would not be issued. The truth is that they cannot be issued. I will cite an example to show how impractical and unworkable the proposals are.

Four people have a right to a particular commonage. One of them is inactive and not availing of his right to the commonage.

Of the other three people, if one of those had 150 sheep, he should go up to approximately 500 sheep. He cannot to do that. He does not have the lowland to take it and the hill would not be able to take the 1,900 sheep in the first instance. However, even if he and the other two raised their stock to that level and if the fourth person did not comply with this requirement, the other three would not get paid anyway. This shows how crazy it is.

It is vital that Mr. Gilmartin's group and the IFA make their voices heard on this important matter. As politicians we will do everything we can to highlight the anomaly that exists and the fact that it is unworkable. Then there is the other extreme. There might be people putting 150 sheep on a hill but after seeing the figures, they might figure out that they might be entitled to put 30 on it. Who will police this? Who will stand at a gate at the bottom of a hill and police what is on the hill or will the sheep census that is completed every year be used? What is proposed does not make sense. Where are they aiming to go with it and what do they hope to achieve? I appreciate that Mr. Gilmartin is very active in his work but I urge him to hammer the point about the commonages as well, because many people will be affected. Are there 7,000 commonages?

Mr. Gabriel Gilmartin:

It is 14,000.

Michael Healy-Rae (Kerry South, Independent)
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Yes. Many people are affected and worried as this could possibly directly affect their incomes in the future. For that reason it should be addressed in submissions such as this. I urge the witnesses to keep hammering that point in the future. Thank you, Chairman, for your indulgence.

Andrew Doyle (Wicklow, Fine Gael)
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I am not sure if commonages are part of the budget but it is a relevant issue-----

Michael Healy-Rae (Kerry South, Independent)
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It is very relevant.

Andrew Doyle (Wicklow, Fine Gael)
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It is, and that is why I allowed the discussion include it. On that point, the committee has requested that the Minister allow the members to meet the officials in order that we can contribute to a satisfactory, commonsensical solution to it. Does Mr. Gilmartin wish to respond?

Mr. Gabriel Gilmartin:

I will go through the points made. Senator Ó Domhnaill referred to the disadvantaged areas. I agree with everything Senator Comiskey said. It started with 12 counties and was then expanded. There are only very obvious places where a saving can be made, although I do not know how much it would be. The disadvantaged area payment originated as a payment for cattle and sheep farmers. At present, there is a minimum and maximum stock rate and there are retrospective considerations and so forth. However, nobody looked at why seven donkeys will get the same payment as seven suckler cows in Mayo, Donegal, Leitrim or Clare. Why are they not dropped out of the scheme? Why are the hobby people who are breeding Connemara ponies, for which there are no big markets, and who are not producing food in the scheme? A certain amount of savings can be made there. The disadvantaged areas scheme got too big. Everybody got a slice of the cake. In pillar 2 of the next round of the Common Agricultural Policy there must be a specific scheme put in place for people with marginal land in the poorer areas of the country. That goes back to what the original disadvantaged areas scheme was for. For heaven's sake, make the representation and drop the donkeys and horses from it. A significant saving can be made there. In Pillar 2 there must be a separate scheme for the hill areas where people have low payment after taking a huge cut in disadvantaged area payment and where the REPS payment is gone.

In our view limiting or putting a ceiling on the suckler welfare scheme will not work. The scheme is working very well and many people participate in it. More importantly, there is a huge amount of information being collected by the Irish Cattle Breeding Federation, ICBF, on breeding, calving difficulties, meat yield and so forth. We should keep our hands off it. It has already been cut by 50%, so it should not be cut again. I realise the average cow herd in Ireland is approximately 18 but it is a great deal more than that for the average full-time farmer. It would also hit the most vulnerable people.

Mr. Eddie Punch:

Deputy Barry talked about fragmentation of land. We continuously make the point about roll-over relief. This also ties in with the increase in capital taxes. It only arises occasionally so there are no real implications for the Exchequer. They are one-off cases. Where the opportunity arises for a farmer to dispose of an outside field and buy a field next door, he is absolutely crucified by the combination of capital taxes, so it is very hard to do it. Stamp duty was cut and that is welcome, but if he ends up paying a little more for the land next to him he must make those repayments out of after-tax income. If one makes enough profit to be able to pay for buying the field next door, it is 52%. That is just one example.

With regard to ESB costs, we are not here to advocate cutting public sector pay. We are well aware of the fact that most of the people in that sector are earning low wages. On the other hand, however, one must ask why are we discussing cutting a disadvantaged area payment when the ESB average wage is €70,000 or €80,000. A college lecturer in the UK earns £48,000; the equivalent wage here is €70,000 to €80,000. We must always ask why the most disadvantaged farmers are being hit in this case. To be fair, our view is that the REPS got too big and too costly. We all must admit that. There were 62,000 people in it. We must be a little more sensible about targeting decent payments to people who really need them.

In future we would like to see marginal farmers being looked after a little better under schemes such as the disadvantaged areas and agri-environment schemes. In Ireland, a huge number of farmers are depending on a single payment of €10,000 or €12,000, or even up to €20,000, under REPS and the disadvantaged areas scheme. They are active farmers. They would not be the biggest and most productive farmers, but they are active. They have experienced a huge reduction, almost a halving, of their payment before we even discuss CAP reform. These are the guys we are concerned about in that regard. Perhaps targeting is the answer.

With regard to the young farmer installation aid, we proposed €10 million. The reason is that each year we are watering down the residual costs of the early retirement scheme and what is left is the odd young farmer installation payment which has been made over the last number of years. That is gradually decreasing. It reduced by €3.5 million last year and has been reducing each year since those schemes were shut down under the previous Administration. There is some scope there. As people come out of REPS there is scope to do a little more. There is no reason to be cutting.

Gross voted expenditure for the Department of Agriculture, Fisheries and Food went from €2.1 billion in 2008 to approximately €1.3 billion last year. That is a huge cut. That Department appears to have taken a much higher proportional cut in its expenditure than many of the other Departments, so I do not understand why we keep coming back to agriculture. That said, some of the Government's plans do not work quite as well as it might appear. In 2011, the Estimates for agriculture put Exchequer pay at 7% less. That was due to redundancies, early retirement and so forth, but Exchequer pensions are correspondingly 29% higher. That is just for the Department of Agriculture, Food and the Marine. It is difficult to achieve savings in current expenditure in the Department and that is why we urge the Government to look at the overall picture.

The easy target of closing schemes is unacceptable. REPS expenditure was €341 million in 2009 and €243 million in 2012. Soon, as schemes close down, it will be much less. The point we want to emphasise is that farmers have done more than their bit. With regard to the commonage question, we are well aware of it. It is not in our pre-budget submission because it is separate but it is a major issue.

A question was asked about the greyhound fund. Areas of expenditure could be examined and that is all I will say on the matter.

Mr. Billy Gray:

Regarding the CAP proposals, we have been speculating about it for the past while. We call on the Government and the Minister to try to nail down the budget with the EU. Until a budget has been agreed, we are only speculating about the CAP. If we do not get a concrete foundation this side of 2013, it will be hard to go forward. We are all speculating but we cannot work on ifs, shoulds and coulds. We need a foundation to put under these discussions.

Regarding commonage, Ireland is renowned for under-regulation followed by over-regulation. When the commonage regulations are introduced, the Government is into over-regulating. The food industry needs farmers and farmers need the food industry. How many people are employed in farming and the food industry? We should not be talking about farmers on their own. The two work side by side. All of those workers, paying PAYE income tax, form a strong industry. The industry has not lost many jobs but we should bear in mind that farmers need the food industry and vice versa.

Tom Barry (Cork East, Fine Gael)
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I am doggedly pursuing the opinion of the witnesses on active and inactive farmers. Perhaps they can come back to it at a later date. Commonage issues are due to the fact that some farmers are farming in name only or have land ownership without taking responsibility so the active farmer is getting nailed. We will dance around this issue until finally there is agreement. The active farmer needs to be protected. The situation of the inactive farmer, where people do not know who owns land on commonages, is unacceptable.

Andrew Doyle (Wicklow, Fine Gael)
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No, Senator, we are not talking about commonages today.

Tom Barry (Cork East, Fine Gael)
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He had his Weetabix this morning.

Andrew Doyle (Wicklow, Fine Gael)
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We are supposed to be engaging with the ICSA, not with one another.

Tom Barry (Cork East, Fine Gael)
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I apologise. With regard to schemes, I would not be over-zealous in trying to cut all of the staff in the Department because things will not work without staff. We must be careful that we do not try to remove all of the staff in the Department. There are some very good staff in the Department. We must reach a balance and savings must be achieved in some sort of shared fashion. We want agriculture to work and we will not be cutting forever. Things will build up again and it may not be in our best interest to remove some of the skilled people.

I would like to see more efficiencies in inspections. It makes no sense having a number of different agencies inspecting.

Andrew Doyle (Wicklow, Fine Gael)
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With reference to Mr. Gray's comments about the CAP, it is heartening to see the front page of the Irish Farmers' Journal, with a story on Commissioner Cioloş condemning the proposal of President Herman van Rompuy, as did our Minister and MEPs. The Commissioner is equally concerned. The issue arose and it is an unfortunate aspect within the dynamic of the EU. I do not think the Minister will sort it out. It will need the heads of Government. Co-decision means the UK position has made it very difficult and it is of concern to all of us. We may work out the formula for CAP but the figures will have to be adjusted in accordance with the final budget.

Yesterday, we had a meeting with the Minister for Agriculture, Food and the Marine about the budget. Some suggestions we made were the same. Regarding taxation, the Minister has made submissions to the Department of Finance and the Revenue Commissioners on the fragmentation and consolidation of capital gains exclusions. In other areas, the Minister is in agreement with the witnesses. The Minister is facing a challenge on cuts. Mr. Gilmartin's point about donkeys is something none of us have thought about bringing to the table. Yesterday, a suggestion was made of different stocking rate levels in disadvantaged and mountain areas, with a slightly higher minimum set to reflect the quality of the land according to designation. This was the point made by Deputy Ó Cuív.

There is some trimming that can be done without it having an effect and the effort is to try to protect those who need it most. We may not get an opportunity because the Minister is under serious pressure at the moment to draft his budget for the Department of Finance but this submission is now on the record and along with the other submissions, it will be sent to the Minister's office.

Andrew Doyle (Wicklow, Fine Gael)
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We are back in session. I welcome from the Irish Farmers Association Mr. John Bryan, president, Mr. Flor McCarthy, rural development chairman, Mr. Tom Doyle, farm business chairman, Mr. Pat Smith, general secretary, and Ms Rowena Dwyer, chief economist, and thank them for coming before the committee today to outline the IFA pre-budget submission.

I advise the witnesses that by virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of the evidence they are to give to this committee. If they are directed by it to cease giving evidence on a particular matter and continue to so do, they are entitled thereafter only to qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against a person or persons or an entity by name or in such a way as to make him, her or it identifiable. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official by name or in such a way as to make him or her identifiable.

I ask Mr. Bryan to make his opening statement.

Mr. John Bryan:

Chairman and members, I want to thank the committee for giving the IFA the opportunity to make this presentation. Agriculture has been one of the sectors in the Irish economy that has stood up best in the post-boom period and has delivered on jobs and exports. The last couple of years have been tough for the Irish economy and agriculture has been one of the few sectors where employment has been maintained and the 300,000 jobs in the agriculture and food sector are very important. We outlined to the committee during our pre-budget presentation last year that there are opportunities arising from the protection of agriculture. The recent announcements by the Kerry Group, McDonald's and Kepak are all real and sustainable jobs. It is important that this committee supports the IFA in its efforts to protect agriculture.

In the upcoming budget, there are a number of key issues of concern for Irish farmers. The clear message from the farming sector is that support for agriculture is critical to underpinning economic growth. Over the past few years, the agri-food sector has delivered real employment growth, with potential for further expansion and employment creation in the coming years. Underpinning this growth is a primary agriculture sector that is delivering a high quality, sustainable raw material to the food sector. Agriculture contributes to economic activity in every part of Ireland and is of particular importance in the rural economy.

Farming, however, remains a low income sector, and the importance of farm schemes in underpinning farm income and production cannot be forgotten. REPS, AEOS and the suckler cow scheme account for 50% of cattle and sheep farmers' incomes on average. In addition, as the committee is aware, farming is experiencing a very difficult year in 2012. A combination of dreadful weather conditions, soaring input costs and falling prices in some commodities is impacting on profitability and output at farm level. In its mid-year outlook, Teagasc estimated that farm incomes could be back at 2010 levels, which would represent a fall in incomes of close to 30%. In addition, the impact on farm incomes of previous cuts to farm schemes is now being seriously felt. These cuts impact directly on farm income and have a negative knock-on effect on production decisions on-farm.

The cuts in funding for farm schemes in last year's budget, in REPS and the disadvantaged area schemes were far in excess of the cut in the overall agriculture budget. These came on top of cuts that have been imposed on farm schemes since 2008, including the closure of REPS to new entrants, cutbacks for the disadvantaged areas, suspension of the early retirement and installation aid schemes, halving of the suckler cow premium and cuts to the forestry premium. Like all other families, farm families have been negatively impacted by increased taxes and charges that have been introduced and will be affected by any new taxes in the budget. They cannot be hit on the double by further cuts to farm schemes. There is no justification for this in the upcoming budget.

I want to outline now the priorities for agriculture in the budget. The proposed reduction in funding for the agriculture budget of €114 million, or 8% of the budget, represents a greater reduction in funding than that required, on average, across all of the Government Departments. The IFA believes that there should be an increase in the expenditure ceiling allocated for agriculture in Budget 2013 in line with the level of employment created by the agricultural sector. Where savings must be found, these cannot be from the farm schemes.

The main IFA proposals on expenditure for budget 2013 are to maintain funding and payment levels for disadvantaged areas, rural environment protection and agri-environment options schemes, all of which provide critical support for low-income farmers. We also propose the continuation of the suckler cow scheme in 2013 to build on the achievements of the scheme to date and the maintenance of forestry premiums for those who have already committed their land. If savings are required to forestry premiums, a limited afforestation programme must be introduced. Funding to support the roll-out of the compulsory bovine viral diarrhoea, BVD, eradication programme should be maintained, as should the current allocation for disease compensation schemes. There can be no reduction in compensation amounts. The Government should revise the targeted agricultural modernisation scheme, TAMS, and horticulture and aquaculture grant schemes to ensure national and EU funding is fully utilised. It should also extend funding for discussion groups to other sectors, particularly sheep and grain, to improve on-farm efficiency and management practices.

For agriculture to achieve the Food Harvest 2020 growth targets, it is critical that taxation measures are retained which support restructuring, farm investment and land mobility. There must be no further taxation increases that undermine competitiveness or negatively discriminate against the self-employed. The income tax system already severely discriminates against the self-employed. A single farmer earning €20,000 currently pays €3,900 or 19% of his income in income tax, PRSI and the universal social charge. By comparison, a PAYE employee on the same income pays only 10% or €1,955.

The IFA's farm taxation priorities in budget 2013 are retention of 90% agricultural relief to encourage farm transfer - applying to all agricultural property - with no further reductions in the capital acquisitions tax threshold. Relief from capital gains tax for disposals for the purpose of farm consolidation should also be retained. Farm fragmentation presents a serious challenge for Irish agriculture and undermines efficiency at farm level. A major remaining obstacle to land mobility is the capital gains tax which applies on the disposal of farmland. Stamp duty relief for young trained farmers should be renewed and stock relief should be implemented to encourage expansion. The 50% stock relief should be extended to registered farm partnerships in all enterprises.

In the upcoming budget it is critical that the expenditure and taxation decisions taken support economic growth and protect the lowest income sectors. The growth in agriculture and the agrifood sector in 2010 and 2011 demonstrates the ability of the sector to respond positively to market signals and contribute to economic recovery through increased earnings and job creation. Significant potential remains for the sector to continue this growth and capture the opportunities presented by a growing global population and increasing demand for sustainably produced food. However, the volatility in prices, input costs and weather conditions experienced in 2012 demonstrate how important farm schemes and a supportive taxation system remain to underpin stability and growth in the sector. Undermining these elements by cutting funding for farm schemes or removing important taxation measures will cause long-term damage to the sector and jeopardise its ability to maximise its growth potential.

I ask the joint committee to support agriculture in the upcoming budget through the maintenance of funding for farm schemes, which are a critical support for farm income and production, and the retention of key taxation reliefs to encourage farm transfer, land mobility and investment. Critical negotiations on the future of the Common Agricultural Policy and pillar 1 and pillar 2 funding will take place in Brussels in the coming months. Proposals have been made for savage cuts in both pillars. We are informed that the Commission intends to examine the level of expenditure in member states. The maintenance of all schemes under pillar 2 is critical in the coming years as these years may be considered when calculating the pillar 2 envelope for Ireland.

The IFA welcomes the support it received from the joint committee last year. The opening of a third agri-environment options scheme was helpful and this will be reflected in funding in future. Agriculture has much to offer. When critical decisions are being made in Cabinet it is vital that the Government does not decide simply to reduce certain expenditures by this or that percentage. It is essential to maintain jobs and exports.

Andrew Doyle (Wicklow, Fine Gael)
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I thank Mr. Bryan. Today's newspapers feature reports on a proposal for the overall budget for the multi-annual financial framework, which, if accepted, would make matters very difficult. It is somewhat reassuring to note that the Commissioner is as displeased with the proposal as are the Minister and many others. This is a serious concern and the joint committee will wholeheartedly support the Minister's position on the issue.

Tom Barry (Cork East, Fine Gael)
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I welcome the representatives and congratulate the IFA as its meetings around the country were informative, constructive and contributed to the debate on the CAP.

The representatives referred to the expenditure ceilings in place. Perhaps they might be examined in line with the employment created on a performance-related basis, which is an interesting point. Obviously, we disagree with the fact that the expenditure ceilings do not take account of EU funds. We feel disenfranchised in that regard and that position will not be corrected overnight, but putting in place a performance based model would be progressive. That is a welcome idea which we certainly will push further.

Discussion groups on the grain and sheep sectors are absolutely vital. Last week we launched a document on the tillage industry, a copy of which can be made available to the representatives if they are interested. It is all about increasing performance and production levels as efficiently as possible. Certainly having discussion groups would be a good starting point. In my early days in farming I found such groups helpful, not only in seeking to improve one's performance but also socially as they linked individuals.

Land mobility is critical. Where there is fragmentation, anything that can be done must be considered.

We need to arrive at a solution to the problem of active and non-active farmers. The Chairman may be tired of listening to me saying this. During the boom times hobby farmers were able to take their animals to the mart and if they broke even, it was not a problem, whereas the person who was trying to earn a living could not compete. We need to start looking at commercial farmers once again, irrespective of the scale one is at. That farmers are signing up to receive their single farm payment and renting the land is unacceptable. This is happening, but the matter is being brushed under the carpet. That is the biggest penalty imposed on many farmers and I am determined to have the issue discussed. Something must be done and I want a solution to it to be found.

The food security issue will become more pressing. The cost of food kept the rate of inflation down in the past. When I ceased producing milk in 1991, the price was around 28 cent per litre; it is still around that level. When the spring bursts, the price of food will increase and the consumer will not thank us. All of the messing with the CAP means people are taking their eye off the ball and there could be a food crisis. Weather patterns around the world make this clear. However, they have been warned and should stop playing politics on the issue. It is not good enough.

I listened to the comments on inspections. Perhaps a common database is needed for inspectors, as there is no point in council, departmental and other inspectors tripping over one another on farms. We are living in the computer age. One should be able to check on one's iPhone who previously carried out an inspection. There is no point in repeating a job done by someone else.

I am not comfortable with overdoing staff cuts. While we are in difficulty and there are cutbacks to be made, that will not always be the case.

Farming is cyclical and if we cut our staff too much, those cut will be the very people we require when we want to expand. I do not like to hear people say our staff are not good. We have excellent staff and must recognise that. Consider, for example, the efficiency with regard to the single farm payment this year. It was paid on time or early and many of us were very glad of it. Forestry staff also are extremely helpful. I am not comfortable with criticising staff, because they make the system work. However, I admit efficiencies are necessary.

The coming budget will be difficult as it is trying to square a circle. We all know there must be cuts in some areas and must be realistic about this. The issue is to ensure these cuts are fair. I know not everybody will be happy at the end of the process, but we must realise these are things that must be done at this time. Hopefully, we will try to deal with them in a fair and balanced fashion.

Michael Comiskey (Fine Gael)
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I welcome the IFA president and his delegation, my former colleagues. We are delighted to have them here again. We are coming up to a crucial time and are aware difficult decisions must be made. I am at one with and agree wholeheartedly with what has been said. It is very important the suckler cow scheme is maintained. For those of us in the west who have been producing sucklers and getting reasonably good prices for weanlings over the past couple of years, it is vital the scheme remains in place. As well as helping farmers, the scheme has done a lot for the quality of the animals. Animals exported or those finished off here in Ireland are now better quality animals and produce better prices, which is good. Therefore, we will certainly work with farmers to ensure the scheme is kept in place.

Teagasc and ICBF have run the scheme and discussion groups, as mentioned by Deputy Barry in the context of the tillage sector. It is very good for farmers to get out and learn from fellow farmers and gain experience in that way. I agree it is also very important to keep the disadvantaged area scheme in place. An attempt was made to save some money in this area last year, but it might as well have been left alone. We spoke briefly about commonage earlier, which is a serious problem. At one of the meetings yesterday, somebody suggested that where farmers within a commonage area wanted to sell land by way of another inter-commonage sale, it should be exempt from capital gains tax or stamp duty. The suggestion was there should be no tax payable where one farmer wanted to sell a share of commonage to another. This might be a way of getting around the problem. Whatever we do, the issue must be dealt with as it causes serious problems. It has been dragging on for a number of years and many commonages are undergrazed and others are overgrazed.

With regard to the environment, it is important to maintain an environmental scheme. We have the AEOS, but it is not nearly as good as the old REP scheme. Hopefully, after the CAP negotiations, we will be in a position to put a better scheme in place. We will continue to work on this. Support for younger farmers is also crucial. On inspections, I am aware that in Leitrim alone some 100 files have been returned. Senator Ó Domhnaill mentioned that inspectors were out in Donegal. In the small county of Leitrim, some 100 files were returned and farmers were not paid. Approximately 26% of people have not been paid and as soon as I finish here, I must go and make calls to try to get some of these problems sorted out. We would all agree that it is not acceptable for inspectors to be coming out at this time of year carrying out inspections on land, as the money should be coming out to farmers now. These inspections should have been carried out earlier and throughout the summer.

We would all be aware that any time money comes into farmers' pockets, they go off to the local towns and villages to shop. Even if they only buy a gate or a wheelbarrow or do a bit of shopping, they spend their money, which is beneficial to the local economy.

Noel Harrington (Cork South West, Fine Gael)
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I thank the Chairman for allowing me contribute. I feel like a refugee at the committee. I welcome Mr. Bryan and the IFA delegation. Every issue raised here, not just by the IFA but by other farm organisations also, has a common thread. We recognise the arguments made on the value of the farm schemes in terms of turnover and added economic benefit, not just to farm families but to local economies, rural and urban. We do farmers a disservice when we suggest the economic benefits of these schemes apply just to local rural economies.

As the Chairman pointed out, it is important to take on board the bigger issues facing the State in the wider European context. I was glad to hear Senator Ó Domhnaill say we need to don the green jersey on this. While we all have our own battles to fight in the game, the country must come first. This hearing will help to highlight the importance of getting what we can in the European context. We must at least try to maintain an overall envelope in the multiannual financial framework that must be agreed. We would support everything that can be done in that regard.

I do not want to repeat what previous speakers have said. Obviously, I agree with most of it. However, sometimes we must look beyond the submission made. Senator Comiskey touched on the issue of the commonage framework plan. While this is not something that is an immediate problem, it is an issue we must deal with. Perhaps it is not for this budget discussion, but it is an issue that must be taken on board. Otherwise, Irish farmers face a potential European penalty - perhaps a 10% clawback. That is not in anybody's interest, so the issue must be dealt with.

The main issue I want to raise is a bit out of left field. The trend of Mr. Bryan's submission was maintenance and the need to hold what we have. There is an issue with this as it is proposed to remove €114 million from the agricultural Vote. Therefore, it will be difficult to hold what we have. Nowadays, Departments, agencies, farmers and staff all use the phrase "doing more for less". There is no point in them coming in and making a submission seeking to maintain everything as it is. However, there is one particular area where a small group of people and farm families would benefit from doing more for less, namely, in the area of aquaculture. I urge the farming representatives to include in their submissions proposals to enhance, support and develop the aquaculture industry, particularly along the western seaboard. The people who would benefit from doing more for less in this area would be farmers or people working in farm families. The development of this industry would help to supplement their incomes.

This industry is underdeveloped currently. I am aware the issue is mentioned in the submission document and am aware Mr. Flynn advocates progressive development. This is not just an IFA issue, but is a Department, State and general public issue. For an island nation, we have an appalling record in the area of aquaculture. Development of this area will not solve all our problems, but for people along the western seaboard, it is an option that should be discussed. I would welcome more engagement, support and development in this area. I do not want to go on about this, but It is an area that is not discussed enough.

Mr. John Bryan:

I shall start with the questions raised by Deputy Harrington. His comments on agriculture are in line with ours.

We see agriculture and food production - whether it is forestry, aquaculture, the suckler herd, or dairying - as critical in creating employment. I agree with Senator Ó Domhnaill and Deputy Barry that the potential of agriculture is underestimated. Glanbia is planning to build an enormous processing centre in south Kilkenny and agriculture can provide countless jobs in the next few years. However, we must sustain the jobs on the farms. On the issue of the €114 million budget, savings have been made already. The fact that the REPS payments and early retirement payments are running out means that €40 million can be saved. There have been staff redundancies this year also and there is probably somewhere between €50 million and €70 million in savings achieved already.

As Senator Ó Domhnaill said, the Government will have to look at areas they did not look at the last time. Last year the Department disproportionately hit the farm schemes. I have urged the Minister to ring fence the farm schemes and look to other areas for savings. I do not think that is unreasonable because some of the other areas were not touched last year. I am not saying I want to touch anything but if the Minister has to make savings he should stay away from the schemes because they are critical to employment. He should look at the other areas.

When I am finished, I will ask Mr. McCarthy to say a few words on the commonage framework plans. The IFA takes the attitude that while something has to be done, the plans were rushed. We do not hold with collective responsibility, for example. If one holds with collective responsibility then if someone in this room commits a crime it means we should all be locked up. That is unreasonable and unfair and we cannot accept it. I agree with Senator Comiskey that something must be done on the commonage plans. Perhaps exempting them from capital gains is an option as there would be no loss of revenue in that. A broader approach is definitely needed.

Senators Ó Domhnaill and Comiskey both referred to the savings that were to be made in the less favoured areas, LFA, schemes last year. We said to the Minister at the time that exemptions had to be applied for those who were in special areas of conservation, natural heritage areas, those with commonage framework plans and those in environmental schemes. When all of that was factored in, the total was never going to drop below €220 million. At the time, we felt that if a stocking density was to be introduced, there should be three different levels. There should be one level for the hill, another for the more severely handicapped land and yet another for the less severely handicapped land. One should never apply the same stocking rate on a hill as on less severely handicapped land. There may be some technical problems with that but sometimes one must take the more complicated route to arrive at a solution. Having the same stocking rate on the top of a hill as on less favoured areas is not appropriate. The IFA believes that different stocking levels for different areas is the way to go.

During meetings we have held all over the country we got the clear message that there are many farmers who are working very hard and who want to sustain jobs but they are very dependent on pillar 1 or pillar 2 funding and any major change in distribution will have serious consequences for them. The proposed savage cuts in the multi-annual financial framework, MFF, across pillar 1 and pillar 2 will create enormous problems. The Baltic states, Romania and Bulgaria are seriously below the EU average at the moment and no-one thinks they will take a cut. Therefore, if there is a cut, it will hit countries like Ireland, which are close to the average, far harder. It would a very serious impact.

I agree with Deputy Barry that at a time of tightening resources, we must distinguish clearly between active and inactive farmers. There is no way we can be all things to all men every day. We cannot say that someone who has made a decision to give up farming should still get his or her single farm payment, disadvantaged area payment or any other payment. We must be very clear in our support for active farmers.

On the issue of land mobility the IFA has a very reasonable proposal that the sale of land which is being transferred for active farming be exempt from capital gains tax. There is no loss of revenue involved because a farmer will simply not sell a field if he or she has to pay capital gains tax. We have done some work on this and it would be revenue neutral but would facilitate a reduction in parcel numbers.

The IFA believes that the Cioloș proposals do not take any account of food security, which is the biggest threat facing the world. The world population is expected to grow from 7 billion to 9 billion, which is a real threat, both to food and water supplies. The water resources in Australia, North America and France are already under severe pressure. Food production in Europe is vital and that is what is missing in the current CAP reform proposals. The CAP budget was reduced from €1.33 billion to €1.24 billion. If another 10% is taken out, that equates to €200 million less before one even starts. We have already had modular and other cuts so the stance the Government takes on the MFF negotiations is vital. Just because David Cameron jumps up, the whole of Europe cannot tremble and agree to cut one of the strongest pillars of the EU. It is essential that countries such as Ireland, France and Germany tell Mr. Cameron to roll back a bit.

The domestic budget is under the Cabinet's control. As I said to Deputy Harrington with regard to the €114 million, we have already hit the agricultural schemes so now it is time to look at other areas. It will not be easy to find savings but some areas lost 0.5% or 1% last year, while the schemes lost 17%. Given the employment potential in agriculture, cuts of 8% are too high. Schemes like REPS and AEOS are absolutely essential. There are a lot of farmers who are in receipt of small single farm payments of between €7,000 and €8,000 and getting an additional €4,000 under AEOS makes an enormous difference to them.

Regarding the issue of penalties, if someone is in my yard, I must treat him or her with respect and dignity and vice versa. Spend a week in a man's yard and one will see a lot. If someone is sick, even more care is required. I was aware of a case in Kilkenny where an inspection was due to take place but the farmer was suffering from depression at the time. When I rang the Department, the inspection was postponed. Depression is a common thing in rural Ireland, especially with isolation and that must be borne in mind by the Department. Inspectors should be trained in how to deal with people and how to have a compassionate and understanding attitude. If they are in doubt, they should cancel the inspection and come back another day because they do not know the pressures that people are under on the ground.

Redeployment of staff could yield some savings, as would other measures, but I would be very conscious, in redeploying staff, of the need to protect frontline staff, whether they are in Teagasc, Bord Bia or other essential areas. I would prefer to see redeployment within the Department itself rather than in the frontline services. I will now hand over to Mr. McCarthy who will deal with the commonage framework plans.

Mr. Flor McCarthy:

I thank the Chairman for the opportunity to address the committee. I wish to take up one point raised by Deputy Barry, namely, the issue of fairness. As farmers see it, the cuts being made to the agricultural envelope are disproportionate. A cut of 8% versus 3% is simply unacceptable. The evidence shows that farmers have taken considerable cuts to all of their schemes in recent years and in the context of the overall amount of money given by the Exchequer to agriculture, we are back to 2000 levels or earlier. The president referred to a farmer earning €20,000. As a self-employed person he or she is paying 19% in taxes and charges, versus 10% for PAYE workers, because the farmer does not have an allowance. The farmer must also pay the extra carbon taxes and extra VAT, while his or her family suffers the same way as every other family in society through the reduction in services. This year the farmer's income will be down by between 20% and 30% and in some cases more - depending on the type of farming - because of bad weather and increased costs. I urge members to remember the word fairness as I speak. The Government is arguing that something must be cut and the Department is intending to go after the schemes again. Farmers, like everyone else, will have to find the extra money to pay the property tax and whatever else is introduced in the budget. There is a tipping point and it has been reached. Farmers have already taken cuts and the disproportionality of those cuts must be addressed at the Cabinet table.

We cannot push many of these people much further. Already many of them would be better off getting up on a Thursday morning and going down to pick up a cheque, but they want to produce and they are glad to be doing something. The Government and the committee must argue for that because there will be no savings. The expenditure will go on the dole or farm assist or something else.

Andrew Doyle (Wicklow, Fine Gael)
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Do you wish to comment on the commonage framework plan?

Mr. Flor McCarthy:

It has created major problems along the western seaboard. We have been in negotiations for six or seven months. We have made the case at six or seven meetings but they have made no changes. The proposal made by the Minister for Agriculture, Food and the Marine, Deputy Coveney, yesterday involving the introduction of an independent chairman was welcome. We have said that the collective agreement is totally unworkable. We were informed there would be a major gap between the minimum and maximum but we did not realise anything until the proposals were published, even though we were at the meetings. The proposal published and what was explained to us were totally different. We must have been attending totally different meetings.

The reaction on the ground has been very negative. Individual farmers with 200 sheep may have to reduce their numbers to 46 again. It is a total shambles. There is no way the document in question can be negotiated or changed. I welcome the proposal of the Minister, Deputy Coveney, to bring in an independent chairman and to begin afresh. We accept without a doubt that something must be done on commonages but the proposals brought forward in the past week are not workable. The collective agreement does not make sense. One man doing his job right should not be penalised because one or two others are doing it wrong. At the same time we will support the scheme, even if it is not totally what we want. The IFA is a reasonable organisation and if the scheme is in any way reasonable we will go with it, but the reaction has been savage and the Minister, Deputy Coveney, has got it from his backbench Deputies. They are not hyping it up for nothing. There is a major problem.

Senator Ó Domhnaill commented on the inspections. They are also a major issue in the west. Many inspections are rather subjective. Inspectors come to eligible ground and decide certain people's ground has rushes on it. Three of us could visit the same farm and come out with three different opinions. It is not black and white. I know of a farmer in Kerry who faced an inspection in 2010 and received a 5% reduction in eligible ground. An inspection was carried out again this year and he was informed that he will receive a 100% penalty. There were two inspectors and he was inspected in both years. I could take the view that the inspector from this year was wrong and that the inspector who took off 5% two years ago was right. The farmer expected a 5% reduction in his eligible ground. There should be some way of assessing some of these individuals. Some people are giving 100% penalties. The work of these people should be examined. They are picking on weak individuals working and farming on their own. All these farmers are bachelors. Perhaps their situation has slipped somewhat but a 50% penalty would be savage. Many people are facing 100% penalties and that cannot be condoned. These people are in peripheral areas. The whole inspection system should be examined. Some compassion should be shown because, as the president said, there are issues relating to depression, sickness, old age and various family circumstances.

Many of these people are only barely getting used to the numbers from the reference year. This is the type of terrain they farmed in 2000, 2001 and 2002 from which they established their entitlements. It is not as if there has been a major shift. This was always poor ground and it will always be poor ground. The 100% penalties are occurring in areas close to the shore where the climate is warmer and more encouraging. There is not as much higher bush growth in these areas. Obviously, it is poorer land as well and that should be taken into consideration. We welcome the support of the committee members and we all accept that there must be inspections, but inspections where people face 100% penalties cannot be condoned.

Reference was made to aquaculture and wind energy. There are difficulties facing all of these schemes and with special areas of conservation, SAC, designations. Up to now these were okay because we were compensated for them. At this stage a new look should be taken at the designations because the farmers concerned are having restrictions placed on them. The same applies to aquaculture. Those involved cannot be grant aided if they operate in a SAC or in a proposed natural heritage area, NHA. These are real issues.

I come from an area where there has been a good deal of wind farming and it is disappointing for us that all wind developments seem to be moving to the midlands solely because we are restricted by designations. We have a better asset than those in the midlands but we are losing out because of designations. At this stage the designations are a nail in the coffin for us.

It was not as bad under REPS 4 and we were able to get reasonable compensation. I have raised this matter with the Minister as well with regard to disadvantaged area payments, REPS and the agri-environment options scheme, AEOS. Up to 70% of the funding for these schemes comes from Europe and that should be recognised in the general kitty. The onus is on Deputies to recognise that this money is coming from Europe and that there should be a commitment to the AEOS. If there are 8,000 applicants for the scheme they should all be paid.

There is an attack on the disadvantaged areas scheme. The scheme has been in place since the 1970s. It is a second generation scheme and it is a real support for people. There will be a vicious reaction if it is attacked. I am the second generation to draw down the disadvantaged area payment. Rightly or wrongly people may believe they are entitled to it but if there is any attack on it at this stage there will be problems. Years ago the payment was IR£7,000 but the criteria under which it was paid changed. It was moved over to a land based system and this brought a reduction for the genuine people who were benefiting from it. It is at the stage now where we are only getting €3,300. Any attack on that limit will be met with a vicious reaction.

Andrew Doyle (Wicklow, Fine Gael)
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I thank the committee members and Mr. Bryan and his colleagues. The responses have given us some extra insight into the issues. The end of the official budget submission refers to sustainable investment in energy security and emissions reduction. The IFA may have referred to the Energy (Biofuel Obligation and Miscellaneous Provisions) Bill, the bioenergy scheme and the renewable energy feed-in tariff, REFIT. These and other taxation measures are probably areas that will be easier to secure agreement with the Government and with the Minister in particular. This may not necessarily be the case with all Departments but certainly with some. The Minister outlined some of the proposals he has submitted to the Department of Finance with regard to taxation measures. These concur a good deal with the comments of the deputation. No doubt an evaluation will be done and, for example, in the case of the AEOS, the people who are in genuine need are protected. This was the thrust of the effort last year. Perhaps it did not work as well as expected but the effort was to try to protect them and to ensure that those who were availing of it when they had no real need of it are made to be active. The matter of active farmers is a discussion for another day.

We were under some pressure for the meeting room but it turns out that it is not as critical now. I thank everyone for their attendance and I thank the IFA for its submission.