Oireachtas Joint and Select Committees

Tuesday, 13 September 2016

Joint Oireachtas Committee on Agriculture, Food and the Marine

Pre-Budget Submissions: Discussion

2:40 pm

Chairman:

The witnesses are welcome. Before I begin, I remind members, witnesses and those in the public gallery to please turn off their mobile phones, as they affect the broadcasting facilities in the room. The first group before the joint committee today for a pre-budget discussion is the Irish Farmers' Association, IFA. I welcome Mr. Joe Healy, president of the IFA, and wish him well in his tenure, as this is his first opportunity to appear before the committee since his election as president in the springtime. I also welcome Mr. Seán O'Leary, dairy chairman, Mr. Liam Dunne, grain chairman, and Mr. Bryan Barry, acting general secretary. I thank them for their attendance today to discuss the issues related to the agricultural sector before budget 2017.

On the matter of privilege, in accordance with procedures I am required to read out the following statement before we commence. By virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to the committee. However, if they are directed by the committee to cease giving evidence on a particular matter and they continue to so do, they are entitled thereafter only to a 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 they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person, persons or 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 House or an official either by name or in such a way as to make him or her identifiable.

I remind the witnesses their presentations should take no longer than ten minutes. The presentations they have submitted have been circulated to members. Questions and answers will be taken after the presentations. I invite Mr. Healy to make his opening statement.

Mr. Joe Healy:

I thank the Chairman and members for the opportunity to speak to them today on the key issues regarding farm income for 2016. I first congratulate the Chairman on his appointment and wish every success to the members of the committee. We worked closely with the Chairman's predecessor, the Minister of State, Deputy Andrew Doyle, and we wish him well in his new role. We obviously look forward to a positive interaction with this joint committee, as well as engagement on all agricultural issues.

On farm income pressures, difficulties undoubtedly have been experienced in many sectors in Ireland throughout 2016 through a combination of a number of factors involving low product prices, a bad spring and negative political events. Families are under severe pressure as cashflow tightens as the autumn approaches. In addition, the vote by the United Kingdom to leave the European Union has created much uncertainty. For Ireland as a whole, for Irish agriculture and for the agrifood sector in particular, with 40% of our agrifood exports going to the United Kingdom and a shared land Border, the implications of their decision will affect us greatly. No one is underestimating the major challenge that Brexit presents for the agrifood sector but at the outset, I wish to highlight farmers' anger at the behaviour of meat factories in the weeks following the vote in over-hyping the Brexit result in an effort to push down their prices and to create panic in the trade. This was not reflective of the strong market conditions for finished cattle that existed at the time and which continue to exist in the UK market. Moreover, further evidence of this behaviour by the factories was to be seen this week. At a time of political uncertainty and in advance of formal negotiations, the IFA’s focus is on highlighting the key issues and on identifying the best means by which these can be addressed.

This brings me to budget 2017 and the farm schemes and in this context, the Government must use budget 2017 to take funding and taxation decisions to alleviate the farm income difficulties being experienced and to underpin the longer-term development of the sector. The IFA is clear that having experienced a reduction in funding to the agriculture budget of almost 40% during the downturn, there must be an increase in funding in this year’s budget for important farm schemes. These schemes are vital in supporting farm incomes and economic output on lower-income farms in particular, as well as in supporting important capital investment across all farming sectors. A viable agriculture sector is critical to the strength of rural Ireland and the rural economy. It contributes to employment across the country and underpins our agrifood exports, which have grown by almost 60% since 2009 and are likely to exceed €11 billion in 2016.

Our expenditure priorities for the farm schemes in budget 2017 are: the funding of €250 million for the agri-environmental schemes, with full payments for all green low-carbon agri-environment scheme, GLAS, agri-environment options scheme, AEOS, and organic scheme participants; the introduction of the targeted sheep scheme of €25 million with minimal costs and bureaucracy on farmers to maximise its benefits; additional funding for the areas of natural constraint, ANCs, to reach €225 million, thereby commencing the process of restoring ANC payments to the position in 2008 before the cuts; the immediate reopening of the beef data and genomic programme to new participants with additional funding of €25 million to increase support for the very important suckler cow herd; and a funding allocation of €50 million to the targeted agricultural modernisation scheme, TAMS II, to meet the demand across all farming sectors for on-farm investment.

In addition, farm assist is a vitally important scheme for low-income farm families, particularly in a year like 2016. The IFA recognises the commitment to a review of farm assist in the programme for Government. To that end, the income and child disregards that were fully abolished in recent years must be reinstated in this year’s budget.

As regards taxation, budget 2017 also provides the opportunity to address ongoing challenges in farming through the taxation system. Everyone is clear that income volatility is a real challenge. The barriers preventing more farmers from using income averaging must be removed as a priority. In addition, a more targeted and individualised volatility scheme is required. The IFA is proposing to maximise the number of farmers using income averaging; the current restrictions on eligibility where the farmer’s spouse is in self-employment must be removed. Also, the income averaging system must be adjusted to allow a farmer on averaging, in a year when income falls significantly, to pay the tax due for a single year only. The deferred tax would then be carried forward and paid over a three-year period. This flexibility could assist greatly with cashflow pressures.

Last October’s budget finally saw the first steps in removing discrimination against the self-employed in the income tax system with the introduction of the earned income tax credit. We recognise the commitment in the programme for Government to increasing this to match the PAYE credit by 2018. However, it is vitally important that the Government equalise those credits fully by 2017, which means bringing forward the two-thirds into this budget. This would give a direct cashflow boost to farmers and other self-employed people.

I will now discuss Brexit taxation measures. The weakening of sterling in the aftermath of the vote by the UK to leave the EU has had a negative impact on the competitiveness of Irish agri-food exports into the UK market, and for products competing with UK imports at home. The more labour-intensive sectors in agriculture are seriously affected by the impact on prices arising from exchange rate volatility. Those particularly affected in the short run are the domestic horticulture sector and our mushroom industry, almost all of whose €120 million of exports are destined for the UK market. It is critical that action be taken in budget 2017 to offset this negative impact and maintain cost competitiveness. In this context, IFA proposes that the lower rate of employer PRSI should be temporarily reduced in order to reduce employment costs for export-dependent SMEs in all sectors.

There must be no increase in excise rates for marked gas oil - that is, agricultural diesel. In addition, given the importance of maintaining competitiveness, we would have to question any move by the Government to increase excise rates on other road fuels at this time.

I will now deal with access to credit, including low-cost cashflow funding. Farm income difficulties are being compounded by a clear market failure in the Irish financial sector. The lack of competition and flexibility within the banking sector is affecting farmers’ ability to secure finance at reasonable rates. Extending merchant credit to deal with cashflow pressures is a high-cost and inefficient way of dealing with short-term farm financing. The IFA has clearly identified that the Government and the Minister for Agriculture, Food and the Marine must deliver, without any further delay, alternative sources of lower-cost long- and short-term funding for farm enterprises. The €11.1 million funding allocation for dairy and other livestock farmers agreed by the EU in July must be matched by national funding to bring the total package value to €22.2 million. This must then be used to help farmers with their cashflow difficulties.

In the grain sector we have seen income losses of €100 million this year, as they endure their fourth successive year of losses.

Up to 75% of crops in the north west have yet to be harvested. The Minister must deliver a European aid package for tillage farmers and the sector, which has been so badly affected this year. The Minister must also not lose sight of the need to allow farmers in all sectors to convert their accumulated merchant credit, utility, superlevy and other bills into low-cost, short-term loans. This type of loan package, based on the €15,000 state aid de minimusrule, was proposed by the IFA earlier this summer. While the response from the Minister has been positive, the time for delivery is now. The July agreement of the EU Council of Ministers confirmed that member states may make advance payments of 70% of the basic payments scheme and 85% of rural development payments on 16 October. This will help farmers in a very difficult year. All payments for farm schemes must be made on time and in line with the deadlines set down in the Farmers' Charter of Rights 2015-2020. This is particularly important in a year when farm cashflow is under stress.

High input costs are also a challenge to viable farms. The Government must take a strong stance at EU level to support the IFA campaign to remove the tariffs and duties on EU fertiliser imports. This would deliver between €50 million and €70 million for Irish farmers. The fertiliser issue is of particular importance for to tillage farmers who, through a combination of low prices and yield, are facing an income drop of up to €100 million this season. Additional support measures that must be delivered for the tillage sector include increased GLAS payments, increased coupled funding to support the expansion of the protein crop and the delivery of funding for the TAMS investment programme. In addition, there is an urgent need to develop a national certification scheme to promote Irish grain and its maximum use. What is needed to drive this agenda is to get all stakeholders around the table through the establishment of a national grain forum led by the Minister, Deputy Creed. I call on him to act on that immediately.

A combination of market factors and political decisions have contributed to create a difficult income situation on almost all farms in Ireland this year. Urgent action and support from all stakeholders in the agrifood industry is required. I urge the committee to support the proposals we have outlined to tackle the income challenge at farm level across a number of fronts.

Chairman:

A number of members are indicating. We will try to restrict members to two or three questions if possible. Deputy Cahill was the first to indicate.

Photo of Jackie CahillJackie Cahill (Tipperary, Fianna Fail)
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I thank Mr. Healy. My questions are on the loans he envisages the €11.1 million funding being put towards. What size loan would he give to individual farmers? Would he put a cap on the amount of money a farmer could get out of this? What kind of security, if any, would be provided? Some of our farmers, especially in the dairy sector, have fairly heavy borrowings. While giving them access to finance might solve a short-term problem, there is a question about whether it will solve the problem of volatility going forward. I would like Mr. Healy to put a bit of meat on the bones of what he is saying regarding security and the type of loan he envisages for individual farmers.

Chairman:

We will bank the questions. I call Deputy McConalogue.

Photo of Charlie McConalogueCharlie McConalogue (Donegal, Fianna Fail)
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On the European allocation of €11 million, there is a need for the Minister for Agriculture, Food and the Marine to confirm that domestic funding will be provided to match it. In terms of the different pressures that are out there, what is Mr. Healy's recommendation as to how the funding should be spread across the different sectors? There are particular difficulties for dairy, which has had a very bad year. Beef is under pressure as is grain, in particular over the last few weeks in the northern part of the country. In that regard, I thank Mr. Healy and acknowledge the fact that he visited Donegal recently. The north west is particularly affected. What is his perspective as to how the funding can best be put into play?

Mr. Healy referred to the benefits of a national certification scheme for grain. Will he elaborate on that? Are there international examples already in place in this area?

Photo of Thomas PringleThomas Pringle (Donegal, Independent)
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I thank Mr. Healy for his presentation. In regard to the €250 million in GLAS expenditure the Department has highlighted, some 50,000 farmers are being targeted. Given that the average payment is well below the €5,000 per farmer which was indicated when the scheme was first introduced, is Mr. Healy making the case for extra farmers to be allowed into GLAS on the basis that their inclusion would not break the €250 million ceiling? This is important. If we got up to a figure of 58,000 farmers, this would mean everybody who wants to be facilitated under GLAS can be facilitated. I would be glad to hear Mr. Healy's views.

I note what Mr. Healy said in respect of farm assist. This is a busy area for me in terms of dealing with farmers locally in Donegal. There is an issue with regard to farmers who work part-time and have an off-farm incomes, and who may be able to avail of jobseeker's benefit when they have periods of off-farm unemployment. They need a certain number of payments in order to make claims and they must also have a subsidiary income of less than €12.70 per day, which is very low. This means that a person with a farm income of over €4,600 a year cannot claim jobseeker's benefit. I have been lobbying to have this increased to approximately €25 a day, which would make a huge difference and would not be a significant cost to the Department of Social Protection. Is this something the IFA has come across in the rest of the country?

Photo of Willie PenroseWillie Penrose (Longford-Westmeath, Labour)
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I am glad to see the IFA is now on board in regard to the beef genomics scheme because it was certainly a very reticent participant 12 months ago when mine was a lone voice in ensuring that people would not be misled in terms of their participation. Mr. Healy might not be aware of this but some of his predecessors were, shall we say, reluctant participants. Coming from the midlands, I want to stress how important it is that no one is misled. How many more farmers does Mr. Healy believe will participate in the scheme? Is it the aim of the IFA to get back up to the full €52 million that was allocated?

I can see the input of Liam Dunne into this paper. I want to support him in regard to the point that the most important thing for grain farmers is to succeed at European level, although there seem to be all sorts of obstacles in that regard. I took that on board last February following his advice. If the IFA can get that €50 million or €60 million back, it would mean a huge input cost reduction and would improve stability, particularly in the current context where grain crops have been hit by low yields, high costs and now cannot even be got out of the ground.

The targeted agricultural modernisation scheme, TAMS, has not gone like clockwork, as we might have anticipated, and technology difficulties within the Department are one excuse. Has any progress been made in that regard and what is the current position?

I unequivocally support bringing the self-employed up to ordinary PAYE equivalent status and I believe it is high time equivalent credits were granted. What worries me is that we now see some of the tax strategy groups indicating they will wipe out some of those credits. If that happens, we will be further back than ever.

There is another issue that is probably in Liam Dunne's area. I have read in recent days of possible proposals to increase the price of green diesel and auto diesel, as an environmental measure, in order to bring it up to the price of petrol. Would that not be a retrograde step? It seems to be a case of tax strategy evaluation but it would probably send the entire sector into a tailspin at a critical time. We will have to keep a tight focus on these issues in terms of the negative impact they would have on the profitability of sectors in the industry that are already experiencing difficulties.

Photo of Martin KennyMartin Kenny (Sligo-Leitrim, Sinn Fein)
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I welcome the delegation. The IFA does tremendous work in supporting farmers across the country. I note an allocation of €50 million towards targeted agricultural modernisation schemes, TAMS, but many farmers find it difficult to get the existing allocation. Many have been approved for slatted houses and so on only for the specifications to be changed and their approvals withdrawn. There is all kinds of messing going on. Naturally, it is important to seek additional money for TAMS, but farmers should get the existing allocation more quickly. Accelerating the process is vital but has not been done, which has disappointed many farmers the length and breadth of the country.

Regarding areas of natural constraint, ANCs, I come from the west where there is poorer, marginal land and farmers are on smaller holdings. It is vital that there be a recognition that ANCs must be prioritised in the next number of budgets. Mr. Healy was in north Leitrim and Donegal in recent weeks and would have seen for himself that people were barely surviving. The kind of land that they are working on puts them at a significant disadvantage. This must be recognised as we move into the budgetary process.

Photo of Pádraig Mac LochlainnPádraig Mac Lochlainn (Sinn Fein)
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I wish to raise two issues, the first of which relates to prompt direct payments. During August, a number of the farming organisations raised concerns about late payments and delays in notifying farmers of problems, be it in the context of the basic payment scheme, the ANC scheme, TAMS or whatever. This was despite commitments made by the Minister or in the farmer's charter. What is the current state of play and what proposals has the IFA on making the system work more efficiently and bypassing bureaucracy?

The second issue relates to the problems experienced by grain growers. Perhaps Mr. Dunne will elaborate. I spoke with the IFA chairman in Donegal yesterday. He appreciated that Mr. Healy had visited the county. I understand that the county organisation hopes to meet the Minister in the coming week regarding this issue. The chairman stressed to me that there was a crisis for the affected farmers, specifically in the north west. Mr. Dunne issued a press release, so perhaps he will elaborate on what he has seen on the ground. Does the IFA have proposals on how to assist these farmers?

Photo of Tim LombardTim Lombard (Fine Gael)
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I welcome the IFA delegation. It has been a tough year. The dairy industry in particular had a rocky start but there is a bit of light at the end of the tunnel.

I wish to ask about the IFA's proposal on the grain industry, which is experiencing major issues with bad prices and bad weather. Be one from Cork or Donegal, there are crops in the field, but one does not know when they can be harvested. A European grain package has been mentioned. What will the IFA's platform on that be? What is the template? Will more than the previous amount of €11.2 million be sought? On what platform can our committee work with the IFA in Europe to deliver that?

Photo of Michael D'ArcyMichael D'Arcy (Wexford, Fine Gael)
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Many issues have been covered. The grain crisis is one for the entire country. The weather is difficult currently, but when one ploughs, harrows, sows and harvests only to get below-cost prices, it is a crisis everywhere. The crisis is greater in some areas but it is important that we do not identify it as being a crisis in one particular area. What are the IFA delegates' opinions in this regard?

Photo of Paul DalyPaul Daly (Fianna Fail)
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I welcome the delegation. I have a brief question. Most issues have been covered. I agree that, regarding grain, we seem to be concentrating on the north west. I am in the midlands, which people from outside would call affluent, but ours is a spring barley area, not a tillage one. As such, the weather is causing issues everywhere, not just in the north west.

My question is on beef genomics. The IFA has asked that the programme relating to the latter be reopened.

Is the witness happy with the operation of the scheme to date and does he just want it opened again as it is for new entrants? Would he like to see any changes to how it functions or operates with the farmers who are currently members?

Chairman:

I thank the members. Before going back to Mr. Healy and the delegation, I will raise one issue. An issue that has been highlighted throughout the year, in this and the previous committee, is the potential takeover of Slaney Meats by ABP Foods. The competition authority is reviewing it at the moment but what is the delegation's view on it?

Mr. Joe Healy:

As indicated at the start, Mr. O'Leary and Mr. Dunne, our dairy and grain chairmen, respectively, are with us. We also have Mr. Bryan Barry, our chief executive, so we will share the answers.

Chairman:

There are a number of specific issues and the witnesses can deal with them.

Mr. Joe Healy:

To start with the Chairman's question, the committee is well aware of the report by an independent expert, Dr. Pat McCloughan, on the competition issues surrounding ABP Foods and Slaney Meats. One can argue that it falls within the rules, as in the national figure it is 25.8% of the total kill, meaning it is below the line in the sand of 30%. At a more local level with a narrower scale for competition in the south-east area, taking in the premium cattle of steers and heifers falling into the Meat Industry Ireland spec, one is talking about a portion at 44% of the kill. This is why we would argue there would be a severe lack of competition for premium cattle in the south east. We have the report and we have highlighted it in public. We have given it to the competition authorities here and in the United Kingdom, as well as the directorate-general of competition in Brussels. We have also given it to the Minister for Agriculture, Food and the Marine. That is all the work we could do and it is what we have done.

Chairman:

Will you make the report available to the committee?

Mr. Joe Healy:

Yes, absolutely, as there is no issue there. We will forward a copy of the report to the committee. There is much in it. The key issue in it was that this proposed deal, if it goes through, will weaken competition in a market that is already characterised by very weak competition. That is a key finding in the report.

There was mention of the 50,000 farmers in the GLAS scheme and 5,000 extra farmers. We want the money to go to farmers and there should be no money left in the pot. It is similar to the beef genomics scheme. The average payment is approximately €4,200 and with the 5,000 extra, it would take the €250 million. To get to the €250 million would require more than 50,000 farmers, and there are more than 50,000 farmers who would join it. The key for us is to get that money into rural Ireland and out to farmers. If the average payment stays at €4,200, the number of farmers participating would increase. The Minister spoke at our national council meeting and he was adamant that the money would be spent. He said that was all he would say but he indicated it would be spent on the genomics scheme. There are enough farmers willing to join and draw it down. It is difficult to change the rules mid-stream given that other farmers would have joined under existing rules.

It is incredible there is a proposal to bring up green diesel. There is enough disadvantage in rural Ireland already. Green diesel keeps rural Ireland going and the IFA would vehemently oppose any proposal to increase it.

As an organisation in the IFA, we will vehemently oppose that.

The areas of natural constraint, ANCs, were mentioned. We welcomed the line in the programme for Government on the allocation of an extra €25 million but it was well watered down in that it stated it would not be announced until budget 2018. It is vital that allocation is made immediately and announced in the 2017 budget.

A major issue for all of us is the review of the ANCs in the middle of next year. It is a job of work for us all to ensure that the key areas are kept in the scheme. I attended a county executive meeting the other night. It examined the ANC money and said it is the one payment we get out of which there is nothing taken back. There are no planners or veterinary fees, so they want that to be retained.

A key point for this year is that all payments are made on time. There is an argument to be made that the first tranche of the basic payment scheme should be paid in full to everyone because the second tranche is more than adequate to cover the penalties. It is important, in a year such as this one, to keep in mind that the first tranche should be paid out.

If the Chairman agrees, I will hand over first to Seán O'Leary, who will answer some of the dairy questions.

Mr. Seán O'Leary:

The questions posed by Deputies Cahill and McConalogue are similar in terms of our proposals to deal with the cashflow crisis on dairy farms, in particular. Since last March, it has been within the remit of our own department to make an exceptional exemption regarding state aid. It was announced from Brussels that up to €15,000 of state aid per dairy farmer could be made available for a period of three years; there was a three year exemption on that. At that stage, we put forward proposals by which we felt the Department could make low cost loans available to farmers. Members may recall there were a number of issues at the time, including the overhang superlevy payment and the merchant credit building up on farms. Those options have been available since last March. In discussions with the Department on the previous superlevy scheme, that money was sourced at 1% and made available to farmers. In light of the current crisis, which has continued over the past year, there is a responsibility to deal with that issue through that state aid exemption. The Commissioner, while refusing to move on the postponement of the superlevy repayment, said it was open to each member state to incorporate that into that state aid exemption. That opportunity still exists. The Minister and the Department officials have said they are looking at it. The message we have been sending out is that as those merchant credit bills fall due for repayment and as taxation bills start to hit this autumn, the time for that cashflow relief is now. That is one specific proposal.

Regarding the question on how the €11.1 million should be disbursed, that funding has to be matched, as the previous scheme last September was announced and matched. As dairy farmers, we would like to see now, as then, that money paid out directly to dairy farmers but, unfortunately, in this particular case, there are a number of obstacles to that. First, it is not allowed to do that specifically for dairy farmers. This aid is open to all livestock farmers and we must take cognisance of that.

The other issue is that it is a conditional scheme and must meet a number of criteria in order to qualify. In examining the scheme, we assessed how the money could best be made available across all sectors and used to best effect, rather than having a piecemeal amount of money spread over a number of schemes. The Department has indicated a willingness to look at how this money could be used to make cashflow loans available to farmers. We have endorsed that idea. Unfortunately, at this stage no meat has been put on the bones in terms of how the Department proposes to proceed. We will certainly be meeting its representatives in the coming weeks. A decision on how the money is to be used must be made by mid-November.

The overriding issue on farms is how farmers will be able to extricate themselves from a situation that has arisen, through no fault of their own, in the midst of an expansion programme and major volatility caused, by and large, by political decisions. Dealing with that particular issue will be the number one priority.

On the question of a cap or otherwise on whatever might arise, the latest information we have from ICOS is that, by and large, one is currently looking at merchant credit bills in the region of €30,000. We are dealing with that issue in the midst of an expansion programme. We have finally seen a halt to the downturn with milk prices starting to rise. However, we have to deal with the overhanging debt on dairy farmers, particularly younger expanding farmers. We cannot walk away from it. There is an issue of cost to finance and the availability of finance. It comes back to the question of one's ability to repay.

We have seen the Glanbia MilkFlex product come onto the market and the security is based on a commitment on repayment from milk cheques and milk accounts. Our own pillar banks will have to stand up and meet some of that demand and match what is out there.

The problem, however, is that we have a lack of competition, as identified by the president. When that State aid and relief is available we have to take advantage of it. We cannot walk away from our responsibilities in that regard. The Minister has to make announcements on this in the coming weeks. The discussion process has been going on for six months or more.

Chairman:

The grain issue was highlighted by members of the committee. Does Mr. Dunne wish to comment on that?

Mr. Liam Dunne:

I will give some background but will not go into much detail. Some 20 years ago we were getting approximately £140 per tonne for barley, which is the biggest crop in the country. I am meeting Glanbia in the morning and we will try to get it off the €115 per tonne and up, if we could, to close to €130. It will not be easy. Of course there are greater efficiencies now than there were before. We are more mechanised but these things cost money and involve a great deal of investment.

In 2016, almost every tonne of grain produced in the country will be paid for at a price which is below the cost of production. We estimate that a tonne of barley will cost about €135 per tonne to produce, but we will be paid less than that for it. We have to make up that difference, which can only come from our direct payment from Brussels. That means that a farmer would have been better off staying in bed at the beginning of the season because he will get the direct payment in any event if he tops weeds in the ground. It is not in our nature to do that, however.

This is the fourth year in a row that prices have been bad. They were bad up until now but this year they have actually dropped below the cost of production, so we are in a serious situation. The biggest problem is that Europe has a policy of no tariffs on grain being traded internationally. This means that if the Russians want to export grain here, they can do so and there is no problem.

If the Australians or Argentinians want to, there are no tariffs at the port and there are no restrictions on quality. There are trading standards but there are no regulations on other admixtures.

We recently visited boats that came into the ports. The samples we found were very serious and made us very angry because they were below the quality standards at which we grow our barley. On top of that, we found evidence, which I think one will see in the Irish Farmers' Journalthis week from Andy Doyle, of seeds coming into the country that are not native to this country. Weed seeds are coming in that could have a devastating effect on our farming. We are very worried about it. As a result of an open trading system and because we are not making any money, there is a serious danger that the country will have to look for more imports of grain in future, not fewer. We will not be able to produce it. We cannot keep going as we are. It is all very well to say, "There is a farmer with a big tractor and a big combine harvester." Those things cost a lot of money. He has to have a lot of acres to put them over to make them pay and probably has to do work for other neighbours who maybe used to have a machine but do not have one anymore. There is also the weather window, which is always small in this country. One has to get a lot of work done as quickly as possible. We should not be prepared, as a country, to accept that we can import grain when and if we want. We will not have any control over the quality of it and we would not have any control over the price, not that we have much at the moment.

The second biggest issue we have is our interest rates compared with our European counterparts. Tillage farmers in France, Belgium and Germany are looking at 1%, 1.5% or 1.8% interest per year. We are looking at anything from 6.5% up to 8.5%. I am reasonably well financed; I have managed to get there. I do not have any difficulties with my bank but there is no negotiating with them this year. They just said that is the interest rate, take it or leave it. They did not care. I cannot afford that. It is all of our costs right across the board. If a French farmer gets €130 per tonne, he probably has a margin on it of a couple of euro per tonne. We do not have any. That is how big the crisis is with us. We are looking at the possible termination or at least a collapse of the industry within the island. I am asking all members of the committee to take the issue very seriously. We need help and we need it as quickly as possible.

Tillage farmers were specifically excluded from the aid package that came in from Brussels earlier in the year. We are not allowed to participate in it. We are reliant upon the committee members to support us. It is possible for national funds to be used. We are asking for the committee's support in that. We need it very badly.

There is also the issue of fertiliser which is the single biggest cost we have. There are tariffs on fertiliser coming in from outside Europe. There are many manufacturers who would bring down the price of fertiliser if they could. Our campaign has succeeded in bringing fertiliser prices down but only to some extent and on a voluntary basis. The manufacturers know that politically they are under severe pressure in Europe because of our campaign. It has been quite successful in that regard. As soon as we stop the pressure we know the fertiliser prices will go back up. The only hope we have is that our Minister, along with the Council of Ministers and the Commissioners, will take away the tariffs on imported fertiliser. Nitrogen fertiliser is a manufactured product that is manufactured from natural gas. Phosphates and potash are different; they are mined out of the ground. There is no money left in the system at the moment for reinvestment. It is quite the opposite. There is certain evidence coming to light at the moment that a number of the larger growers that have big machines are bringing them back to the UK to try to sell them second-hand on the market there.

The situation is in serious decline. The weather is making it worse. We spent yesterday and today trying to get some extra combine harvesters to Donegal. That is not easy to do. One cannot wheel a combine out on to the road and head off to Donegal. The ground conditions are poor in Donegal too, so we cannot bring any large machinery there. Fields there would not tend to be as big as they might be further south and in the east. The situation is difficult for those farmers but there is still grain, up to 30% of the harvest, to be cut in many parts of the country. South Wexford and some parts of Cork are in a bad way. Galway and Roscommon are also in poor condition. There is grain in north Meath still to be harvested. It was a late spring and many crops were not sown until late. We are concerned about the ground conditions at the moment.

We also cannot afford extra costs such as the price of diesel going up. The reductions over the year were welcome but costs are increasing again. There is nothing left in our pockets. Any resilience that farmers had over recent years is gone. There are no reserves left.

The targeted agricultural modernisation scheme, TAMS, grant for mechanisation would be a help. Some people would probably manage to put something together if they could. There will not be any capital for farmers in the next couple of years to purchase anything without aid. The TAMS grant for tillage farmers has not come to fruition yet. We were hoping it would be open in June but it has not happened yet. We are now told it may open in October but it still may not happen. We have been working with the officials as close as we can but it needs a push and a shove from the committee to get it over the line. We ask for the committee members’ help and support in every way they can. Making the right noises in here can be of considerable help to us.

Chairman:

Thank you. I call Mr. Joe Healy.

Mr. Joe Healy:

It is all about farm incomes in 2016 and the pressure they are under. We have highlighted the key aspects that could go some way towards relieving some of that pressure, namely, prompt payments of the basic payment and areas of natural constraint, ANC, schemes, as well as adequate funding for the green low-carbon agri-environment scheme, GLAS, and the genomics scheme. While I may not have been deeply involved in the IFA at the time, it along with other organisations gave a push when the suckler cow welfare scheme was replaced. It was the workings of the genomics scheme that the organisation had problems with. Those problems are based on feedback from farmers who are not happy with the new scheme. They are part of it because they have to be but there are some aspects they would like to see changed. We would also call for flexibility in the tax scheme for farmers.

I thank the committee for its questions and interest in our proposals.

Chairman:

Volatility in costs and prices across the board was identified as part of our work programme. We will be dealing with that in the next Dáil term. I thank the IFA delegation for attending the committee.

Sitting suspended at 3.44 p.m. and resumed at 3.45 p.m.

Chairman:

I welcome the ICMSA delegation, Mr. John Comer, president, and Mr. John Enright, general secretary, and thank them for coming before the committee today to discuss issues relating to the agriculture sector prior to budget 2017.

On the matter of privilege, in accordance with procedures I am required to read out the following statement before we commence. By virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to the committee. However, if they are directed by the committee to cease giving evidence in relation to a particular matter and they continue to do so, 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 they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person, persons or entity by name or in such a way as to make him or her identifiable.

I invite Mr. Comer to make his opening statement. The previous group had 12 minutes and I urge him to try to work to the same timeframe.

Mr. John Comer:

Thank you very much, a Chathaoirligh. I will be as brief as possible because when one listens to other farm organisations, one recognises that there is much common ground in certain respects and repetition will not serve anyone well.

I congratulate the Cathaoirleach on his elevation to the Chair of this committee. I wish the new committee very well in its future endeavours in trying to serve the citizens of the country. I wish to refer to the importance of the agrisector, which generates €11 billion worth of exports. The fact that most of the production is indigenous means we are major contributors to net foreign earnings in this country. The point is often missed in terms of our importance in bringing other currencies into this country as net foreign earnings.

We are concerned about the crisis that has befallen the dairy sector and rural economies. Full-time farming, especially the dairy sector, is the mainstay of economic and environmental sustainability in rural areas. When one adds the multiplier effect from 14 through 16, we have quantified that the rural economy has lost more than €800 million of spend. That is a significant amount and there is an onus on us all to try to correct the situation. It is possible to do that if we structure our industry correctly. We can do well. I am on the record as stating previously that the three main stakeholders are the individual business person, who must look in the mirror and make him or herself as efficient as possible. After that one must look to the Government, facilitated by this committee, to put structures and policies in place to help us do business in such a volatile marketplace. The third main stakeholder is the European Commission and the European Parliament. The prize is to have a safe, secure supply of affordable food for the citizens of the Continent. That is not a big ask, but we are in a situation now where ruinous volatility has visited the most vibrant sector in this country. There was no need for us to go there if we all worked in a collaborative and professional fashion in order to invent new policies and tools to put in the armoury of the farmer to mitigate against such volatility.

Milk prices have increased by 1 cent to 2 cent in recent weeks but the crisis is not over and we cannot take our eye off the ball.

The question is whether it is a big cashflow issue or whether it will be structural. We are at the tipping point. Farmers are used to dealing with cashflow. Once the profits come at a certain point, one can manage the cashflow but if one falls below the cost of production, which has happened - that has been recognised by everybody - then structural damage begins to affect the entire industry. We need to focus our attention on that today.

I wish to highlight issues raised previously. It is coming to a crunch point now with bills from contractors and merchant debtors mounting. I submitted a comprehensive document which I wish to commit to the record. I do not believe in reading stuff out so I will continue to refer to notes I have prepared.

Chairman:

Has the document been circulated?

Mr. John Comer:

It has been circulated already. I have highlighted the problems in the dairy sector and I might refer to solutions later. We are most concerned about the beef sector also and the increasing numbers for 2017 according to the CCMS. We must put a plan in place. Competition is critical. An emphasis must be placed on competition by way of live exports. There is a responsibility on Bord Bia and the Department of Agriculture, Food and the Marine. We have heard about the US and Chinese markets being opened but there is no real evidence of that. A further push is needed for ground beef in the US and, in terms of the fifth quarter, that goes to China.

The effect of Brexit is more pronounced in rural areas and the agricultural scene than in the rest of the economy. We must deal with the outcome of that democratic result. To date, the response here has been tardy at best. There is a lack of structure to the approach. Ireland is one of the most exposed member states in Europe and the rural economy is the most exposed sector in this country. We need to talk about the situation in terms of the UK versus the EU. What suits the rest of the EU will most likely not suit Ireland because it is different to other member states. The fact is that the UK put €18 billion into the coffers of the EU and got €10 billion back, which left it with a deficit of €8 billion. The way the deficit was justified to the taxpayers in the UK was by virtue of its access to the Single Market. The Single Market was roughly valued at €8 billion per year. It will not suit the other governments in Europe to allow the UK free access to that market. If a tariff is put on trade between Ireland the UK - or, more correctly, between the European Union and the UK - but it will affect Ireland most. We will be in trouble. We must recognise that and put serious plans in place to deal with the effects of Brexit.

I will return to how we mitigate against volatility in the dairy industry. I have no doubt the dairy industry will recover but I do not want that to happen at the expense of farmers across Europe going broke. Unless plan is put in place, that is exactly how the free market will work. There was euphoria when quotas were lifted on 1 April 2015. The situation was hyped up. The ICMSA was not opposed to the quotas being lifted, as we were not in favour of them. The quota system was a lazy tool that was not fit for purpose. Ultimately, quotas became redundant and we were delighted to see them go. However, it is not the case that one can plan a business in a free market situation and provide a product with a three-year lead-in. That is nonsense and it cannot be done. From the time one makes one’s business decision and one puts one’s cow in the crush and puts in the straw, one must wait nine months before an animal is born and wait two years before a cow comes into the milking parlour. If anybody can tell me where the markets will be in three years’ time, then I will provide for it. However, nobody knows what will be the position. There must be political structures and interventions in food production in order to make sure that we do not have the cyclical volatility of boom and bust.

After much lobbying from the ICMSA, €150 million was ring-fenced for a voluntary supply constraint, but not per member state.

That was introduced on 18 July. Any reasonable observer would say that it had an immediate positive impact on sentiment. There was an immediate uplift in the buoyancy of dairy markets because the buyers were coming back into the market. It was the first time that Irish or European farmers had an alternative to producing the product. I see the processors responded with increases in prices. I would like to see that. The only other alternatives to this voluntary supply constraint that we currently have in the toolbox, after all the huffing and puffing, are either private storage or intervention. The voluntary supply constraint is designed to facilitate at 14.4 cent per litre, taking out 1.1 billion litres or 1.1 million tonnes of product. That is three times what we currently have dried in powder in intervention. We have somewhere in the region of 290,000 tonnes of skimmed milk powder and 100,000 tonnes of butter in intervention. Imagine had we not put that into intervention and we had this tool at our disposal six to eight months ago. We would not now have all that product overhanging the market, which is going to keep our price down for even longer. It would not have been produced in the first place and the markets would have gradually recovered. I know that the consumer has to be protected in this situation as well. We cannot ignore the consumer. However, it is a concept that needs to be worked on to facilitate a reasonable price graph for both the consumer and the producer. I believe it should be there as an automatic trigger once we fall below the cost of production.

On the issue of the discretionary moneys, which is €350 million at European level and of which our portion is €11.1 million, we are very clear. The ICMSA would like to see that issued as an emergency measure in a single payment to farmers. It is uncomplicated, does not have administration costs and is within the rules and regulations. We made enquiries with the Commission and it is certainly within the scope of our Government to pay that as a payment to our farmers directly, specifically to our dairy farmers. We would like to see it matched by an equal amount here. We are lobbying strongly for that. That would amount to in the region of €1,200 per dairy farmer to try to help them meet their bills at a time when the contractor's bill, the feed merchant's bill and everybody else's bill all come in a concentration at the back end of the year. Therefore, I believe it is important to do that.

There was a discussion earlier that we were listening to in the Visitors Gallery about interest rates and alternatives for that money. I believe that we cannot let the banks off the hook. If one benchmarks Irish debt with the rest of the European debt and one compares the average cost of money in Europe with what Irish farmers have borrowed, one will see that we are paying €80 million per annum more in higher interest rates in Ireland than our competitors and counterparts in Europe. That is an intolerable situation that can be addressed by Government. The Government can have a role in creating a situation in which that will not be allowed to happen.

I will be brief on the other points because that is the central point of what I am trying to emphasise here today. We can structure our production in a different way that is more economically and environmentally sustainable. There is the issue of the management of stocks that are in intervention - 290,000 tonnes of skimmed milk powder and 100,000 tonnes of butter. Those stocks need to be held there until the markets themselves return to a sustainable level for the primary producer. We cannot take our eye off the ball in this regard. I have mentioned the points about market access for beef. We need competition in terms of purchases of cattle in this country. We made a submission to the EU competition authority on the proposed merger of ABP and Slaney Meats. I can take questions about that afterwards.

Chairman:

I ask Mr. Comer to wrap up, please. We are trying to keep the time as even as possible.

Mr. John Comer:

I respect that, a Chathaoirligh. I have just two more quick points. With regard to commitments given at the beef forum, some of them are still outstanding. I believe they need to be put under the microscope again and delivered on. We have a comprehensive pre-budget submission document for budget 2017 that can be made available, but there is one primary focus that I would like to home in on today.

That is the farm management deposit scheme. I believe it is the most pragmatic and practical tool that can be put at the disposal of farmers to mitigate against the volatility. I have outlined that before to others.

I move on to my final point, Chairman. It is critical that we work on this. It might be a long-term goal but we have been hearing about it for the last ten or 12 years. We need to bring some balance back to the supply chain and the power of the multiples. We need to legislate for transparency of margin because voluntary codes are pretty much useless. I have no problem saying that. I would rather not finish on that note but I will out of respect for the Chairman.

Chairman:

Thank you Mr. Comer. We will try to keep to the time if we can.

Photo of Charlie McConalogueCharlie McConalogue (Donegal, Fianna Fail)
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I thank Mr. Comer for his very comprehensive presentation. I welcome him as president and Mr. John Enright as general secretary. I have a couple of follow-up questions. On the issue of the voluntary milk reduction scheme, Mr. Comer indicated that he feels that it should be something that should be permanently part of the landscape. Does he see a downside in that being used as a key tool in trying to keep prices up from an Irish perspective, due to the fact that we are a very significant exporter, unlike some other countries? I would like to hear his perspective on that.

On the issue of improving volatility tools and trying to ensure that the increases, reductions and prices are evened out at farm gate level, what additional measures, does Mr. Comer suggest need to be taken to encourage that? Where does he feel that farmers are at with regard to embracing the existing tools that might be there?

I take Mr. Comer's point on the difficulties with interest rates and how the Irish stand out when it comes to competitive rates versus our European neighbours. Mr. Comer indicated that is something the Government should address. How does he feel that could be done?

Chairman:

Thank you, Deputy. Once again, I remind members about their telephones.

Photo of Willie PenroseWillie Penrose (Longford-Westmeath, Labour)
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The interest issue is a function of competition in the market. Has the witness any ideas of how we could grow competition in the market? Do we need an equivalent of the former ICC Bank, ACC Bank or a grouping that would provide specific finance for farmers, particularly in the context of the vulnerabilities that are there, and that would look at it as a long-term financial commitment?

I could not agree more with Mr. Comer and I am on record here as having said as much over the last ten years: the multiple retailers have excessive power and they will utilise it. Unless there is a statutory way of dealing with them, those voluntary codes are a waste of time. I believe there has been an opportunity missed in the recent legislation. It has to be reviewed and put back on track. A proper statutory form of dealing with that process at every link has to be introduced to try to deal with this issue. The witness is right in that regard.

Everybody knows that Brexit is going to be a huge challenge. We have already seen some industries suffer, particularly the horticulture and mushroom industries. Has Mr. Comer any indication, apart from round table forums, as to how we can set out a pathway to try to deal with it? While we can take steps, they are going to be somewhat within the confines of what is happening elsewhere. Until Article 50 is triggered and until all of the various things are in place, there is a multiplicity of relationships that have to be dealt with in that context. There is no one-size-fits-all solution with which we can deal with this situation quickly.

The management deposit scheme is something that Mr. Comer has been consistent about. I like consistency. At least that is good. Could he outline it for us? He could even send a note to us on how he sees it working. He might not have time to do that here so perhaps Mr. John Enright would send it to us.

I wish to ask one question. We have listened carefully to Mr. Comer's colleagues in the IFA, such as Mr. Seán O'Leary, who is a very experienced man in the dairy area. It is about the crisis in funding. Mr. Comer indicated that it can be paid out directly, while Mr. O'Leary indicated that there may well be obstacles and conditions attached to it and there may be other farmers entitled to it. How can we have those apparently irreconcilable viewpoints being expressed here today before a committee of ordinary people who may not have the same expertise available to them as the witnesses?

Both organisations advocate on behalf of the farming community. How can such a view be expressed so forcefully by the witnesses, and by Mr. O'Leary who is a person of standing in the milk production area? Will the witnesses explain this? Perhaps we have missed something.

Photo of Martin KennyMartin Kenny (Sligo-Leitrim, Sinn Fein)
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I welcome the witnesses and the work they do on behalf of dairy farmers. We are all very conscious of what has happened in the dairy sector over the past 12 months. Many people are struggling to produce milk on poorer land. Credit is the biggest problem. Some farmers had a problem with the super levy because they had increased production anticipating the end of the quota. We were told we would have white gold but this has not transpired. It has brought many people to the wall. Many people speak about selling their cows and stopping. It is a terrible situation for many farmers whose families have produced milk for generations.

The witnesses spoke about the power of multiple retailers. We are all conscious that while the price of milk has gone through the floor there is no difference in the price in the shop. In food production in this country, and perhaps throughout the world, the two ends seem to get screwed. Prices stay high for the consumers no matter what happens and prices keep getting lower for producers. Everyone in the middle seems to make all of the money. The farmer does all the work and takes all of the risk but gets the least out of it. The witnesses have stated that legislation needs to be introduced to ensure transparency. Transparency is one thing, but we are trying to create fair trade. Fair trade is vital for those producing coffee beans in Africa or wherever, but it is also vital for our people at home. As far as I can see, and it is clearly to be borne out, there is no fair trade when it comes to how the processors, the big players and the big multiples are able to dominate the market. They have totally and completely put the farmer out of business. This is what they are doing. It is almost like a glass ceiling. They are allowed to go so far but cannot get any further. Will the witnesses expand on what legislation they feel can be introduced to rectify the situation?

Photo of Tim LombardTim Lombard (Fine Gael)
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I welcome the witnesses. With regard to the beef forum, a key issue will be the numbers and the lack of live trade and competition. What are the witnesses' views on how the beef forum will deal with this given that the numbers next year will be so large? This will be a challenge for the industry, the Department and the farming organisations. Will the beef forum be capable of dealing with it? Will this be its biggest test?

With regard to Deputy Penrose's remarks on the dairy industry, one farming organisation has come up with a totally different view to the other on the payment of the €11.2 million. We do not know whether this will be doubled. I am interested in finding out the actual difference in the views so we can make a decision or speak to the Minister about it. This money is being spoken about and farmers are looking for it but no decision has been made on it.

Photo of Thomas PringleThomas Pringle (Donegal, Independent)
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With regard to the power of the multiples, more than 90% of beef produce is exported and while I am not sure of the percentage in the dairy sector it is probably pushing this figure. In such a case, forcing the multiples to pay a reasonable price for dairy products will not make any impact on the price the farmer gets for the produce. I do not see much point in pursuing the multiples in Ireland. The price paid by multiples for a litre of milk would probably have to be increased by 1,000% to make an impact on the farmers supplying the milk.

I do not know how to tackle this issue. Perhaps the witnesses could speak more about it.

I was interested to hear the comments of the witnesses on Brexit and how negotiation with the UK will benefit the entire EU and not necessarily Ireland. Given that 69% of our agrifood exports are to the UK and non-EU countries, does the ICMSA believe we should consider our position in the EU if a tariff on exports to the UK is introduced after Brexit takes place?

Photo of Pádraig Mac LochlainnPádraig Mac Lochlainn (Sinn Fein)
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Some of my colleagues have commented on the processors, meat factories and multiples. This issue has been raised by farmers for years. I would like to get a sense from the witnesses of the view throughout the farming organisations. I have always heard tea and sympathy for this point of view across the political spectrum but I would like to know from the witnesses, working in co-operation with other farming organisations, what do they propose legislatively at State and European level to address this? A huge amount of profiteering and abuse is happening in the middle between the consumer and the producer. I would like to hear this in clear terms, particularly as, I imagine, it will be a priority in the committee's work programme for the period ahead.

Photo of Michelle MulherinMichelle Mulherin (Fine Gael)
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I welcome Mr. Comer, my fellow countyman, to the meeting. It is critical the relative position of farmers in the food supply chain, which is very weak, is tackled, otherwise we will have the same conversation again and again. The witnesses spoke about unequal bargaining power with regard to factories and multiple retailers. The most sober part of this is that every time the farmers are squeezed, the ICMSA and similar organisations must come to the State looking for their income to be augmented. The market is an artificial construct and it is not organic. Certain people are in control of it and they have power. This will be an eternal chestnut unless something is done. I welcome the call by the Minister, Deputy Creed, for the Commission to examine it from an EU legislation point of view. This is not just an Irish problem. It is the way farming and agriculture operate Europe. We have high standards and regulations but we also have an issue in the market. We have suggestions of control by factories and dominant positions and on previous occasions, the former Minister questioned this. I am sure others have also. We always fall down with regard to evidence in this regard. If it waddles, quacks and has webbed feet, it is a duck. We need an emphasis on rooting this out, otherwise we will have an eternal conversation with slight variations in the fortunes of farmers but they will always be drawing the short straw.

Photo of Jackie CahillJackie Cahill (Tipperary, Fianna Fail)
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I welcome my former colleagues to the committee. Mr. Comer gave a detailed presentation on the long-term and short-term issues. I agree with Deputy Penrose in that I would like more background on the farm management deposit scheme. Unfortunately the back end is coming and there is no cashflow on farms to pay the tax bill at the end of October. Many farmers will try to obtain loans from their banks to pay income tax, which is unsustainable. The farm management deposit scheme is a policy initiative on which I would like more background information.

We have been hearing about the power of the multiples, tackling the multiples and regulation of the market for a long time.

We have heard about this for a long time and through tackling multiples. We regulated our liquid milk business 20 or 25 years ago, which has done nothing for farmers.

People talk about regulation and the power of retailers and multiples. I have been involved in the liquid milk trade for a long time and we are being squeezed out of existence. The market is supposed to be regulated. Someone will have to convince me that regulation can bring protection to primary producers because it has not worked in the liquid trade. We pay our levy as producers to the regulatory body and it has given us absolutely no protection.

The beef forum was established and made a couple of recommendations on age and weight restrictions, which factories have completely ignored. There has been no improvement for the producer side following from the beef forum. There is a quality assurance scheme, but unfortunately a lot of cattle leaving farms do not qualify for the payments. We have now gone down the road of dairy quality assurance schemes as well. For a farmer involved in dairy and beef, only 20% of the stock that leaves the farm qualifies for quality assurance payments. That is something that has to be looked at. If a farm is quality-assured, all produce leaving it should qualify for premium. Farmers go to the expense of bringing farms up to the required standards, and to receive payments for only a percentage of the stock is completely unjustified.

Active discrimination against Friesian cattle is creeping in in the different schemes that are being established. Fianna Fáil representatives met the Irish beef industry some time ago and it was evident that there was a total bias against Friesian cattle. Fortunately or unfortunately, in the future, larger numbers of cattle that are finished in this country will be Friesian. Like the beef breed in the past, there will be another stick to beat primary producers with, in that there will be active discrimination against those cattle.

Farmers are facing many issues. At the end of the day, we have to face up to the principal issue - namely, that we are being asked to produce at world prices but we do not have world costs of production. That is something which has to be focused on and will be the main issue in the future. If one buys a tractor in Russia or in this country, the difference in cost is immense. Whether it is producing grain, a bullock or a litre of milk, Western European farmers are being asked to do so on a different cost of production plane compared to many of those with whom they are competing. If our family farm structure is to survive, that issue has to be addressed. The Commission has a responsibility to European producers to address that, and it is something on which we need to focus more.

Chairman:

As the delegation probably knows, the committee published a report on the relationship between primary producers and large multiples. As several members of the committee mentioned, we intend to revisit the issue and publish a report during the time of this Dáil. We will seek the delegation's input whenever that happens. I ask the delegation to deal with some of the questions.

Mr. John Comer:

I thank the Chairman. There were many questions, and I will go through a few of them briefly in no particular order. Our general secretary, Mr. Enright, will take up the ones I leave out or that do not know the answer to but will not admit it.

The voluntary supply constraint is a major issue. It is new and people are afraid of it. I and our organisation are fully supportive of the concept. Deputies Penrose and McConalogue and others referred to the term "voluntary" at the beginning of the meeting. It certainly has to be voluntary, because any farmer who has incurred fixed costs in terms of expansion cannot be told that he or she cannot milk cows. We have to put that up against what caused the problem. Why did we go from almost 40 cent down to 21 cent? It was not the same as in 2009, and people found that difficult to understand. The farmer experienced the same results but for completely different reasons. Both reasons were the same, but involved different jurisdictions. The problem was oversupply. The 2014 crisis was caused by extra milk in Europe. Europe traditionally produces around 140 billion litres of milk per year, and production increased to 147 billion litres. The market was still growing.

We created a crisis by producing too much in Europe, not in New Zealand, Australia or America. We were the main contributor to the extra volumes.

It seems to me to be a rudimentary idea that an alternative is provided to drying a product and putting it into storage. After a lot of lobbying, a voluntary supply constraint was proposed. Many people asked for it not to be voluntary. Deputies McConalogue and Penrose are correct. It was not in Ireland's interest, as a major exporter, to have it made mandatory. I felt if we did not opt for a voluntary scheme it would be made mandatory and we will would be snookered.

The scheme is in place now and it is a concept that will work. It should be an automatic trigger at whatever level an independent body decides the cost of production is, and once levels fall below that it should automatically kick in. It will not cost taxpayers a whole pile of money as far as I am concerned, compared to the alternatives. It is a strong tool that can be used at a European level.

At a national level, the farm management deposit scheme can be used in cases where, like in 2014, there is a high income. The reality is that some farmers were faced with high taxable income and paid the top rate of tax but in late 2015 and 2016 faced a tax bill and, in some cases, were not able to put food on the table. I am not putting on the poor mouth because I do not go into that, but that is the reality. Farmers ended up with no income after having had high levels of income.

In a good year, farmers could be allowed to put, for example, €20,000 into a private scheme and pay corporation tax on the way in. We are building up a major problem in this country, whereby farmers are being forced to incorporate and sole traders, that is, the family farm structure with which we are familiar, are disadvantaged at every turn. This would help as an alternative. One can choose any figure to invest; I am only explaining the concept. A farmer could put money into a scheme and if, within five years, they had to take it out to augment their income because they had no income, they would pay income tax relevant to the year they took out the investment. If we could get the concept established we would be doing very well.

There are many questions on the beef grid, which Mr. Enright might cover. On the power of the multiples and what we want, I am not sure if I am at liberty to name a multiple operating in this jurisdiction but one has a turnover of over €32 billion. That would shake our Taoiseach and Government because it is a lot of money. No member state can come up with legislation that will address the imbalance in terms of the giant versus individual farmers. The issue has to be addressed at a European level.

In terms of fleshing out some of the detail, Deputy Cahill did not seem to have great faith in legislation. I am not so sure about legislation, but I can tell the committee without fear of contradiction that voluntary codes have not worked. When something is not working, one has to look for a way around it. I would be open to developing ideas that might work. Deputy Pringle stated a litre of milk was only 5% of Irish production, but that could also pertain to other products such as powder, cheese and everything else. I do not see any issue with that. It does not have to specifically involve a litre of milk.

There are many other questions and I would like to be respectful in trying to answer them all. I will ask Mr. Enright to deal with them.

Mr. John Enright:

I refer to the €11 million fund that was mentioned. We are firmly of the view that money can be paid as direct payments to dairy farmers. They are the regulations. Our proposal is that dairy farmers should get a payment of €1,200 each. We asked the Department of Agriculture, Food and the Marine whether that is legally possible under the regulation and the response we received was that it was.

From our reading of the regulation we are very clear that it is possible. There is one distinction compared to the payment that was made to dairy farmers last year, namely, that one must meet one condition. There are seven options, but a farmer must meet in order to qualify for the payment.

For example, one of the options would be that I took part in the voluntary reduction scheme. Others include that I did not increase my milk production, that I am a small-scale farmer, that I am engaged in extensive production methods or that I am in a quality assurance scheme. At this stage, there are 15,000 dairy farmers who are either in the quality assurance schemes or close to being in them, so we are very firmly of the view that this is possible. The Department confirmed to us that it is possible and we also spoke to the EU Commission on it. The Commission said it is entirely up to the member state to decide what it wants to do with it. We do not see any barrier, under the legal regulation, to allowing that to happen. This was a dairy package. It was negotiated as a dairy package and we feel it should be there to support the dairy farmer.

We accept Deputy Pringle's point regarding the multiple retailers and the fact there is no point putting pressure on the Irish multiple retailer, but the point we would make is that dairy farmers across Europe have seen their milk price fall by 35% to 40% in the last 12 months. At the same time the retail price of dairy products across Europe fell by 2%. Somewhere in between, somebody is getting an extra margin. As a starting point, we need to expose who is getting what in that chain. As an example of what can be done, recently on the beef side one multiple retailer in France has agreed to pay a price that will return a positive margin for the farmer. The French farmers are in a much different position to ourselves in that they have a home market that is much bigger than ours, but that has happened in the last two to three weeks. Pressure will have to be put on the multiple retailers to address the cut in the margin for the farmer.

On interest rates, it is possible under the CAP rural development plan, for example, if the Minister wants to do so, to use funds that are unused at present to set up financial instruments to help farmers. The crisis fund should be used for the crisis and we should look at the CAP rural development plan to deal with financial instruments to try to address the issue with the banks. To be fair to Glanbia and Dairygold, they have introduced low-interest loans for their suppliers and that model, along with some of the work that is being done by the SBCI, is an alternative. It does not make sense to use crisis funding to fund low-interest loans.

On Senator Lombard's point regarding the beef forum, the key issue from our perspective is that if there are more cattle in the system, there will have to be more alternative markets for farmers. The live export trade is critical from that perspective. We have a live export trade for calves and weanlings but the finished cattle element is very important from our perspective. If that could be secured, it would go a long way to addressing the issues in that respect. Much work has been done on the US market for ground beef, as our president has mentioned, and the Chinese market, but we need to see beef moving to those markets. I think we have answered most of the questions.

Chairman:

On the issue of famous €11 million, or potentially €22 million, there is a big divergence of opinion. We would have to get clarification on some of the information we have here. We will have the Minister before our committee in two weeks time, so we will hold judgment on either side until then.

Photo of Tim LombardTim Lombard (Fine Gael)
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Is it a livestock or a dairy fund? That was one of the key issues.

Mr. John Enright:

The regulation states that it can be accessible to milk producers and-or to farmers in the beef, veal, pig meat, sheep meat and goat meat sectors. I can give the Senator a copy of it.

Photo of Thomas PringleThomas Pringle (Donegal, Independent)
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There was a question on Brexit and the negotiations with the EU.

Mr. John Comer:

I apologise to Deputy Pringle. The point I was making is that I am of the belief that the EU's interest in the negotiations between the UK and the EU probably will not reflect Ireland's interest as a member state, because we are in a unique position. Whether behind the scenes or overtly - I am open to changing my mind on that one - the Government and the political powers in this country should be strategically positioning themselves to make sure we do not end up with a deal between the EU and the UK under which there are tariffs on trade.

If that comes to pass, it will have a pronounced effect on rural Ireland. There might be benefits for urban areas but for rural Ireland, there is no positive aspect to it. I think Deputy Pringle asked me whether Ireland should consider having a similar referendum to the UK. We would have to examine that possibility when we see what deal is on offer. I am a committed European. It has been good for our island and for the rural economy and it would take a strong set of circumstances to change my mind on that.

Chairman:

Deputy Penrose mentioned the farm management deposit scheme earlier and the witnesses said they would supply more information in that regard, so we would appreciate it if they could do that whenever they get the opportunity. Do any members wish to put a question before we wrap up this section?

I thank Mr. Comer and Mr. Enright for coming here, making their presentation and engaging with the committee. I look forward to future engagement. We will now suspend the meeting to allow the next group of witnesses to take their seats.

Sitting suspended at 4.31 p.m. and resumed at 4.33 p.m.

Chairman:

I welcome the witnesses from Macra Na Feirme, particularly Mr. Seán Finan, president of Macra na Feirme; Mr. James Barber, agricultural affairs committee chairperson; Mr. Thomas Duffy, agricultural affairs committee vice-chairperson; Mr. Derry Dillon, acting CEO; and Mr. Paul Smith, agricultural policy officer. I thank them for appearing before the committee to engage with us and discuss matters relating to budget 2017.

Before we begin, I must go through the privilege issue, if the witnesses could bear with me for a minute. 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 this committee. However, if they are directed by the committee to cease giving evidence in relation to a particular matter and they continue to so do, they are entitled thereafter only to a qualified privilege in respect of their evidence. Witnesses are directed that only evidence connected with the subject matter of these proceedings is to be given and they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise nor make charges against any person(s) or entity by name or in such a way as to make him, her or it identifiable.

Before I ask Mr. Finan to make his opening statement, I ask him to confine this statement to 12 minutes, as with the other groups.

Mr. Seán Finan:

I thank the committee for giving Macra Na Feirme the opportunity to attend today’s meeting to discuss issues we feel need prioritisation in budget 2017. As national president, I have the pleasure of being joined here today by my esteemed colleagues, agricultural affairs committee chairperson, Mr. James Barber; agricultural affairs committee vice-chairperson, Mr. Thomas Duffy; acting Macra na Feirme CEO, Mr. Derry Dillon; and agricultural policy officer, Mr. Paul Smith.

Everyone here will agree that the Irish agricultural sector needs young farmers to survive. Young farmers and generation renewal within the sector are essential to ensuring the long-term competitiveness and sustainability of the industry. As well as playing their part as the future of the Irish agri sector, young farmers are the lifeblood and future of rural Irish economies and communities.

Their farms provide both direct and indirect employment in rural Ireland, thereby helping prevent the depopulation of the Irish countryside. Young farmers should be viewed as prized assets by the Government because they yield jobs, growth and investment for the sector. With the weight on their shoulders of being the future of the Irish agricultural industry and at the heart of rural Ireland, it is vital that the necessary resources and supports are made available to young farmers to fulfil this expectation. An injection of youth into the sector to regenerate and rejuvenate Irish agriculture and ensure its survival and expansion is essential and will only be achieved with an increase in the attractiveness of the industry to the younger generation.

Luring more of Ireland's youth into this exciting sector must be seen as a twofold approach. First, the relevant avenues must be explored and support provided to young farmers. Second, the availability of land for young farmers to establish their businesses must be a priority. Access to land is a primary requirement for any agricultural or farming activity as without land there is no farming. To contribute to the agricultural sector in the most efficient manner possible, young farmers need to be installed on holdings at a young age when they have the energy and time to develop their enterprises. Furthermore, for the successful passing on of land, all schemes need be inviting to the older generation to encourage the exchange of land. Despite the need for change in the demographic of Irish agriculture, challenges still exist in supporting young farmers in terms of agricultural education, training and advice, which also helps deliver efficiency, innovation and productivity at farm level. Such investments in education, skills development and advisory resources are vital in ensuring young farmers play their role in delivering on the targets set out in Food Wise 2025, for the creation of 23,000 jobs and in increasing the value of primary agricultural output to €10 billion by 2025.

Macra na Feirme's pre-budget submission outlines productive tax and resource proposals with the dual aim of benefiting young farmers and Irish agriculture. Macra acknowledges the Government's extension of stamp duty relief to young farmers in last year's budget to the end of 2018. Stamp duty relief is extremely advantageous as it puts persons in a significant and beneficial financial position after the purchase or transfer of land. The moneys saved via stamp duty relief allow for considerable investment in a property to improve its productivity. Currently, 35 is the maximum age at which a young farmer can avail of stamp duty relief, yet the EU definition of a young trained farmer is up to a maximum age of 40. Macra proposes extending the required age to avail of stamp duty relief for young trained farmers on the purchase of land to 40. As a result of the considerable cost of purchasing land, a young farmer will struggle to avail of much of the benefit of stamp duty relief before the age of 35. By extending the maximum age to 40, Macra feels young farmers will be in a better position to take advantage of the benefits of stamp duty relief.

In terms of capital allowances, with tough years like 2016 becoming more regular, many farmers meeting high loan repayments are further crippled by large tax bills. Investment, jobs and growth go hand in hand. The working group report of the 2014 agri-taxation review revealed a 10% increase in capital input is likely to increase agricultural output by 1.6% to 4.2%. The Government, in the upcoming budget, should reward those willing to take risks and invest in their businesses. Their risk benefits both themselves and the wider agricultural community by improving farm efficiency and output. An increase in agricultural output has the ability to generate additional jobs in rural communities, thus helping to keep the Irish countryside populated. Macra proposes the implementation of an annual investment allowance similar to the UK model whereby a portion of a year's capital expenditure can be written off in the first year, with the remaining balance written off over the normal period.

Currently, the Irish system allows machinery and motor vehicles to be written off at 12.5% per annum over an eight-year period and buildings, reclamation, etc., at 15% over a seven-year period. The UK system allows a maximum of £25,000, which is approximately €30,000, to be written off against income in the first year. The UK model applies to all types of capital expenditure and does not, therefore, favour one enterprise over another. Such a system will at worse be cost-neutral, with the money farmers invest normally spent in local areas. Simply put, Macra's proposal will allow farmers to manage loan repayments better, thereby providing the finance for more on-farm investment, with the additional benefit of creating jobs for the sector.

In terms of capital acquisitions tax, to promote the establishment of young farmers on agricultural holdings, Macra is calling for an increase to the current capital acquisitions tax thresholds by 25% for category A, therefore increasing it from €280,000 to €350,000, with an equivalent increase to categories B and C. Historically, capital acquisitions thresholds were as high as €521,000 in 2008 and at the same time the capital acquisitions tax rate was 20%, compared to today's rate of 33%. Thus, the increase proposed by Macra is moderate and much less than pre-recession levels.

It has also come to Macra's attention that some high-wealth, non-farming individuals could potentially be using farmland as a way of sheltering wealth from capital acquisitions tax when passing the property on to their children, who have no intention of ever farming it. The present capital acquisitions tax relief reduces the market value of "agricultural property" by 90% so the gift or inheritance tax is calculated on the "agricultural value" of the asset. Macra welcomes the revised criteria of the Finance Act 2014 to ensure those who avail of capital acquisitions tax agriculture relief hold an agricultural qualification or spend a minimum of 50% of their time farming. To prevent the use of agricultural property as a way for non-farmers to shelter wealth, further measures may need to be introduced to ensure the relief remains farmer-focused.

In terms of tax relief on the leasing of farmland to family members, every effort should be made to facilitate young farmers' access to land. Relief needs to be not only focused at young farmers, but also aimed at the personnel who supply the land. Rewarding those who transfer the land to young farmers will both encourage and speed up the accessibility of land for young farmers. The current tax code goes against natural justice in that tax relief on the leasing of farmland only applies to non-related parties. A parent who leases his or her land to a son or daughter is at a distinct disadvantage when it comes to leasing his or her land to a third party. The total cost of leasing relief to the Irish Exchequer, as identified in the agri-tax review of 2014, is €5.2 million, making it the sixth least expensive agri-tax cost. Macra feels the introduction of agreements between parents and their children and between siblings to qualify for tax relief on land leasing is one measure which should be undertaken to decrease the range of factors which has caused the low uptake of leasing relief. As a result, Macra is calling for the extension of tax relief on the leasing of land to include agreements between parents and children and between siblings who are young trained farmers. However, the relief should be available on a one-term lease of no longer than seven years and available to those up to the age of 35. We call on the Government also to prioritise the approval of the family transfer partnership, which was announced in last year's budget.

In terms of young farmer stock relief, the extension of stock relief to young trained farmers to the end of 2018 in last year's budget is welcomed by Macra. Stock relief to young trained farmers goes a long way in allowing young farmers to expand their herd by offsetting the increase in herd value against the tax liability, yet there are limits to the reliefs benefit. As the relief is only applicable for the first four years after the issue of the herd number, not all young farmers are in a financial position to grow their herd rapidly and to get the full benefit of the relief. Infrastructural constraints and compliance with nitrates directives may also limit young farmers in their expansion initially. Macra calls on the Government to allow for greater flexibility around the activation of the four years of the 100% stock relief. This flexibility would allow young trained farmers to select the four years they wish to apply the 100% stock relief, consequently allowing the relief to come in line with their long-term business plans. Indecon outlined the positive and statistical correlation between increasing stock numbers and the impact on farm productivity. This, combined with Indecon's estimated 12% higher levels of output by trained farmers compared to untrained farmers, makes the outcome of a more flexible approach to stock relief for young trained farmers nothing but positive. Macra calls for an increase to the amount eligible for the relief from €75,000 to €150,000 for those farming on their own and from €7,500 to €75,000 for those in a farm partnership. Macra believes this is a justified increase due to stock relief to young trained farmers being the third least expensive agri-tax cost to the Irish Exchequer, with Indecon estimating the cost to the Exchequer being €0.9 million. This proposed increase to €150,000 equates to a 100 dairy herd.

We are willing to share with the committee our thoughts on income volatility. I will briefly conclude by summarising our last couple of points. We believe in education as an organisation and that additional resources should be supplied to Teagasc to allow for the implementation of the Education Strategic Vision project, as the Teagasc model is a unique model in integrating research, education and advisory within the one organisation.

From a productive point of view, we would encourage the Government to consider putting in place a grass utilisation measures fund for young farmers. We suggest the Government put a €2 million Exchequer fund in place to subsidise the provision of grass measuring equipment for young farmers to the value of €500 per farmer. This would mean 4,000 young farmers could benefit from the financial backing to purchase such equipment. Grass utilisation is a major target of the Food Wise report and we would encourage the committee to work with the Minister and try to implement a measure of this nature.

We would like TAMS, under the Rural Development Programme, to focus more on grazing infrastructure. Therefore, Macra calls for this to be included as part of any future TAMS because we realise the value and importance of focusing on investment in the productive assets which farmers have on their farms, being grass and soil fertility.

I thank the committee for inviting us here to day to present Macra's pre-budget submission. While it is not necessarily a budgetary issue, we would also call on the Government to make a national reserve available in 2017 as a priority, as 2016 saw no reserve. The national reserve is seen by Macra as fundamental for young farmer's development and future contribution to the sector.

The uncertainty facing the Irish agricultural sector surrounding Brexit makes budget 2017 one of the most paramount budgets of the century for the agrisector. It is pivotal that the budget puts the framework in place to instil confidence, trust and belief in the sector for young farmers as they are the ones who will live with the implications of Brexit in five, ten and 20 years' time. We would also welcome a discussion as part of the questions on the more strategic issues in the sector, such as those that have been talked about by the previous speakers in their presentations. I thank the committee for its time.

Chairman:

I thank Mr. Finan. I am sorry for rushing him near the end. It is a comprehensive presentation and I was merely trying to keep it within the timescale as far as possible. I will take questions now from the members - Deputies McConalogue and Cahill, Senator Mulherin, and Deputy Martin Kenny, in that order.

Photo of Charlie McConalogueCharlie McConalogue (Donegal, Fianna Fail)
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I concur with the Chairman in thanking the Macra delegation for a comprehensive presentation to us here today covering the issues.

Mr. Finan might elaborate on the issue of the shortage of education and training places at present, his perception of that and what needs to be done to address it. Mr. Finan referred to it in his presentation but I ask him to go into it in more detail.

An issue Mr. Finan did not cover, which is not specifically related to the upcoming budget but on which, since he is here before the committee today, I would like to get his perspective is the issue of the older young farmers. It is one of the issues most prevalent among young farmers coming to me, and particularly acute for those who are affected. It has meant that many genuinely young farmers who have been farming for more than five years have been discouraged from expanding their farming enterprises. I note it is a difficulty at European level but I would like to get Mr. Finan's perspective on it because it is a particularly important issue for those affected.

As for Mr. Finan's suggestion on increasing the stamp duty relief to those aged between 35 and 40 years who can avail of it, he might comment on whether that would lead to delayed transfer.

Photo of Jackie CahillJackie Cahill (Tipperary, Fianna Fail)
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I welcome the members of the Macra delegation here today. They put a focused presentation in front of us. I would be interested to hear Macra's view on Deputy McConologue's point about the young farmers being longer than five years farming and failing to gain access to different schemes.

Another point in the Macra's presentation that I have seen pushed on a number of fronts for a number of years with no progress made is the tax relief on the leasing of farm land to family members. As it stands, it is far more advantageous to lease land to a stranger rather than to lease it to a family member. I note Macra includes in its presentation that the relief should be available on a one-term lease for no longer than seven years. Has Macra pushed this previously in a pre-budget submission and what response has Macra received? Macra has come at it in a inventive way and I would like to hear has it received positive soundings on it.

Photo of Michelle MulherinMichelle Mulherin (Fine Gael)
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I also welcome the Macra delegation here.

To add to what the previous speaker said, it would be fair to say, on the question of land mobility, in talking about land access that practically everyone who gets into farming is from a farming background or grew up on a farm, somebody either is inheriting or gets land from a family member. I accept that is not the case across the board but it would seem that in regard to leasing, there is a lack of recognition that land is kept very much within families. There are bachelor and bachelorette farmers who do not have natural successors but it seems to be at odds with that fact. On the land access side, I presume the position is that one does not have people going to agriculture college for the most part who do not have some access to land. Is farm size and access to more land the issue?

I have an observation in regard to the capital taxes relief on the stamp duty young trained farmer relief 90% reduction and also on the agricultural relief on the gifts and inheritances side. It is attractive compared to somebody who is getting a gift or inheritance of non-agricultural land or non-business assets and it would seem that the issue in regard to land mobility is not so much concerned with that but with the older farmer who is not passing on the land at the rate Macra might like. Macra might comment on that. Macra has made suggestions to improve the situation but, as I say, it has already been there. Macra acknowledges that there has been an extension and it appreciated that. That side seems to be fairly well looked after.

I also agree on the extension of the definition of young trained farmers to those 40 years of age. Nowadays we are all living longer, and that includes older farmers. People have the ability to farm longer. It seems a natural progression that one would extend the definition and make everybody feel a lot younger too.

Photo of Martin KennyMartin Kenny (Sligo-Leitrim, Sinn Fein)
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I welcome the Macra delegation here today.

The issue, already been raised by a number of others, that I had in mind was the issue of the old young farmers. I come across many who are farming more than five years, who are under the age, and who want to try to qualify and cannot. It is a significant barrier to many young farmers around the country and it is something that needs to be dealt with. I wonder has Macra any suggestions as to how progress can be made because to date it seems to be a significant block for everyone concerned. I am firmly of the view that, if the correct application and concentration of effort was made, there must be a solution to resolve this.

Photo of Tim LombardTim Lombard (Fine Gael)
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I join other speakers in welcoming the Macra na Feirme delegation.

The real issue for me is still land mobility. Macra na Feirme produced a report two or three years that came up with a frightening statistic that there were more farmers over 80 than under 35. That statistic is what haunts farming. I do not know whether looking to increase the age of a young farmer from 35 to 40 will help that scenario. On this issue of land transfer, and the requirement to have farmers reach their thirty-fifth birthday to move it, I wonder will they be now required to reach their fortieth birthday to move it. Some of us here are farmers. We know how farmers think and it is an issue. I am genuinely concerned about that and how we deal with it in the long term. It is something this committee must look at with help from Macra. However, it is a key issue. As Macra has proven with its statistics, when one gets a young trained farmer on a property the productivity goes up and everything else goes up with it, but how does one manage it? I do not know whether making a young trained farmer 40 is the correct approach.

Mr. Seán Finan:

I will endeavour to answer all the questions. I will then pass over to my colleagues to add anything I may have overlooked.

First, to elaborate for Deputy McConalogue on the education and training places, we undertook a recent young farmers survey which identified that 33% of those surveyed had not completed their agricultural education. There could be a number of reasons for that, one being access. As members know, there was huge demand on the education system as a result of the CAP measures which were announced. We constantly have to work on this issue, which is more pronounced in some parts of the country than in others. For example, we will have to work with local Teagasc organisations on the ground to make sure places are available for young farmers who want to avail of education. Macra na Feirme has played a huge part in education and we are currently rolling out a further education programme through our Macra na Feirme young farmer skillnet programme, which is providing further education to young farmers and giving them the practical skills they need.

On the older young farmer issue, which was raised by a number of speakers, this really comes back to the five-year rule, which we highlighted when the CAP legislation was published. We fully support the plight of the older young farmer, or the young farmer who is beyond five years establishment and who is not entitled to avail of the schemes as other young farmers are. We welcome the commitment in the programme for Government that representations will be made to Europe to find out whether this issue can be addressed. We have no real solution but we are involved with CEJA, the European young farmers council, at a European level. We understand there is flexibility in some member states in terms of the implementation of the five-year rule across both pillars. The Irish Government has decided that the five-year rule will be consistent across both pillars. If this can be looked at with a view to allowing flexibility to be built into Pillar II, whereby some of these young farmers could avail of 60% of TAMS, that might be an option.

We support the plight of these young farmers because it is not right there are two tiers of young farmers. One person might only be commencing farming activity at 37 and getting all the benefits of that through the top-up and the reserve, while another person at the age of 25 might have five years farming done and is no longer eligible for any of the schemes. It does not seem fair. We will be working at a European level to see if anything can be done. We have met with the Department and with Commission officials at an EU level, and we ask the committee to look at this issue, on which we made a presentation here last year also.

A number of committee members spoke about stamp duty relief in regard to the extension up to the age of 40. We have asked for this in order to make it consistent with the young farmer definition that has existed across the EU. We take the point that it might slow down or reduce the transfer but we believe that young farmers will probably be in a better position to avail of this relief between the ages of 35 and 40. While we would be a little concerned that it may slow down the transfer, which is the principle we push in terms of getting more young farmers onto the land, in order to bring consistency to the approach on young farmers, we will be asking for this to be extended to the age of 40.

Deputy Cahill referred to the issue of tax relief for family members. Through our land mobility programme, we have seen many people taking up long-term leasing. That land mobility programme is going from strength to strength and long-term leasing is a major part of it as a result of the tax measures in place. However, as part of that, we feel there should be some means to allow parents to lease their land to sons or daughters, which would encourage more transfers within the family. The reason we have put in that the relief should be for one term of seven years is because we do not want this to be an indefinite arrangement. We want the transfer to happen after a period but this might be the transition period that is required. It would first go into the lease and then, ultimately, result in the transfer of the farm holding.

I have addressed the other issues around the question of the older younger farmer. Senator Lombard referred to the land mobility programme, which, as I said, is going from strength to strength. We have over 500 clients in place and over 200 arrangements in place as part of the programme, which is great to see. The focus of our organisation is always to encourage young farmers.

A speaker mentioned the size of holdings. We are trying to encourage efficiency and improvements at farm level so young farmers are as efficient as possible at the farm gate.

As representatives of young farmers and as a young farm organisation, we work on a lot of the external factors, but we always encourage young farmers to make sure they are as efficient as possible inside the farm gate.

I will hand over to Mr. Dillon to deal with anything I have missed, and if any of our other representatives have anything to contribute they can do so.

Mr. Derry Dillon:

I will pick up on two points, the first being stamp duty relief for young trained farmers. Our proposal is that we focus on extending the age to 40 for the purchase of land, because we feel young farmers may be in a better position in their late 30s to purchase land and they should still have that advantage over another farmer who might have better financial means. We have not proposed the extension of the age to 40 on the transfer of the land and we want to retain the age limit at 35 in that regard. As Senator Lombard said, there is a spike in the number of transfers made on the 34th birthday, but we want to retain that while changing the age restriction in regard to purchase. Young farmers say they are in a better position to purchase land when they are in their late 30s and we want to give them that advantage.

Second, I want to pick up on the points made about older young farmers. It is a critical issue and is an Irish phenomenon rather than a European phenomenon. This is a result of the stop-start nature of young farmer schemes. We had installation aid but we stopped it, then started it, then stopped it, then started it again. As a result, people fall between the cracks and fall outside the definitions of particular schemes. That is why we have a cohort of older young farmers who have never been eligible for schemes. Our president has outlined the importance of funding initiatives such as the national reserve. We had no national reserve last year. If we are fortunate enough to have a national reserve this year, we hope that nobody who missed the scheme last year will miss out due to eligibility criteria. That is how these issues come about. If we have schemes for young farmers, we must keep them open for the duration of each CAP reform. Most European countries keep them open for the full duration of the reform but we have not had that consistency in the past. We need to learn the lessons of the past, which suggest that if we do start a young farmers scheme, we need to keep it open. Otherwise, we will have this scenario of older young farmers, which we would not have had if we had kept schemes open in the past.

Mr. Seán Finan:

Mr. Barber is also going to speak on the older young farmer issue.

Chairman:

Before he does, I would like to get a view on another issue mentioned by different groups, namely, the allocation of potential funding of €11 million.

Mr. Seán Finan:

I will speak on that after Mr. Barber speaks.

Mr. James Barber:

I am one of those older young farmers. I am in a milk partnership. I took over the home farm in 2011. To be honest, we have been bleeding for five years now. We missed out on installation aid and the early retirement scheme. From the time we went to sign over the farm in 2008 until my father gets the State pension, including the loss of REPS payments, we will have lost out on €144,000 in direct payments. This has had an incredible effect on my personal life, including relationships. That message has not got through. We sat in front of the Minister when he was appointed and we put that across the table to him. There just does not seem to be the political will or enough Deputies and Senators who will make a noise about this. We have come with solutions. With regard to force majeure, when we entered the milk partnership, we were not seen as farming. However, when the new schemes came out in 2015, we did not qualify for them because the EU saw us as farming because we had entered into a partnership. If we are recognised as having joined the partnership, we should be paid installation aid up to the value that applied at the time we entered it. On the other hand, if the EU does not see us as farming, it should let us into the new schemes.

I am in the process of building a slatted unit and a cubicle shed.

I am missing out on the 60% grant; I am getting a 40% grant. My neighbour, up the road, who has no formal agricultural education and is only doing it through the green cert online, is qualifying for them. I have committed to farming since I left school and I am being penalised for it. It is not good enough. The committee is looking for suggestions. On force majeurewhen entering a new partnership, if the installation aid was paid to all those people included, it would cost about €5 million.

Mr. Finan will go through this. We had an agricultural affairs meeting last night about the €11 million. As an organisation of young farmers, we would like that to be strategically implemented. That money should be put towards improving farming at farm level. The agricultural affairs committee vice chairman, Thomas Duffy, proposed that it might go into a grassland improvement scheme, to take half the cost of receding land and where it would lead to an increase the production on grassland on a farm from eight tonnes to 12 tonnes or even 14 tonnes to tie in with our grassland utilisation measures.

Mr. Seán Finan:

Mr. Barber has given some of the outline. We want a fully co-funded scheme. We support the other organisations in their call that the scheme would be fully co-funded to bring the €11 million up to €22 million. We welcomed and called for a top-up for young dairy farmers as part of the last scheme. We were delighted that was secured. It delivered €1.5 million - €1,000 to 1,500 dairy farmers. Given the amount of money involved here, we acknowledge that it could be spent across a number of different sectors. If it is to be a flat-rate payment, it will be a relatively small payment to all farmers. If it is to be a flat-rate payment, we call for a top-up to young farmers.

It should be used to strategically develop the industry. Considerable work could be done at farm level by investing this money strategically, which in the long run that would put more money in farmers' pockets. I know there is an issue with cashflow at the moment, but the volume of money to be paid out would be relatively small when divided across all the industries. As Mr. Barber has said, it should go into some kind of grassland improvement scheme or measure where the costs of reseeding would be covered or partly covered as part of that.

As it will be too small a pot to spread across all the sectors, it should be used strategically. We have to have a strategic focus on agriculture because ultimately it is about equipping farmers with what they need to make them more efficient and ultimately drive profitability within the farm gate. We acknowledge there are factors outside the farm gate, as we have faced this year, which are out of our control and put incomes under severe pressure. That is where we stand on the measure.

Chairman:

With regard to the old-young farmer issue we were discussing, does Mr. Finan have any figures the number of old young farmers at the moment - the actual costings?

Mr Seán Finan:

We have heard various accounts of different figures. I believe between 3,000 and 4,000 people are involved. Perhaps some sort of case of specific disadvantage could be made to deal with these. However, there has not been a great deal of engagement at a European level to try to come up with a solution to this problem between the Government and at an EU level. There is inconsistency in Europe over implementation of the five-year rule. It is rather annoying that there is no flexibility here at home whereas some EU member states can give that flexibility across the pillars. Where there is a will there is a way.

There is another fundamental issue. As members know, we had no national reserve in 2016. We are calling for a national reserve to be put in place for 2017 because it is critical to get more young farmers into the industry. A budget needs to be found to cater for these older young farmers. Where will that budget come from? There was no political will to provide a small fund this year - to provide a national reserve. Where will the fund come from for these older young farmers? They deserve their national reserve payment to be brought up to the national average, but there are many questions to be answered and it is not within our gift to answer those questions. That has to be done at a political level, at EU level and at Government level.

Chairman:

I thank Mr. Finan, Mr. Barber, Mr. Duffy, Mr. Dillon and Mr. Smith for appearing before the committee and engaging in a very positive way. I look forward to engaging with them in the future.

Sitting suspended at 5.10 p.m. and resumed at 5.13 p.m.

Chairman:

I welcome from the Irish Cattle and Sheep Association, Mr. Patrick Kent, president, Mr. Eddie Punch, general secretary, Mr. Seamus Sherlock, chair of rural development, and Ms Neassa Fitzgibbon, press and communications officer. I thank them for coming to engage with the committee today in respect of the upcoming budget.

By virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of the evidence you are to give this committee. If they are directed by the committee to cease giving evidence in relation to a particular matter and they continue to so do, they are entitled thereafter only to a 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 they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any persons or entities by name or in such a way as to make him, her or it identifiable.

I ask Mr. Kent to make his opening statement and, as with the other groups, I ask him to keep it to within 12 minutes if possible.

Mr. Patrick Kent:

I thank the Chairman and other committee members for the invitation to attend.

The economy has made significant progress towards recovery overall.

Figures which show employment now exceeding 2 million people are very positive and reflect a growing confidence in certain sectors of the economy. Increases in tax receipts have helped to support a sense of recovery and allow the Government to consider options that would have been inconceivable two years ago. However, we should not get carried away on that. We saw clearly in the general election that recovery was not something that had reached rural Ireland and, since then, nothing much has changed. We believe that the huge pressures facing all sectors of agriculture in 2016 are integral to the lack of recovery in rural areas. Farmers are not making any money and therefore economic activity in rural Ireland is subdued. It is that simple.

During the downturn, farmers stayed productive and contributed to keeping the economy going when other sectors sank, but we should recall that farmers were among the first to suffer austerity cuts. The disadvantaged areas scheme was seen as an easy target in 2008 when its expenditure was cut from €257 million to €220 million. A second cut led to that figure dropping to €195 million. Those affected were the most vulnerable in the farming community. It is now time to begin the process of reversing those cuts in full. The programme for Government foresees a €25 million partial restoration of the payments, now called the areas of natural constraint, ANC, scheme. The Irish Cattle and Sheep Farmers' Association, ICSA, wants full restoration to the level of €257 million over the next three budgets, with €25 million put in place for 2017.

In other expenditures, we want to see a full drawdown of the €52 million per annum for the beef data and genomics programme. In our view, that will require additional top-ups for existing participants and space for new entrants to the scheme. The ICSA is concerned about the slow pace of uptake of the targeted agricultural modernisation scheme, TAMS II, due to technical difficulties in the Department and, significantly, farmers being unable to commence work due to cashflow difficulties. We want to see more flexibility, therefore, in the next tranche of the green low-carbon agri-environment scheme, GLAS, to ensure maximum benefit to farmers. Also, it is imperative that the sheep scheme is up and running in 2017, and we are somewhat concerned that it may be too bureaucratic to ensure maximum uptake.

Overall, the key message is that we now need to ramp up expenditure under the rural development programme, RDP, to make sure that the total fund is spent. The profile of expenditure suggests an average of €580 million over the full 2014-2020 period, but inadequate spending to date means we need to be spending close to €600 million per annum for the period 2017-2020.

We also need to see the locally led schemes up and running to support farmers with land designated for hen harriers, pearl mussels and so on. However, it is our belief that it is now essential to restore funding from the National Parks & Wildlife Service, NPWS, scheme as a complementary measure to RDP funding. For many years it was accepted that a variety of instruments were required to ensure proper compensation for every designated hectare, something the EU favours. Hence, we need to go back to models that have worked in the past and can work in the future.

I emphasise that all of this money is badly needed by the farming sectors. Brexit has led to a level of uncertainty which is already putting pressure on beef prices. The Government must fight hard to ensure that the impact is mitigated and that a UK-EU trade deal is negotiated to allow our exports to continue unhindered. We also need to fight against unfavourable trade deals with Mercosur and under the Transatlantic Trade and Investment Partnership, TTIP, which would see significant quotas for beef imports. However, while this is a battle to be fought at EU level, we are in control of ensuring adequate supports under the RDP. The Department of Finance must also avoid measures which damage our competitiveness.

The ICSA is demanding that we do not score own goals in terms of adding to fuel costs. We are quite alarmed about proposals to increase taxes on diesel. Even if the insane proposal of the environmental pillar to increase the price of green diesel to the same level as petrol never sees the light of day, the tax strategy group has examined a possible increase in the price of auto diesel to petrol price levels. I can deal with that in more detail when we take questions. It is quite a strange idea to drive up the price of fuel in rural Ireland at this time. Questions arise also about carbon taxes. This move would be extremely short-sighted. Higher auto diesel prices mean we are less competitive in terms of our exports. At a time when we are already struggling with competitiveness in terms of UK exports due to sterling-euro exchange rate movement, any additional pressures provoked by diesel increases would be foolish in the extreme. We must remember this is a double whammy, as increased diesel prices increase the cost of inputs and also affect the export costs of our output.

When it comes to taxation, we are not looking for the Apple deal. However, it is worth reflecting on the apparent consensus that everything possible must be done to protect the 6,000 Apple jobs, and perhaps some 150,000 jobs directly created by foreign direct investment.

Farmers are the foundation of an agrifood sector which accounts for at least 8.4% of total employment in this country. The sector is far more significant than Apple on its own and, arguably, more significant than the entire foreign direct investment sector, particularly when we consider the reach into every community in every county in Ireland. On the other hand, the benefit of Apple is limited to the main urban centres. Hence, we will make no apologies for saying that the levels of tax on sole traders here are way too high. The ICSA supports the phasing out of the universal social charge, USC, and wants to see a 1% cut in it in this budget. We also support the strategy, begun in the previous budget, of bringing in an earned income tax credit equivalent to the employee credit. The €550 announced in budget 2016 must be doubled in 2017, and the job finished in 2018.

These are small changes but it is vital to understand how the universal social charge can be so damaging to the progressive farmer who is investing in his farm but whose capital allowances against income tax do not extend to the universal social charge. Also, our members have to provide their own pension, and there is no relief against the universal social charge for pension contributions. For all of these reasons, we want the universal social charge phased out. It is worth reflecting on the fact that there is almost universal consensus that the 12.5% corporation tax rate is essential to job creation and the sustainability of most businesses, but little appreciation of the fact that farm businesses can be hit for almost 50% tax even on relatively modest incomes.

There are other taxation measures which the ICSA believes are vital but which typically only apply to a small fraction of farmers in any one year. As such, their contribution to the state finances are minuscule but the impact on individual farmers faced with them is immense. The ICSA wants to see further increases in the category A threshold, which was increased in last year’s budget to €280,000, having regard to the fact that it was €542,000 in 2009. The 90% agricultural relief must continue.With regard to capital gains tax restructuring relief, which assists the consolidation of holdings, we want to see this relief extended beyond current deadline of the end of 2016.The ICSA proposes that 50% stock relief be available for all farmers in the interests of encouraging farmers to meet the targets of Food Harvest 2020. In the longer term, the State will reap much more from increased exports and future tax take rather than taking the short-term view, which limits stock relief except in the case of young farmers or partnerships.

With regard to rainy day planning, the ICSA proposes that farmers should be able to shelter a proportion of income from tax in a good year by putting it into a special account where it would be taxed on drawdown in a bad year. The ICSA submits that tax relief for pension contributions should continue at the marginal rate, and take into account the universal social charge as well, until such time as the USC is fully abolished.

I thank the Chairman and the committee members for the opportunity to appear here today. What we are looking for in budget 2017 is modest in terms of the overall strong performance in the economy. When the economy was on its knees, farmers kept going and performed an act of patriotic duty in continuing to produce, which led to annual increases in export earnings. That was the good news story when everything else was gloom and doom. The ICSA is increasingly alarmed, however, that farmers are not getting their fair share of the cake, and that must be examined in other forums. Our members look at fancy strategies such as Food Harvest 2020 and Food Wise 2025 with a jaundiced eye. They do not appear to be getting any benefit from putting more in and taking less as a result. However, while this will be determined by a variety of policies at home and in Brussels, we expect that the measures we have outlined will be delivered. The Government will not be forgiven if our sacrifices in the downturn are quickly forgotten.

Photo of Martin KennyMartin Kenny (Sligo-Leitrim, Sinn Fein)
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I welcome the witnesses and thank them for their contributions. What strikes me is that I disagree with very little of what they have put forward to the committee.

On the issue that farmers have put in so much and that Harvest 2020 is about food production to feed the world and so on, the people I see making the most out of that are not farmers but corporations, processors and everyone else. What concrete proposals do the witnesses have that can be implemented to reverse that to ensure fair play for primary producers and that primary producers can see a future in farming? That is one of the problems I come across, and I was conscious of that when the Macra na Feirme witnesses were before the committee. All my life older farmers have told me that whatever else I do, I should get a good job and not even think about farming.

They are still saying that. That is one of the difficulties we face. We have to create a sense of a future in it. I met a young fellow a week ago who had spent two years in Australia. He said the difference between Australia and here is that there everyone had a sense of a future. People were looking to what they would do in two or three years’ time. When he came home there was a sense that very little was happening. We have not got past the doom and gloom. The agriculture sector is very much in that frame of mind. How can we guarantee that the primary producers will actually make money in the future? The money that buys land is never made from land. That is one of our problems. Our agriculture sector has to make enough money to expand and grow. At present it does not. Has the ICSA proposals to change that?

Photo of Charlie McConalogueCharlie McConalogue (Donegal, Fianna Fail)
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I thank the president and delegation from the ICSA for their comprehensive presentation and patience in staying with us. This has been a long meeting. I am interested in the ICSA perspective on the income crisis and the €11 million EU livestock fund that is to be matched by the Department. How useful is that and what approach should be taken to it?

Photo of Tim LombardTim Lombard (Fine Gael)
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Will the delegation elaborate on its views on diesel? Mr. Kent stated in his presentation that it would be bad for the economy. Where does he see that going?

Photo of Pádraig Mac LochlainnPádraig Mac Lochlainn (Sinn Fein)
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I thank the delegation for their patience. They had a long wait before making a presentation. Mr. Kent referred to the problems with the computerised payment system in the Department. Several organisations raised this in August. There is a farmers' charter and the Minister has committed to getting payments delivered ahead of time, in line with recent EU agreements. What is the experience of the ICSA’s members and what proposals does it have to improve it?

Mr. Patrick Kent:

On the question about Commissioner Hogan, the transparency of the food chain and where the money is going, I think labels can be applied to products that highlight the fact the farmer gets so little. There is probably an opportunity there.

The sugar tax has been kicked down the road to 2018. That should be addressed immediately and the funding generated by the tax on carbonated beverages should be used to educate kids in school, on milk schemes in schools, or to educate kids to cook. Many kids now only know how to phone up and order a pizza or other takeaway. Increasingly, kids going to school in the morning get breakfast rolls with carbonated beverages in petrol stations. As a result they become obese and unhealthy very quickly. That transfers to the HSE budget as they develop massive health problems in later life such as cancer, heart disease, diabetes and other issues. That has to be addressed. There might be a lack of courage to do that because people think these are poor people but everybody drinks these carbonated beverages and everybody suffers as a result. That goes across the spectrum of the health care industry. There are vested interests involved and huge lobby groups.

Deputy Pringle asked the IFA how to increase the price for farmers. We have to increase demand. We are producing grass-fed beef and lamb, the healthiest meats in the world. If the funding were put into advertising those to get them into the high price markets, we would have a massive future. That is not being done. An Bord Bia is asleep. Its members go on junkets abroad to Taiwan and places like that. We have got to get into our main markets in the UK. We have to advertise the food, get the consumers to appreciate and be proud of it.

When a child is brought down the street in a pushchair, she is given a coloured chemical cocktail and the next time she is given milk at home she throws it away. Some recent research shows this cocktail is more addictive than cocaine. The sugar tax has to be brought in. People have to be healthy. They have to appreciate the food we produce here and farmers have to be appreciated for producing it. The very good environment we have must be appreciated also and it has to be understood that this is the future. Hippocrates, the founder of modern medicine, said, "Let food by thy medicine and medicine be thy food." We have to adopt that sort of approach.

On the issue of diesel, I have seen some misleading stuff in the press recently saying that there is a diesel subsidy for farmers. There is no such thing. That is misinformation given out by a particular lobby group based in this city. What has been said is not true. Farmers do not get a diesel subsidy. They get a lower tax rate on it. There is also misinformation given out that farmers do not pay carbon tax on the diesel for their tractors. Farmers pay a higher proportion of their diesel bill in carbon tax than any other sector. The price per litre is higher. Green diesel costs over 5.5 cent a litre - that is more than white diesel - in carbon tax. If the carbon tax continues to be taken it has to be ring-fenced and put back into rural Ireland to finance green energy schemes, that will feed into the national grid on a small scale. There is only very large-scale funding for big projects and vulture funds come in from abroad and launder money through them. We have to act small and basic. This money is being taken out of farmers’ pockets. There are many opportunities in rural Ireland for wind, solar, water and methane projects. Due to the fact that so much carbon tax is levied on farmers, they do not have money left to invest in anything else. They do not even have an income.

I will hand over to Mr. Punch to deal with technical issues.

Mr. Eddie Punch:

In response to Deputy Martin Kenny’s question about the fair share of the retail price, the ICSA proposed some time back that this needs to be solved at EU level. The entire food chain has to be regulated. Our proposal is to have a regulator at EU level who would have power to audit the accounts of the multinationals involved in the retail trade.

At the moment, no individual member state is able to pursue this - to follow the money, as it were. Companies such as Aldi, Lidl, Tesco and so on are involved in this country and other countries. With the best will in the world, it would be difficult to audit the margins they make and identify where the money goes. There needs to be auditing power at EU level to examine the accounts of these multinational corporations. There has been much talk about multinationals in recent weeks but there is no getting away from the fact that the source of almost all the farmer's income difficulties is that the more the farmer is dependent primarily on Brussels funding or national funding, the more he is being undermined by getting less and less of the retail price at the other end of the food chain. We have to begin with full understanding of who - the processor or the retailer - is making what. The situation where these corporations can work and keep consumers, farmers, policymakers and the EU in the dark about where the money is going is increasingly intolerable. The proper function of an entity like the EU must be to tackle the power of very large multinationals. There is no point in the EU solely regulating the activity of the little people, namely, small-scale businesses. There is, for example, a huge burden of bureaucracy on farmers.

Any number of State employees are, on behalf of the EU, auditing, measuring and examining what farmers are doing. There are satellites in the sky and so on. We need this effort to be refocused on what is happening in the food chain at the money end of the show.

Regarding European funding, there is clearly no getting away from the fact that the beef, sheep and cereal sectors are not the most profitable in Irish farming. It is baffling to us how there have been two rescue packages for dairy, notwithstanding the fact that the incomes of cattle and sheep farms in 2016 will still be at the bottom of the heap. The cereal farms will not be much better. It is incomprehensible that we would twice put a package in place to give cash to dairy farmers only. The likelihood is that the dairy markets will recover next year and revert to their traditional position of making three times per hectare what cattle and sheep farmers make. I do not want a row between farmers, but there is no getting away from this. We must reflect the fact that cattle and sheep farmers are the poor relations.

Regarding a computerised system in the Department, our point was that the targeted agricultural modernisation scheme, TAMS, was held up because a software system had to be put in place to deal with applications. Our understanding is that the Department has resolved this situation. We will watch carefully to ensure that payments are progressed as quickly as possible.

Like everyone else, we are concerned about the impact of Brexit on our sector. Beef prices have slipped in recent weeks. Live exports will be even more important now if we are to reduce our dependency on beef exports to the UK. We must use every opportunity to get the message across that Ireland's position is a special one. I spoke at an agrifood conference in France yesterday that was organised by Ouest-France. I got the opportunity to have a few words with Mr. Michel Barnier, the European Commission's Brexit negotiator and a former French Minister for agriculture. I put across the message that we needed a special and continuous engagement in the EU's negotiation with the UK. He outlined that he would be engaging with each member state's government, particularly ours. This avenue must be pursued very assiduously by our Government. There is an appreciation in Europe that we have a particular interest. In a nutshell, we do not want the trading arrangements between Europe and the UK, which really means our exports of beef to the UK, undermined in any way by the playing of a different political game in the talks.

Chairman:

I thank Mr. Punch. If there are no further questions, does Mr. Kent wish to conclude?

Mr. Patrick Kent:

I will give Mr. Sherlock the opportunity to speak on farm debt and the lack of a proper interest rate, which was mentioned by others. Since it could be a solution, a great deal of thought needs to be given to this major issue if it is to be addressed and people are to be given coping mechanisms.

Mr. Seamus Sherlock:

As rural development chairman, I deal with many dry stock farmers on a weekly basis. The level of financial debt in the family farm is astounding. The number of dry stock farmers who are basically living hand to mouth is scary.

There were newspaper reports about the price of green diesel increasing that sent shockwaves through our membership. People rang to say that they could hardly put diesel in their tractors as things stood and that an increase in the price of diesel would see them walking.

Blame whoever one likes for farm debt - the banks or the farmers who borrowed - but it remains a major problem and is nowhere near being solved yet. The number of farmers who contact me or the ICSA monthly for help is not decreasing. A large number of people are still ringing us asking what they can do. I want to ensure that there is a realisation out there about how bad the situation remains. The problem is that many farmers are not great at discussing the issue. Unfortunately, this has led to many taking their own lives because they could not cope. I get phone calls at midnight from fellows whom I have never met. When one gets a call from a farmer at that time, he or she is under severe pressure. There is only so much that anyone can do for him or her. When I plead with the banks to work with us on solving the problem, I tell them that the blame game is over. Anything that these institutions can do to make a situation easier for a farmer, they should do it. My main objective is to keep as many family farms going as possible. The family farm is the institution that built this country. Without it, we will have no country.

Issues such as diesel increases send shockwaves around the country. Our president mentioned the ANC scheme payment. When I spoke to the Minister, Deputy Creed, I could not urge him enough to increase that payment to its original level over the next two or three budgets. It would give a significant lift to rural Ireland. Some €1,500 per household would equate to approximately €30 per week, which would put petrol or diesel in many farmers' cars for the week. They could keep bringing their kids to school and so on. It is a small amount of money in one way, but a large amount in another. If we want to keep family farms alive, it is imperative that we all work together.

Chairman:

I thank Mr. Sherlock. If members have no further questions, does Mr. Kent wish to conclude?

Mr. Patrick Kent:

I thank the committee for inviting us. My phone number and that of my office are available to members. If they want to contact or liaise with us on any issue, they should feel free to do so, because our purpose is to represent our members. If we can be of any assistance to the committee in formulating policy, we will be there.

Chairman:

I thank the witnesses for being patient. Being fourth meant being last and someone had to be last.

Mr. Patrick Kent:

I understand.

Chairman:

I thank the witnesses for appearing before the committee. I also thank members.

The joint committee adjourned at 5.45 p.m. until 5 p.m. on Tuesday, 27 September 2016.