Oireachtas Joint and Select Committees

Wednesday, 2 October 2013

Joint Oireachtas Committee on Agriculture, Food and the Marine

2014 Pre-Budget Briefing: Discussion with Minister for Agriculture, Food and the Marine

10:30 am

Photo of Andrew DoyleAndrew Doyle (Wicklow, Fine Gael)
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The purpose of today's meeting is to have a pre-budget briefing from the Minister for Agriculture, Food and the Marine. I welcome the Minister and his officials to the meeting. The Minister will be aware that the Select Committee on Agriculture, Food and the Marine meeting on 22 July this year considered the 2013 Estimate for the Department in the context of the existing policy and financial framework. Budget 2014 will be announced at the earlier date of 15 October and the purpose of today's meeting is to engage with the Minister on the financial allocations being considered for 2014, the targets that arise from those allocations and related issues.

I propose that we begin by inviting the Minister to make a brief opening statement and then I will invite questions from members, to be taken in the usual order.

Photo of Simon CoveneySimon Coveney (Minister, Department of Agriculture, the Marine and Food; Cork South Central, Fine Gael)
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I thank the Chairman and committee for inviting me today. Last year we had a very useful discussion in advance of the budget. I hope members will recognise that we took on board some of the ideas from all parties and not just the Government parties in terms of how we would make some of the difficult savings that had to be made from the point of view of disadvantaged area payments and also some of the supports we tried to put in place for the more vulnerable sectors.

It is up to members to decide if they want to analyse the figures and make constructive suggestions as to what the next budget might look like and I will certainly try to take on board their views, where possible. Alternatively, members may decide to take a different approach entirely. Rather than give a long speech, I propose to give the committee the figures for the savings that need to be made for next year. I will also give some of my views on the various options available to us. At that point, I would like to get some feedback from the committee on what they think of the figures and options and the approach they would like to see the Department taking on the agriculture budget.

Some committee members will have questions on this year's figures. When the Exchequer figures are released later on today, members will see a current underspend in the Department. That was anticipated but it does not mean that we will have an underspend at the end of the year. We will not have any underspend. We are anticipating that if there is an underspend at the end of the year it could be in single figures but at most, it could be €10 million, mainly on the capital side. That will be money that we will carry over into next year, if we can. Given the fact that we have a total expenditure of well over €1.2 billion, we are talking here about a very small percentage of the budget. Obviously, we also have to make sure that we do not overspend because we literally do not have the money to do that this year. This is a constant dilemma at this time of the year for the Department because a huge amount of the expenditure happens in the last quarter of the year. We are trying to be as close to zero as we can be in terms of any underspend.

The crux of the issue is that we are being asked by the Department of Finance, on the expenditure profiles that have been outlined in the last number of years, to spend €168 million on the capital side and €1.02 billion on the current side next year. That essentially means a reduction of €28 million in current expenditure and of €25 million in capital expenditure, giving a total of €53 million in savings. Up until budget day we will be trying to change those figures where possible and when it makes sense to do so. We must try to make a case for that and we have successfully made a case in the last two years for increasing the capital budget for this Department. That is not to say, however, that we will be able to do it again this year but we are certainly going to try. It is important to note that of the Departments that saw a change in their figures last year, apart from the Departments of Health and Education and Skills, no other Department got an increased allocation. We are making the case for reducing the amount of savings we are being asked to make but we must have a very good case that is absolutely watertight if we are to succeed.

At present the figure to be saved between current and capital expenditure is approximately €54 million. In some ways, that is not as difficult a challenge as last year or the year before but having said that, we have had new challenges that may cost extra money next year that we had not anticipated. We have changed our mapping system, for example, which is causing problems for farmers who had, in some cases, unbeknownst to themselves, overclaimed which means that we have to claw back public money that should not have been spent. That mapping change also has a cost implication for the Department in terms of implementing the new system, which may also put some pressure on us next year.

We also potentially have some horse welfare considerations, following the fact that there has been a dramatic reduction in the number of horses slaughtered in slaughterhouses this year when compared with the past two years. We have tightened up the rules since the horsemeat scandal, which has resulted in a reduction in the number of factories slaughtering horses, as well as a very tight system with microchipping, identification, passports and so on. That is a good thing, but there is a resulting by-product with which we need to deal to ensure there is no welfare issue for horses that in essence have no market value. That is something we are examining. We are trying to assess the extent of the problem and there is a potential cost implication next year from that.

I have spoken publicly about the need for us to look at vulnerable sectors, such as the suckler beef sector, and examine ways we can provide support while at the same time making the savings we have to make. This is not a straightforward budget. The actual savings in terms of numbers may not be quite as big as last year, but there is still some pretty complex discussions to be had on how we do the strategic things we need to do for the sectors that need support. I would like to get committee members' blunt feedback on the areas they would like me to prioritise for supports. If savings are to be made, in what areas do they think we can make those savings? We will take on suggestions if they make sense.

10:40 am

Photo of Andrew DoyleAndrew Doyle (Wicklow, Fine Gael)
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Does Deputy Ó Cuív wish to make an overall comment or does he wish to go through the allocations programme by programme?

Photo of Éamon Ó CuívÉamon Ó Cuív (Galway West, Fianna Fail)
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I would like to make a very brief overall comment.

Photo of Andrew DoyleAndrew Doyle (Wicklow, Fine Gael)
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Is everybody else in agreement with that? Agreed.

Photo of Éamon Ó CuívÉamon Ó Cuív (Galway West, Fianna Fail)
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I thank the Minister for coming in and providing the information. We got a lot more detailed information last year, however, and it was much easier to work out the figures. I presume the Department still has what used be called an NPC, or no policy change, and which later changed to an ELS, or existing level of service. It would be very useful to get a breakdown of the expected outturn for 2013 and the ELS for 2014, in other words, what happens if there is no change. That gives us the list of figures which the Minister provided. We got a lot of detail about the administration, but we have been told that if there are any further administrative savings, they go back to the Exchequer. That is the usual craic. I am particularly interested in-----

Photo of Simon CoveneySimon Coveney (Minister, Department of Agriculture, the Marine and Food; Cork South Central, Fine Gael)
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There is a €9 million saving from the Haddington Road agreement.

Photo of Éamon Ó CuívÉamon Ó Cuív (Galway West, Fianna Fail)
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The Minister is going to be told that that is fixed and we cannot go for €12 million in further administrative savings, because he will probably tell me that if there is another €5 million in savings to be made, the Department of Finance will grab that and we could not use it for giving out aid for suckler cows.

Photo of Simon CoveneySimon Coveney (Minister, Department of Agriculture, the Marine and Food; Cork South Central, Fine Gael)
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That is correct.

Photo of Éamon Ó CuívÉamon Ó Cuív (Galway West, Fianna Fail)
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When we come to supports for farmers, including this year when we had the one-off support for the fodder scheme, it would be useful if we had the figures for what will be given to farmers next year at both EU and national level compared with what was given this year, as well as a list of the EU programme of single payments. It is very relevant to compare this year's single payment with next year's payment, because it is going to be down. That will give us a total picture of how the farmer is going to see it, because he does not care where the money comes from. What is the Common Agricultural Policy going to be next year with a no policy change compared with this year, and how much of that will be EU and how much will be national? Then there is disadvantaged areas scheme, DAS, and the national programmes that are solely funded out of the Exchequer. If we could see all of that, we could make the hard choices and at least tell the Minister what we think should be done and where the focus should be, and we could be realistic about the figures. He indicated that there might be a certain amount that he can negotiate, but that it is not without limit.

If the Minister gets the same money next year as last, because of the decrease in EU funding, farmers are going to get less funding than they got this year, as we will be in the new CAP and the 3% is going to kick in.

Photo of Andrew DoyleAndrew Doyle (Wicklow, Fine Gael)
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Am I right in saying that the single farm payment does not form part of the budgetary calculations here?

Photo of Simon CoveneySimon Coveney (Minister, Department of Agriculture, the Marine and Food; Cork South Central, Fine Gael)
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No, but the rural development programme does.

Photo of Andrew DoyleAndrew Doyle (Wicklow, Fine Gael)
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Yes. I know the point the Deputy is making, but of the €54 million-----

Photo of Éamon Ó CuívÉamon Ó Cuív (Galway West, Fianna Fail)
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I accept that it has nothing to do with the single farm payment. We have to look at this from the Minister's point of view, but we also have to look at it from the point of view of the farmer who is trying to pay the bills. The first thing he will be hit with is the reduced single farm payment. That strengthens the case for the Minister to say to the Minister of caiteachas poiblí that these farmers are already taking a hit from Europe.

My understanding is that the amount of rural environment protection scheme, REPS, money to be paid to farmers next year, between Europe and Ireland, will be considerably less than this year or in subsequent years once the new REP scheme gets going. Again, the Minister can make a strong case to the Minister for Public Expenditure and Reform that farming is in a dip or interregnum period of financing from Europe, and that has to be taken into account by the Minister, Deputy Howlin, in his dealing with one Department relative to another. If we could get the figures, I would certainly be willing to make a written submission to the Minister on what I think should be done. I cannot make it now because I do not have the data, unfortunately.

We need to do something very significant for suckler cows for next year, in view of the deleveraging of suckler cows that is taking place at the moment. If necessary, other schemes should be pared back to do that.

Photo of Andrew DoyleAndrew Doyle (Wicklow, Fine Gael)
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Before I call Deputy Ferris, I think it would be valuable to go through these programmes if people are prepared to do so. I accept the point that we have a limited amount of information, but it is important we emphasise the areas in which we need to strengthen, be it suckler cows or forestry, and that we get down to that level in the time we have.

Photo of Martin FerrisMartin Ferris (Kerry North-West Limerick, Sinn Fein)
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The Minister has to save €54 million in the coming year. I would like to see how he intends to do that and the effects that will have in the future. He also said that he hoped to increase the capital spending budget. I would like to see a breakdown of how he intends to do that. We do not have anything at this stage.

The suckler cow issue will have devastating consequences if it is not addressed. What is badly needed is a proactive incentive to bring people back into that sector, because the knock-on effect can be quite damaging for any projection. The Minister also said that savings had been made in the mapping section.

It is a big issue at this time and the Minister mentioned that himself. Has the Minister any intention of trying to address it, especially the loss to recipients, many of whom have taken big hits in that regard?

I hope we can get a sense today of what the Minister hopes to achieve in the budget. Any help we can offer will be forthcoming regarding the Department of Finance, including perhaps a collective proposal from the committee to support the Minister to try to secure the necessary funding. We are all for that.

10:50 am

Photo of Thomas PringleThomas Pringle (Donegal South West, Independent)
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My first point relates to the savings of €54 million. The document we have states the gap will be covered to some extent by lower budgetary requirements in 2014 because schemes have closed and so on. Will the Minister give us a breakdown of the savings from the closed schemes? That would give us a better picture of the impact of the reduction.

My other question relates to information. The select committee dealt with the Revised Estimates in July. We received spreadsheets of the subheads and so on and that was very useful. I had thought we would have similar information for today, and it would be useful in future to have that information because it gives a breakdown of where the changes arise.

Photo of Andrew DoyleAndrew Doyle (Wicklow, Fine Gael)
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I call Deputy Deering and then I will go back to the Minister. I will take other members subsequently.

Photo of Pat DeeringPat Deering (Carlow-Kilkenny, Fine Gael)
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The cuts of €54 million are substantial in the overall scheme of things. The Minister made the point that there could possibly be an underspend on the capital side. I recall the Minister said it would be €10 million. Could that be transferred? I know that in the case of the targeted agricultural modernisation scheme, TAMS, which is under the capital side, there is an issue about the criteria for qualification. I understand there has been a poor uptake generally during the past while. Could that be expanded in any way? I realise this is broadening the question a little. Could it be expanded in any way to ensure a better uptake? I believe every available penny or euro within the Department should be used if it is there to be used rather than have it rolling over from year to year or not being taken up.

I would welcome the Minister's comments on the horse issue. We are heading into the winter now. I hope it will not be as difficult or as long as last winter but if it is in anything in the same vein as last winter, we will be in serious difficulties where horses are concerned. Has the Minister considered any ideas? Judging from the comments he has made, he appears to be considering the idea of an amnesty for horses that are not eligible for the factory setup. A large number of horses in the country will be under severe pressure as we come into the winter because the feed may not be directed in their direction. It will become a problem if the winter is difficult. Is an amnesty on the cards? What would be the potential cost of that amnesty? That is a big issue as well.

Previous speakers have mentioned that the suckler premium or potential support for suckler farmers has been a topic of conversation in recent times within farming circles. It is well known that suckler numbers are dropping. We had a related discussion at length yesterday in the committee. While a suckler premium would be welcome and may stabilise the situation, it may not halt the decline in numbers in future and that will have a knock-on effect on the Food Harvest 2020 plan as we move beyond this year into other years. Can anything be done for the future? The suckler premium was probably a short-term measure to address a long-term problem. What is the potential cost of it? If it does come in, is the intention to have it across the board or to have a focused scheme?

Photo of Andrew DoyleAndrew Doyle (Wicklow, Fine Gael)
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Perhaps the Minister will address the general points and then the specifics.

Photo of Simon CoveneySimon Coveney (Minister, Department of Agriculture, the Marine and Food; Cork South Central, Fine Gael)
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I will address the numbers first. We have published on our website much of what the Deputy is asking for. Perhaps we should have sent on some of the updated charts on this year's expenditure, but we cannot give next year's expenditure. That would in essence be giving the committee the budget now.

Photo of Éamon Ó CuívÉamon Ó Cuív (Galway West, Fianna Fail)
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No.

Photo of Simon CoveneySimon Coveney (Minister, Department of Agriculture, the Marine and Food; Cork South Central, Fine Gael)
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It is not finalised. One of the differences between this year and last year is that last year we had two meetings while we only have one this year. It was in this meeting last year that the Deputy asked for more information and we got that for him and that was the basis of the second meeting. Perhaps that explains it, but I assure the committee there is no attempt to try to evade questions. We will give the committee any information we have and that it seeks. I cannot give the committee the budget because we have not finalised it yet. Some of the questions the Deputies asked are relevant, however, and I will go through some of them.

The first question relates to the rural development programme for next year. It is true that in the new Common Agricultural Policy, which starts from next year in terms of the multi-annual financial framework, Europe's contribution to Pillar 2 money will be €313 million as opposed to just under €350 million, representing a reduction. This does not necessarily mean that the amount of money spent on farmers in the rural development programme reduces because the co-funding rates are different for different schemes. We have an option of 85% co-funding for several schemes because we are a bailout country at the moment. In the new CAP we will have a 75% co-funding option for environmental schemes, whereas it will be a 53% co-funding option for many of the other schemes. The co-funding rates will determine the amount of money. The Deputy rightly said that what farmers want to know is not the split between Europe and Ireland. They simply want to know how much money they are getting and whether they will get more or less next year.

The expenditure profile for current and capital expenditure is set on the basis of the amount of money that is being spent by the Department. It comes from Europe and from the Exchequer for rural development funding. The expenditure profiles will be set by the Department of Public Expenditure and Reform. We are trying to maintain the actual spend at as high a figure as we can. Obviously, that will impact on the co-funding elements of the decisions. From a finance point of view, in terms of the accounting, some people are keen for us to prioritise spending on rural development that is linked to 85% co-funding. This would mean the Exchequer would make a minimum contribution, but farmers would suffer then. My job is to ensure I represent the farming view and that we try to spend as much money as we can throughout rural Ireland and support the agrifood sector. That is an ongoing debate, but just because there is a reduction in terms of the European contribution does not necessarily mean that next year there will be a significant reduction in rural development. Certainly, over the full period, it means there will be less money spent from a European Union point of view on the overall rural development programme over seven years, but that is a different discussion.

There was a time when Ireland had a good deal of money to spend and we were spending plenty of extra money on top of the rural development fund, well beyond what we had to provide to draw down EU funds, and we could afford to do that at the time. Much of the rural development debate will be around the co-funding levels and the Exchequer contribution in terms of the overall spend. It is an entirely different thing in terms of direct payments because they are set. There is a 3% reduction and that is it. It is €1.2 billion under the new CAP.

Many farmers are coming out of the rural environment protection scheme this year and that is creating natural savings. In some ways it means that fewer cuts on top of that will be required to meet the savings we must realise. This means, I hope, we will not have to reduce the disadvantaged areas payments this year if we can avoid it, because savings have been made in the past two years. If some of the gap in what we have to save can be filled by the natural savings from people coming out of REPS, then we will make some savings there. However, if they are coming out of the REPS, farmers will ask why the Department does not introduce a new agri-environment options scheme, AEOS, to allow them to get some new revenue streams under an environmental scheme. I made one choice in advance of the budget. It does not make sense to introduce a temporary AEOS next year. Last year and the year before, we introduced new schemes for farmers who were primarily coming out of REPS. We prioritised farmers who were coming out of REPS.

If we were to introduce the same next year we would be introducing an AEOS scheme for which farmers would apply by the end of May. They would not get payments on those AEOS schemes until December at the earliest and probably January, by which time there would be a new CAP rural development scheme starting with, hopefully, quite a comprehensive environmental scheme package. Farmers currently in AEOS schemes may be switching into that new scheme. The idea of introducing an entirely new AEOS scheme this year for a five- or six-month period and paying out when a new scheme is kicking in does not make sense. Most farmers probably agree that it does not make much sense. If there are savings to be made from REPS, we do not have to be as proactive in terms of finding savings and cuts in other areas. The combination of the savings we are being asked to make at the moment from the Department of Public Expenditure and Reform on capital and current expenditure is a higher figure than the savings we are making from REPS next year. There is still a gap to be filled unless we can renegotiate some of those figures, particularly on the capital side.

11:00 am

Photo of Éamon Ó CuívÉamon Ó Cuív (Galway West, Fianna Fail)
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If I may ask two questions-----

Photo of Andrew DoyleAndrew Doyle (Wicklow, Fine Gael)
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I will allow the Deputy to ask them later, because there will be specific questions about REPS and about the roll-over.

Photo of Simon CoveneySimon Coveney (Minister, Department of Agriculture, the Marine and Food; Cork South Central, Fine Gael)
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I agree that the suckler cow sector has seen growth in recent years. We are killing a lot more beef animals this year than last year. However, there is anecdotal evidence to suggest that a large number of suckler cows are not being put into calf and a large number are being slaughtered. There is a real concern that the decisions being made by farmers may reduce the size of the suckler cow herd. There is a lack of confidence in that sector, particularly due to last winter and the terrible spring. Even though beef prices were quite strong this year - they have decreased in the past couple of weeks - there is a confidence issue with regard to the suckler herd that needs to be addressed. We have very limited resources with which to do this but we are actively looking at it. We are expending €25 million in support services for suckler beef and beef. Some farmers were not happy with the €10 million data transfer scheme because they wanted something bigger, but the scheme was oversubscribed. Last year's suckler cow welfare scheme has a carry-over of €10 million. Calves born in the second half of last year are included in payments this year. A total of €5 million is being expended on beef discussion groups. The calculation is being correctly made that the carry-over of €10 million from last year will not be there next year. Effectively, this means a cut of €10 million in supports for the suckler sector. We are looking at ways in which we could provide some support to that sector, but people need to be realistic about the amount of funding we can provide given the savings we have to make. I agree with the sentiment and we will give some signals to the suckler sector in this budget.

The issue of mapping is a contentious one. Nobody likes getting a letter in the post saying that he or she has to give money back, particularly money from 2009. This is not our money; it is public money. If we do not claw it back the European Commission will do so, and with penalties. We debated at Question Time the difference between penalties and disallowances. The situation is the same across Europe; it is not just happening in Ireland. The fines or disallowances applied to countries on this particular issue of mapping are significant. For example, Greece was charged €104 million; France, €62 million; Italy, €111 million; and the United Kingdom, €58 million. As yet, no disallowances have been applied to Ireland on this issue. We have given an assurance to the Commission that we will have a resolution process in place before the end of the year in order to avoid those levels of disallowance. That means ensuring that money drawn down on land that was not eligible must be clawed back and returned. That is the required transparency.

The reason the mapping changes are coming to light now and not in 2009, when some of the mistakes were made, is that we have changed the mapping technology. A new system was introduced in July called Bing Maps which replaces images taken by aircraft flying at high levels, which produced maps that were relatively fuzzy but better than earlier images. The mapping is now done with satellite technology, which produces crystal-clear imagery of the land showing borders, ditches, forestry and scrub at a level of detail that was not possible before. The Commission can see the detail too. Instead of assessing one quarter of the parcels of land in Ireland each year the Commission has required us to look at every single land parcel across the country and to verify that the claims attached to those parcels are accurate, and if they are not accurate the Commission wants its money back. That is about as blunt as I can be about it. We have to accommodate that concern; otherwise, there will be disallowances and penalties and then everyone loses. They will lose on the double because not only do we have to return money that should not have been paid out but we must also pay the disallowance. I will happily answer any more detailed questions on that issue.

CAP implementation is a bigger concern to farmers than the budget. They are both of concern, but farmers really want to know how the single farm payment will be redistributed, what the rural development programme will look like, the extent of a new environmental scheme, how disadvantaged area scheme will be viewed in the future, given that we are redistributing single farm payments, and whether that should change how we look at disadvantaged area payments. These are the types of issue we need to finalise before the end of the year. There are other issues with regard to young farmers, new entrants, active farmers, whether a cap should be imposed and whether we are allowed to introduce one. We could have a long discussion on those options. I do not wish to distract the committee today unless the members wish to have that discussion. We will endeavour to provide all the current figures that the committee requested. Much of that information is available on the Department's website.

I refer to Deputy Pat Deering's questions about horse welfare and an amnesty. We cannot simply grant an amnesty. If the Deputy means we should allow horses that do not have appropriate microchips and passports to be slaughtered for human consumption, then that is out of the question. I know that was not what he meant. We are not going to allow a single kilo of horsemeat into the human food chain unless it has been rigorously tested. We need to defend our strong reputation. Following the lessons learned from the horsemeat scandal, we now have a single database for registered horses and this is being improved all the time. Some of the horses on the database are dead but the information has not been returned. The database management is improving all the time. We are moving towards a single issuing body for passports and microchipping. We have learned some real lessons from the crisis and the system has really tightened up. We will not have an amnesty to allow people to slaughter horses inappropriately. We have considered approaching this problem purely from the point of view of horse welfare. I will not reward anyone financially for having a large number of horses that are not microchipped.

However, if people have horses that they cannot feed, they have no market for those horses and there is likely to be a welfare problem as a result, we must and will act on that, and we are willing to allocate funding to ensure it is done in the most appropriate way. Whether the animals have to be slaughtered humanely or given appropriate treatment, it will be done. We have a welfare phone line that was used very effectively during the fodder crisis and is still open and functioning. Where people cannot afford to feed their animals and have no outlet for those animals, I urge them not to do something crazy such as shooting them in the yard. Instead, they should give us a call. We have the resources to help them if necessary.

Horse welfare is an issue of great concern to me. We have a responsibility to ensure systems are in place to prevent mistreatment and abuse. Last year, some 24,000 horses were slaughtered in Irish factories, while the number to date this year is approximately 6,000. That decline has come about because of an entirely changed regime and approach in regard to the slaughtering of horses. An important factor is that many of the facilities that slaughter cattle no longer want anything to do with slaughtering horses because of the reputational issues that have arisen. We are examining this matter closely and talking to all stakeholders.

Deputy Deering also referred to suckler cows. I accept that there is a risk the numbers will continue to drop. What we will be able to do in this budget will not dramatically change the business case for keeping sucklers, but it might give a signal that it is a sector we wish to prioritise in the context of the limited moneys we have at our disposal. I cannot give the Deputy the exact detail of how it will work, but I would welcome feedback and suggestions from members as to how we can best use the limited funds available to us in safeguarding a sector in need of support.

11:10 am

Photo of Andrew DoyleAndrew Doyle (Wicklow, Fine Gael)
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I have a question regarding the €54 million reduction in expenditure and the costs saving under REPS, which is an offset figure. Is it the case that any scheme in respect of suckler cow welfare would effectively be an add-on? If, say, €20 million were put into suckler welfare, would the cost-saving requirement then become €74 million as opposed to €54 million?

Photo of Simon CoveneySimon Coveney (Minister, Department of Agriculture, the Marine and Food; Cork South Central, Fine Gael)
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That is correct.

Photo of Éamon Ó CuívÉamon Ó Cuív (Galway West, Fianna Fail)
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The Minister has told us the figures are available on the departmental website. I expected to receive a detailed brief outlining those figures. Instead, I did not receive the documentation, such as it was, until last night, and I had other meetings to prepare for this morning. Expecting each member to log onto the website and hunt down the figures is unacceptable and not conducive to a mature and considered debate. We should have had the brief a week ago.

Photo of Simon CoveneySimon Coveney (Minister, Department of Agriculture, the Marine and Food; Cork South Central, Fine Gael)
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For the record, we sent out the brief last Thursday.

Photo of Andrew DoyleAndrew Doyle (Wicklow, Fine Gael)
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I received it on Friday.

Photo of Éamon Ó CuívÉamon Ó Cuív (Galway West, Fianna Fail)
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I did not receive it until last night.

Photo of Thomas PringleThomas Pringle (Donegal South West, Independent)
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Documentation was circulated on Friday, but there was no detail in it.

Photo of Éamon Ó CuívÉamon Ó Cuív (Galway West, Fianna Fail)
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That type of practice is unhelpful.

The Minister referred to mapping. I came across the case of a farmer who had an overclaim of 0.09 hectares on one plot and 0.01 hectares on another, amounting to 0.1 hectare in total. The penalty that has been imposed on him is €258 per year, multiplied by five years, which works out at €12,900 a hectare. This individual claims that some of the land is forage area and, as such, he intends to appeal the penalty. Already, however, the Department, for the sake of 0.1 of a hectare, has deducted €516 from his payment under the disadvantaged area scheme. In other words, he is left with no disadvantaged area scheme payment. A penalty of almost €13,000 for getting it wrong by 0.1 of a hectare seems bizarre.

Photo of Simon CoveneySimon Coveney (Minister, Department of Agriculture, the Marine and Food; Cork South Central, Fine Gael)
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With all due respect, that type of claim is about making headlines. The amount of money we are asking farmers to repay is the amount they would have drawn down on land that was not eligible for payment. The Deputy can spin the figures all he wants, but that is the reality. Moreover, it is not charged for five years.

Photo of Éamon Ó CuívÉamon Ó Cuív (Galway West, Fianna Fail)
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It is in this case.

Photo of Simon CoveneySimon Coveney (Minister, Department of Agriculture, the Marine and Food; Cork South Central, Fine Gael)
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No; that is not-----

Photo of Andrew DoyleAndrew Doyle (Wicklow, Fine Gael)
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I apologise for interrupting, Minister. I am anxious that we not get bogged down in a forward-and-back exchange on this particular issue. Other members are waiting to speak on general budgetary matters, which is the purpose of this meeting. Farmers are aware there is an appeals mechanism in regard to mapping. I had to avail of it myself when I was notified of a deduction in my disadvantaged area-scheme payment.

Photo of Simon CoveneySimon Coveney (Minister, Department of Agriculture, the Marine and Food; Cork South Central, Fine Gael)
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I accept that there are farmers who feel hard done by; I have spoken to many of them myself. For the benefit of people in that situation, we are putting in place a fast-track appeals system. Under the existing appeals mechanism it sometimes takes a considerable amount of time to arrive at a decision, because these are complex cases. To remedy that, we are appointing an independent chair, whom farmers will like, and a fast-track system that will ensure speedier decisions.

Photo of Andrew DoyleAndrew Doyle (Wicklow, Fine Gael)
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I am aware that issues to do with mapping can have an impact on income levels. However, the purpose of this meeting is to discuss the implications for agriculture of measures in the forthcoming budget. On the suckler cow issue, the Minister has clarified that any additional money allocated will be added to the current spending reduction target of €54 million, unless the Minister can negotiate something with the Department of Public Expenditure and Reform. I ask Deputies to concentrate on that. I will allow Deputy Ó Cuív to come back in, but he must be brief. I have already given him more time than anybody else.

Photo of Éamon Ó CuívÉamon Ó Cuív (Galway West, Fianna Fail)
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My point in regard to mapping is that the Department should not be clawing back any money until it has given people all the information and allowed them a chance to appeal. It is outrageous to begin taking back these moneys before people have time to initiate an appeal.

Photo of Susan O'KeeffeSusan O'Keeffe (Labour)
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Is this meeting about mapping?

Photo of Andrew DoyleAndrew Doyle (Wicklow, Fine Gael)
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The Deputy has made his point. Other members wish to speak.

Photo of Éamon Ó CuívÉamon Ó Cuív (Galway West, Fianna Fail)
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I have several questions on the general issues.

Photo of Andrew DoyleAndrew Doyle (Wicklow, Fine Gael)
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The Deputy must be brief. Other members are waiting.

Photo of Éamon Ó CuívÉamon Ó Cuív (Galway West, Fianna Fail)
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Will it be possible to get the saving from REPS and, in addition, will the scheme be rolled over? The Minister indicated that he could not start a new agri-environment options scheme. Will he explain why the 3,000 people who are ready to go into AEOS are not being facilitated in doing so? Finally, how much would the €100 per cow suckler cow welfare scheme cost if it were implemented next year?

Photo of Andrew DoyleAndrew Doyle (Wicklow, Fine Gael)
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It is easy to calculate that figure when we know there are 1.2 million cows.

Photo of Martin FerrisMartin Ferris (Kerry North-West Limerick, Sinn Fein)
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In the case of people coming out of REPS 4, there will be a gap in provision. Has the Minister any intention or proposal to fill that gap? In regard to the ceiling on CAP payments of €150,000, what savings will accrue from that and does the Minister propose to redistribute them?

Photo of Thomas PringleThomas Pringle (Donegal South West, Independent)
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I still have not heard how much of the €54 million saving will come out of schemes.

Photo of Simon CoveneySimon Coveney (Minister, Department of Agriculture, the Marine and Food; Cork South Central, Fine Gael)
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I will give the Deputy that figure when I reply.

Photo of Thomas PringleThomas Pringle (Donegal South West, Independent)
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When we took the Revised Estimates in July, there were certain figures for projected expenditure which we were told by the Department were reflective of a spirit of prudence. For example, the allocation for legal fees was €2.1 million greater than the corresponding figure for 2012. Will that type of approach continue into 2014? If some of that prudential allocation were pruned there might be potential savings of millions across the different subheads, which could be used to offset some of the cuts affecting particular schemes.

Photo of Andrew DoyleAndrew Doyle (Wicklow, Fine Gael)
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I now call Senator Susan O'Keeffe. I apologise for not calling her earlier; I did not see her indicating.

Photo of Susan O'KeeffeSusan O'Keeffe (Labour)
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That is okay, Chairman. I am just frustrated by the conversations about mapping and so on. I understand that is a hugely important issue for individual farmers, but it is not what we are here today to discuss.

In addition, there are time constraints involved. My difficulty relates to the fact that we do not even have a rough idea of how we might address this matter. We do not really know anything about from where the Minister might be seeking the €54 million saving required. I appreciate the dilemma in which he finds himself because he cannot reveal the budget to us. At the same time, however, we cannot identify - from the range of issues involved - whether this is an appropriate matter to discuss. That is because we have no idea at all with regard to where the Minister is seeking to make the cuts which, we appreciate, must be made. I am finding this process extremely difficult.

A matter to which I have referred on several occasions in the Seanad relates to the incredibly difficult weather conditions experienced earlier in the year and their impact. None of us knows what the weather conditions will be like next year. We must be in a position to discuss this matter in the context of what we might need to spend and the action we might be obliged to take should there be a recurrence of the weather conditions experienced last winter. That is just one tiny matter which might not relate to budget constraints at all. Research from the Met Office and elsewhere indicates that conditions in Ireland are inevitably going to become wetter.

There is no mention of the marine in any of the documentation. I find the process involved here too fuzzy to allow us to really engage with it. I am not laying blame, I am merely outlining the position as it stands. In light of the fact that this is a huge Department, we should examine ways of how to improve the process and make it more focused. It is not as if the Minister is not working hard, he is doing so. However, we cannot engage with him.

11:20 am

Photo of Martin HeydonMartin Heydon (Kildare South, Fine Gael)
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I am not sure whether it is proposed to go through each subhead individually.

Photo of Andrew DoyleAndrew Doyle (Wicklow, Fine Gael)
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To be fair and with all due respect to the Minister and his officials, the general impression seems to be that it would be very difficult to do that. The lesson we learned last year was that we did not get anywhere on foot of our first meeting and that a second meeting was required in order that we might be provided with more detailed information.

Photo of Susan O'KeeffeSusan O'Keeffe (Labour)
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We are doing the same thing this year.

Photo of Andrew DoyleAndrew Doyle (Wicklow, Fine Gael)
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When we were provided with additional detail, we were in a position to engage in a somewhat more constructive discussion. What the Minister has outlined is very simple: a saving of €54 million. In addition, regardless of whatever is invested in particular schemes, savings must also be made. We must identify what is going to be targeted and how the savings will be achieved.

Photo of Simon CoveneySimon Coveney (Minister, Department of Agriculture, the Marine and Food; Cork South Central, Fine Gael)
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Minus the natural savings.

Photo of Éamon Ó CuívÉamon Ó Cuív (Galway West, Fianna Fail)
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How much will be the natural savings?

Photo of Andrew DoyleAndrew Doyle (Wicklow, Fine Gael)
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The other point is that if there is a carryover from REPS 4, I presume this will either add to the figure or reduce the offset effect.

Photo of Simon CoveneySimon Coveney (Minister, Department of Agriculture, the Marine and Food; Cork South Central, Fine Gael)
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May I comment on some of those matters?

Photo of Andrew DoyleAndrew Doyle (Wicklow, Fine Gael)
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I will allow Deputy Heydon to continue and the Minister can wrap up proceedings at that point.

Photo of Martin HeydonMartin Heydon (Kildare South, Fine Gael)
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For fear that I might not get in at all, I will just make a couple of brief points. I see that gap and I am going for it.

I welcome the Minister's comments regarding the suckler herd and the need for a welfare scheme of some type. I would support such a scheme. I also acknowledge the difficulties involved with a short-term environmental scheme. From my point of view, spending constraints apply with regard to the establishment of a new scheme or the putting in place of a mechanism to make payments in a short period. People may wish to play politics but there is no doubt that the Minister must operate within those constraints. There is only so much which can be done with the money that is available. We must ensure that the maximum amount of such money goes to producers and farmers and that it is not tied up in extra administration and unnecessary red tape. Perhaps establishing a suckler scheme would be a better way to use the money than trying to set up a short-term environmental scheme that would only last for eight or nine months of the year.

Under the administration budget, the Department appears to have spent €500,000 more than projected in respect of office premises expenses up to the end of August. If a Teagasc office closes, do the expenses relating to its maintenance remain with Teagasc or do they become the responsibility of the Department? Who is responsible for disposing of it and to where does the money go?

I welcome the Minister's comments on horse welfare and his indication that an allowance will be provided, if necessary. It will depend on the weather this winter. There is a potential problem in this regard which might need to be addressed. I support the horse and greyhound fund, which has been the subject of significant cuts in recent years. I hope that, at the very least, we will be able to maintain the level of funding that was made available for the current year. This industry is worth over €1 billion to the economy and it gives employment to in excess of 17,000 people.

Photo of Andrew DoyleAndrew Doyle (Wicklow, Fine Gael)
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I call the Minister, who has ten minutes in which to reply.

Photo of Simon CoveneySimon Coveney (Minister, Department of Agriculture, the Marine and Food; Cork South Central, Fine Gael)
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I will provide some figures with regard to what the Department of Finance regards as natural savings and which it factors into the budget. As a result of the numbers that will be leaving REPS next year, we are of the view that we will make natural savings of approximately €25 million.

Photo of Éamon Ó CuívÉamon Ó Cuív (Galway West, Fianna Fail)
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Is that national as opposed to European savings?

Photo of Simon CoveneySimon Coveney (Minister, Department of Agriculture, the Marine and Food; Cork South Central, Fine Gael)
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It is both. REPS is co-funded by ourselves and the EU. There will be €25 million less to spend as a result of the number of people who will be coming out of REPS next year.

Photo of Éamon Ó CuívÉamon Ó Cuív (Galway West, Fianna Fail)
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Let us be precise. Will the Department of Public Expenditure and Reform consider the full €25 million as a saving or will it view it as €25 million minus the EU clawback?

Photo of Simon CoveneySimon Coveney (Minister, Department of Agriculture, the Marine and Food; Cork South Central, Fine Gael)
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The Department of Public Expenditure and Reform does not factor in EU clawbacks. The Deputy should be aware, from his time in government, that this is how the Departments of Finance and Public Expenditure and Reform work. Schemes that are co-funded are part of our expenditure programme in terms of both current and capital spending. On the capital side we have TAMS, etc., while on the current side we have the environmental schemes, DAS payments and so forth. The actual expenditure is the amount indicated. How it is co-funded is a separate issue.

Photo of Andrew DoyleAndrew Doyle (Wicklow, Fine Gael)
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So that figure is subtracted from the €54 million.

Photo of Simon CoveneySimon Coveney (Minister, Department of Agriculture, the Marine and Food; Cork South Central, Fine Gael)
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Correct. That is why I am saying that there is less pressure on us to cut schemes than was perhaps the case last year. On the other hand, we are trying to find new money to invest in a support scheme relating to suckler cows.

I wish to nail a few matters in respect of which people appear to have totally unrealistic expectations. One of these is the idea that we could simply roll over REPS next year, that this would be okay and that we would still be able to save the same amount of money. The latter is simply a non-starter. We did not roll over REPS 2 or REPS 3 so why should we roll over REPS 4? The cost of such a roll-over would be significant.

We are making some savings in the context of the suckler cow welfare scheme. This is because €10 million was spent this year which will not be spent next year. That was an overhang from last year. Some money is also being saved in respect of the early retirement scheme. The cost relating to that scheme decreases each year. Approximately €4 million will be saved in this regard. Money will also be saved in the context of marketing and processing but this is on the capital side. We anticipate that up to €8 million will be saved in this regard.

Photo of Éamon Ó CuívÉamon Ó Cuív (Galway West, Fianna Fail)
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Will there be a saving in respect of the fodder scheme?

Photo of Simon CoveneySimon Coveney (Minister, Department of Agriculture, the Marine and Food; Cork South Central, Fine Gael)
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No. The fodder scheme was not part of our original Estimate so we were obliged to find extra money for it.

Photo of Éamon Ó CuívÉamon Ó Cuív (Galway West, Fianna Fail)
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The €10 million for the scheme was found from somewhere else within the Vote.

Photo of Simon CoveneySimon Coveney (Minister, Department of Agriculture, the Marine and Food; Cork South Central, Fine Gael)
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The amount was not €10 million. It was not even €2 million. The Deputy was the one who called for the provision of €10 million for the scheme. Nobody else made that call. We were focusing on getting fodder into the country as opposed to handing out money.

If all the savings to which I refer are added up, the amount involved is approximately €45 million. Those are natural savings. We are seeking to make savings that are required of us of €54 million. That is before we have had the opportunity to try to renegotiate some of the capital spending. We are pursuing that matter aggressively at present and I am hoping we will make some progress on it. We could possibly reach a point where we would not be obliged to cut schemes at all. However, we must find some space to put new money into the suckler beef sector. We are examining ways in which we can make savings without affecting farmers directly.

The challenge in the context of the forthcoming budget relates to finding ways of spending new money. With natural savings and a positive outcome to negotiations on capital budgets, I hope that the overall figure will match the target that has been set for us.

The question then is how much money can we find through sensible savings to put into a sector that needs a boost, namely the suckler sector. I cannot be more open than that.

11:30 am

Photo of Andrew DoyleAndrew Doyle (Wicklow, Fine Gael)
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To be clear on this, what we have here is an overall synopsis of the budgetary position. The Departments of Public Expenditure and Reform and Finance require savings of €54 million from the Department subject to ongoing negotiations with the Minister to reduce that figure. We have figure for natural savings. We got a general confirmation from the Minister that there will not be a new agri-environment options scheme nor a roll-over of the rural environment protection scheme, but there will be a provision of some figure for a suckler cow welfare scheme which adds to that. I have added up the natural savings and the figure comes to €47 million.

Photo of Simon CoveneySimon Coveney (Minister, Department of Agriculture, the Marine and Food; Cork South Central, Fine Gael)
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For the sake of accuracy, what I am referring to may not be a suckler cow welfare scheme-----

Photo of Andrew DoyleAndrew Doyle (Wicklow, Fine Gael)
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It will be a support scheme.

Photo of Simon CoveneySimon Coveney (Minister, Department of Agriculture, the Marine and Food; Cork South Central, Fine Gael)
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-----but it will be some supports for that sector that help it move in the direction we want it to go in. If I am designing it, it certainly will not simply involve the handing out of money; it will hopefully incentivise more efficiency and improvements in the sector.

Photo of Andrew DoyleAndrew Doyle (Wicklow, Fine Gael)
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To be clear on this in case there is any ambiguity, on the issue of mapping, the money in that receipt will not come back into the Exchequer. If €1 million is retrieved on foot of mapping penalties that would not come into Exchequer figure, that would be passed on to Europe.

Photo of Éamon Ó CuívÉamon Ó Cuív (Galway West, Fianna Fail)
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There is also money in respect of the disadvantaged areas scheme, DAS. I was counting only the single payments savings, but there will be a saving in respect of DAS.

Photo of Andrew DoyleAndrew Doyle (Wicklow, Fine Gael)
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I want to clarify the issue in respect of mapping penalties.

Photo of Éamon Ó CuívÉamon Ó Cuív (Galway West, Fianna Fail)
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There is also a DAS issue.

Photo of Simon CoveneySimon Coveney (Minister, Department of Agriculture, the Marine and Food; Cork South Central, Fine Gael)
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It has been clarified to me that it will come back as what is called an A and A but we will not have it to spend as such.

Photo of Andrew DoyleAndrew Doyle (Wicklow, Fine Gael)
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That is the point.

Photo of Éamon Ó CuívÉamon Ó Cuív (Galway West, Fianna Fail)
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There will also be a saving in respect of DAS.

Photo of Simon CoveneySimon Coveney (Minister, Department of Agriculture, the Marine and Food; Cork South Central, Fine Gael)
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There are other important things we are trying to do in terms of this budget around the taxation system. We got a very good response from the Department of Finance last year and the year before that on innovative ways of using the tax system to encourage certain practices in farming such as encouraging a movement away from the conacre towards long-term leasing, getting tax deductions in terms of foreign earnings in the food sector and a series of other measures. We have brought a series of new tax proposals to the Department of Finance this year, some of which I hope we will be successful in getting through and some of which we probably will not be. This is not all about expenditure, it is also about trying to do strategic things with the tax system. We put in a detailed submission to the Department of Finance as far back as July on using the tax system to make strategic changes in agriculture that would be helpful.

Photo of Éamon Ó CuívÉamon Ó Cuív (Galway West, Fianna Fail)
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Would it be possible to get details from the Department of Finance on the take up of the various tax breaks that were introduced, which are welcome. I would not always praise the Irish Farmers' Association but its submission on this issue is comprehensive and reasonable. Of all the tax changes that are impacting on ordinary throughout the country, the reduction in the thresholds applying to inheritance tax, transfer tax and capital gains tax and so on is acting as a break on the transfer of land from older farmers to young farmers. Everything positive that was done in that direction is put at nought because people are going to face huge tax bills because the thresholds have been reduced and they are putting off land transfers. Many of the smaller targeted schemes have been put at nought by the changing of the thresholds for transfer taxes.

Photo of Andrew DoyleAndrew Doyle (Wicklow, Fine Gael)
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A vote has been called in the Dáil and I ask that we deal with matters quickly as we have to conclude very shortly.

Photo of Simon CoveneySimon Coveney (Minister, Department of Agriculture, the Marine and Food; Cork South Central, Fine Gael)
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One of the things the Department of Finance is likely to do shortly after the budget is to open up a detailed review of all of the tax measures that relate to agriculture and agrifood. During the past 20 years or so there have been new additions every year but very little change has been made to the existing tax incentives. I think we will see a comprehensive review within the Department of Finance of the overall package of how tax is used in agriculture. That will bring opportunities but also potential threats to the current system about which we will have to be aware. As regards this budget, I do not want to give the members the details on all the measures but we are trying to keep the same priorities intact around trying to make more land available at affordable prices, which essentially means leasing because buying land is almost impossible in Ireland because it is so expensive, particularly for young farmers. We are also trying to do some other strategic things with the tax system around environmental management and climate change.

Photo of Andrew DoyleAndrew Doyle (Wicklow, Fine Gael)
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Aside from that, Macra na Feirme has engaged, with the support of FBD, a land mobility officer and that person's deliberations should be fed into the review by the Revenue Commissioners.

I thank the Minister for this exchange. We eventually got to the nuts and bolts of the budgetary position and while we as a committee may not get to make a further submission to the Minister, all members, Opposition and Government, now have an opportunity to feed into the process. It could be the case that the Opposition members are being better armed for the debate after the announcement of the budget. At least we know the figures and the general position the Minister is taking with regard to schemes and natural savings. We appreciate knowing that. If we had this exchange a fortnight earlier it would have helped us and we could have come back to this issue but because of various think-ins and other matters we had to defer it until this morning which was unfortunate. I thank the members for their input. Deputy Ferris is indicating and I will allow him in if he will be very brief.

Photo of Martin FerrisMartin Ferris (Kerry North-West Limerick, Sinn Fein)
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There would be cross-party support for some form of sucker scheme some farmers, as it is important for the viability of that sector.

Photo of Andrew DoyleAndrew Doyle (Wicklow, Fine Gael)
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That is generally acknowledged.

Photo of Simon CoveneySimon Coveney (Minister, Department of Agriculture, the Marine and Food; Cork South Central, Fine Gael)
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People need to know the limitations of what I have financially.

Photo of Andrew DoyleAndrew Doyle (Wicklow, Fine Gael)
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As there is no further business, the meeting is adjourned.

The joint committee adjourned at 11.50 a.m. until 2 p.m. on Tuesday, 8 October 2013.