Chairman:

I welcome the Minister for Agriculture, Food and the Marine, Deputy Michael Creed, and his officials here today and apologise to them for the delay. We had another issue to deal with before they arrived. I remind members, witnesses and those in the Gallery to turn off their mobile phones. On the issue of privilege, members are reminded of the long-standing parliamentary practice to the effect that members should not comment on, criticise or make charges against either a person outside the House or an official either by name or in such way as to make him or her identifiable.

Members have been circulated with the Department's briefing note and the committee secretariat's briefing note. Following the Minister's opening statement giving a general overview of the Vote, we will proceed to a consideration of the Vote. Its consideration is to be programme by programme. I propose to call members in the order in which they indicate on each programme. When members' questions on programme A have been answered by the Minister, we will move on to the next programme and so on. When programmes A, B and C have been considered, the committee may consider the appropriations-in-aid information presented and then administrative expenditure generally, with subheads 1 and 2 in each programme to be considered together.

I also propose that we consider all the budgetary allocations across the programme subheads together. This will allow members who have an interest in a particular programme to schedule their time and ensure the committee gives consideration to all programmes. The emphasis of questions should be on how effectively the financial resources are being managed and the performance achieved relevant to that programme. The programmes and subheads are listed at the back of the brief that has been circulated. When asking questions or raising issues, members should indicate the subhead to which the questions relate or the page number of the departmental secretariat briefing to which they are referring.

I call the Minister to make his opening statement.

Michael Creed (Cork North West, Fine Gael)
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I am very pleased to accept the Chairman's invitation to meet the committee today. This is a valuable opportunity to examine the 2016 Estimate for my Department and consider the mid-year expenditure and programme indicator outturns, where they are available. I am also happy to outline my priority areas for expenditure in the three year period 2017 to 2019 and would welcome the committee's views on the opportunities and priorities in the areas of agriculture, food and the marine for the years ahead.

The Exchequer contribution to the Vote of my Department amounts to €1.363 billion in 2016, being €1.134 billion for current expenditure and €229 million for capital expenditure, including a carryover of €12 million in capital funding. In addition to the Department Vote, in 2016 Ireland will receive some €1.2 billion in direct funding from the European Union for the basic payment scheme. This brings the combined investment in Irish agriculture, food and the marine to more than €2.5 billion in 2016. At the end of June, the Department had spent a total of €450.4 million of voted expenditure, which was 93% of profiled expenditure of €485.1 million. On current expenditure, the Department had spent €346.5 million out of a profiled expenditure of €375.9 million, representing a figure of 92% of profiled current expenditure. On capital expenditure, the Department had spent €103.8 million out of profiled expenditure of €109.1 million, representing a figure of 95% of profiled capital expenditure. Appropriations-in-aid amounted to €162.2 million out of profiled receipts of €164.9 million, representing a figure of 98% of profiled receipts.

The increase in funding this year is allowing the Department to progress the key priorities which I identified when we met the committee last June. Looking ahead to the remainder of this year and into the 2017 to 2019 period, I am conscious that there are a number of challenges to be faced. These include Brexit, continuing poor returns in the dairy sector, access to finance, programme for Government commitments in respect of the new €25 million sheep scheme and the progressive implementation of the rural development plan and the seafood development plan.

The €4 billion 2014-2020 rural development programme is designed to enhance the economic and environmental sustainability of the agrisector and is co-funded by the European Union. Rural development programme schemes provide vital investment to capital in the rural economy, prioritise agri-environmental protection, support the incomes of family farms and will be a key driver of the additional funding which will be required by the Department for next year. As the committee is aware, a number of schemes were opened last year under the new programme and their continued roll-out will require additional investment and support.

Similarly, the €241 million seafood development operational programme is a vital element of Government policy and will support the economic, environmental and social sustainability of the seafood sector up to 2020 to maximise its contribution to jobs and growth in coastal communities and to the national economy.

Built on a smart foundation of knowledge, training and applied research, the programme seeks to grow the industry sustainably through building scale, fostering competitiveness, adding value, new product development and output growth.

The Government, through Food Wise 2025, is targeting an increase in employment of 2,000 in the seafood industry by 2025 and an increase in the value of exports by the sector to €1.2 billion. The operational programme will support the investments by industry in increased production and exports that will bring about the achievement of these targets.

As committee members will be aware, there are many competing demands across all Departments and only a finite amount of money is available in the 2017 fiscal space. The agrifood sector is an important engine for growth in rural areas, providing valuable jobs to rural communities and contributing to the wider economy. The sector continues to play a considerable role in our economic recovery and has continued to prove its fundamental importance as a cornerstone of the economy and life in rural Ireland.

The sector remains lreland’s largest indigenous industry and provides valuable employment, particularly in rural and coastal areas where few other job opportunities exist. We will continue to make our case for increased funding as part of the Estimates process. I look forward to engaging with members of the committee on areas where we could consider prioritising expenditure in the coming years.

Charlie McConalogue (Donegal, Fianna Fail)
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I welcome the Minister and his officials and thank them for the reports which were supplied in advance of the meeting. This is an especially opportune time, given that we are just two weeks away from the budget. I wish to refer to a few matters in the Minister's statement as well as some items in the programmes. The Minister indicated that current expenditure is running at 92% of profile, which is about €30 million less than was forecast at the start of the year. Current expenditure is now €346 million while the profile indicated €375 million. The Minister is also slightly behind in capital expenditure.

The Minister and his Department are making projections and assessments as to where things will be at the end of this year. Those calculations will be crucial in determining what space the Minister may have in the run-up to the budget. The Minister must make those calls now in order that he will know where he stands when the budget is put in place in two weeks' time. Does the Minister expect that by the end of the year there will be an underspend in the Department which may give him funding for more scope with certain measures next year?

Based on projections at the start of this year, how are payments now running under the beef data and genomics programme, BDGP? I know that numbers in the scheme are far fewer than what was budgeted for. Some 35,000 were budgeted for, while only 25,000 are in the scheme. The same situation applies to payments under this year's budget for the green low-carbon agri-environment scheme, GLAS. Will the Minister assess the capacity for improving the uptake of these schemes next year? As regards the BDGP scheme, is there a potential to use unspent funds to increase payments per cow, either next year or as we approach the mid-term Common Agricultural Policy, CAP, review?

Will the Minister comment on the €11 million of co-funding which is an option for the Government under the €350 million EU fund? Where does he stand on the requirement for a commitment, which is an urgent necessity for farmers to deal with cashflow pressures as we approach year's end? It is required sooner rather than later.

Looking at the graph for the aquaculture licences and the related figures, the number of applications outstrips the number of determinations made each year to the extent that there is now an even more significant backlog. What action is the Minister taking to try to address that?

Martin Kenny (Sligo-Leitrim, Sinn Fein)
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I know the sheep scheme is being scrutinised in the Commission at the moment. There is a concern that a five-star ram might be one of the conditions. I would like clarity on that because farmers are concerned that if it is brought in it would take up many of the possible advantages. Where exactly do we stand on the €11 million co-funding? The dairy sector is under a lot of pressure and is very interested in seeing that put in place as quickly as possible.

Willie Penrose (Longford-Westmeath, Labour)
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Does the Minister have a view on how he will allocate the €25 million for the sheep scheme? Is there talk of a cap on its implementation because there are only 2.5 million ewes? Unnecessary restrictions might be more administratively burdensome and costly than the scheme is worth.

Has the Minister figured out how to resolve the row between the Irish Creamery Milk Suppliers Association, ICMSA and the Irish Farmers Association, IFA, about the dairy aid scheme because they do not seem to know? We were not very enlightened about it but there is an argument for the dairy sector about how it will be implemented. The Minister will need to provide €11 million in order to ensure that €22 million will be available otherwise it will hardly be worth fighting over.

A total of 120,000 people get the single farm scheme payment. Is the Minister concerned that corporate farmers are some of the biggest recipients of the single farm payment? I have been fighting that for years. The nice black hair of taxpayers must go grey when they see that happening. Genuine farmers cannot get anything and if they do they are penalised by 1%, 2% or 3% for a small error. It is very easy for a corporate farmer not to have any errors. I hope there will be some sort of review and that will be taken on board to ensure that the money intended to maintain small farmers in accordance with CAP objectives goes to them. It was never intended for large corporate farmers or anybody else. It is about time that we had a proportionate distribution that reflects the reality for the 100,000 farmers who are trying to survive.

I understand that the Minister has appealed the decision in the O'Connor case on the appeals system to the Supreme Court. How is the Department treating that? Why would the Minister appeal something we indicated we had concerns about in the past? Is it not time to bring the 2001 Act into 2017 to make it real and effective and ensure it operates a system that is fair to all concerned? Is it intended to amend the 2001 Act? If it is will the Minister ensure that we have an input into that?

Michael Creed (Cork North West, Fine Gael)
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In response to Deputy McConalogue's question on the profiling of expenditure, it is important to remember that the figures presented to the committee are the six month figures for the outturns to the end of June. There is no reason for alarm at this stage in respect of the profiled expenditure to the end of the year.

It is a difficult Department to manage in that many of the payments are demand led. Many of them go out of the end of the year. It is a management challenge to ensure we match expenditure with provision in the Department, but at this stage we are quite happy that our expenditure is on target.

One thing that would have skewed the capital expenditure to the end of June is that the World Food Programme payment of €20 million, which is usually made in the first six months, was not made until the early weeks of July. That would bring expenditure close to being exactly where we wanted it. We are, broadly speaking, on target. This is an ongoing issue in respect of managing the finances. We have a good track record in the Department of spending every penny that is provided to us and that is a challenge we continue to track to ensure we deliver the best possible outcomes for the fishing and farming communities that we serve.

On the beef data and genomics programme, BDGP, our profiled expenditure on that up to the end of June was €2 million ahead of schedule. We are quite satisfied with the level of provision. Based on the broad statistics, we have in excess of 24,000 in the scheme already. We will make many payments in December on that scheme. I know many of the members were at the National Ploughing Championships. If they were in the Teagasc, Bord Bia or Department tents, they will have seen that one of the things we are constantly pushing on the BDGP is the requirement for recipient farmers to complete the carbon navigator task because that is a precondition to receiving the payment and it is part of the original raison d’êtreof the scheme. We are on target. By 20 September 11,500 had completed the carbon navigation task, but of the 24,000 in the scheme quite a few have yet to do it. We expect that we will be paying that out as provided for.

The Deputy asked, and the IFA too has raised the issue with me and my colleagues, about additional payment for suckler cows. Two issues arise. One, it would require an amendment to the scheme which has been approved under the rural development programme and that is a cumbersome process, and two, it would also incur additional tasks for farmers. The BDGP scheme as constructed is quite an innovative and progressive scheme. I think Deputy Penrose would agree. I watched his performance in committee recently. Even sceptics of the scheme have come around to it and recognise the potential for it to achieve what the economic breeding index, EBI, has done on the dairy side. There is no intention on my side or that of the Department to seek to impose an additional obligation on farmers in respect of doing something for suckler cows. For those in the scheme, that would also skew the payments and would cause difficulties in respect of our ambition to open the scheme to others. There is provision of €300 million in the lifetime of the rural development programme for the scheme. Long before I or my predecessor arrived there was a record of drawing down every penny on schemes. We do not leave money behind in Europe and will not do so in respect of this scheme. We would prefer to do that in a fashion that allows more in rather than paying more for more complicated tasks which it would take some time to have approved and about which it is a big question whether the Commission would desire it. We are better off sticking with the construct of the scheme and getting more people into it.

On the €11 million co-funding, prior to this meeting I had a meeting with my colleagues in the Department of Public Expenditure and Reform on the matter of co-funding and several other matters relating to the budget. That is a legitimate question. We still hope that will be possible. We have not thrown in the towel on that. The precedent is there for co-funding.

I might take with that the related question from Deputy Penrose on the dairy scheme generally. There are in the region of 4,000 applications, so approximately one in four dairy farmers have applied for it.

If the payment is made as envisaged, at 14 cent per litre, it would approximate a benefit of €11 million for farmers. That is if my recollection of figures is correct.

Chairman:

Is that the reduction scheme?

Michael Creed (Cork North West, Fine Gael)
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This is on the supply reduction measure. The €150 million scheme for Europe was not ring-fenced for an individual producer. It appears there may be difficulty in having a second and third tranche, as envisaged by the Commission. With the level of interest in the first tranche, it may utilise the full space and there may not be a second tranche. That remains a Commission decision. We know the level of interest in Ireland and it looks as if that is the envisaged figure.

A number of members have raised the sheep scheme. That was constructed in consultation with the farm organisations. I personally met representatives of the Irish Farmers Association, the Irish Creamery and Milk Suppliers Association, the Irish Natura and Hill Farmers and Macra na Féirme. My officials subsequently had very detailed discussions about the detail of the scheme. It is €25 million and, as Deputy Penrose has alluded to, if one does the maths on the number of ewes, it works out approximately as a payment of €10 per ewe. The EU requirement is for a quid pro quofor the €10 and there must be an equivalence in effort. We have been trying to design a scheme that meets the EU requirement but takes into account the various husbandry practices, both for lowland and hill sheep farmers. We have a reasonable scheme and we await EU approval. The ambition is to have applications invited for early 2017, with payment in the same year.

There will be a menu of options. If the four or five star ram does not suit a particular need, there are other options, such as scanning. We have put a suite of measures to the Commission and we hope they will all stack up to the scrutiny that will be applied. They have been constructed in consultation with the farm organisations. Every farmer will be given a menu from which he or she may choose elements that will suit.

Deputy McConalogue asked about aquaculture licences. I am aware of the inordinate delays with these and we have discussed the issue previously, as Deputy Pringle raised the matter as well. It was raised with me yesterday in Killybegs. There is a legal background to this in terms of court findings against the State and the wriggle room we were given in order to get our house in order. We are working through a very considerable task of getting assessment done in all the bays. At the end of the exercise, the objective for the seafood sector is surely to get the industry somewhere near its potential. We are at an abysmally low level in what we achieve. The legal issue with the Commission arose from our non-compliance with the habitats and birds directive but apart from that I have committed to establishing a review of the aquaculture licensing system here, as it takes an extraordinarily long time. I am familiar with one case where the licence was applied for in 2011 but the operation is still not off the ground; the licence was granted but the appeals process is ongoing. The issue is very complex. We have approximately 10,000 tonnes or 11,000 tonnes of farmed fish but Scotland produces approximately 100,000 tonnes and the Norwegians produce more than 1 million tonnes. That is an indication of how far behind the curve we are. If could get our house in order in dealing with the interests in the matter, we could have a significant economic benefit from it.

Deputy Penrose raised two matters generally relating to the Common Agricultural Policy, CAP.

One was on the single farm payment and "corporate farmers", as he described them. This issue was the subject of much debate when the current CAP was being put in place. We sought a lower cap but, unfortunately, the Commission was having none of it. The Deputy would have seen figures in newspapers recently that included CAP and greening. There is a cap of €150,000 on single farm payments, which is significantly lower than was previously allowed. A process is under way on convergence, whereby those who have high per hectare payments are moving back towards an average and those with lower payments are moving up. This is the first attempt at some modicum of fairness and is a good start. There are casualties in the process, but it has been a step in the right direction.

We have lodged an appeal in the O'Connor case on foot of legal advice. It raises interesting questions for which the Deputy would understand the rationale. For example, the finding suggested that we should even pay in respect of ineligible land regardless of EU regulations prohibiting that. There are other aspects of the finding that we are conscious of and have reflected on and that have resulted in some change in our practices, but the court ruling is the subject of an appeal.

Willie Penrose (Longford-Westmeath, Labour)
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Can the Government not change the 2001 Act?

Michael Creed (Cork North West, Fine Gael)
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I am not sure. We might be better informed when considering that by the outcome of the appeal.

Willie Penrose (Longford-Westmeath, Labour)
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We will all be dead by the time the Supreme Court decides that.

Michael Creed (Cork North West, Fine Gael)
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The Deputy, with his legal hat on, will agree that it would be imprudent to rush down the road of introducing legislation based on a decision that might be overturned when challenged in the courts. We need certainty regarding the findings in the case before we can build any legal case to change the current appeals procedure. We hope that our appeal brings certainty. The Deputy might be more familiar with the situation than me but, given the additional resources that have been given to the Supreme Court, we hope that the case will be heard sooner than would be the norm. I appreciate that there is a time issue involved.

I believe that I have addressed most of the questions asked.

Chairman:

Will the Minister clarify the issue of the €11 million? A farming organisation appeared before the committee recently. It has a different opinion as to how that money might be allocated or spent.

Michael Creed (Cork North West, Fine Gael)
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The matter arose out of a €500 million package. Some €150 million in supply control measures has been applied for by 4,000 farmers. It is an optional element for them. The balance - the €11 million that has been allocated to Ireland - is a fund that is not specifically targeted at the dairy sector. Rather, it is available to the wider agricultural community. Unlike the previous package, which was targeted at the dairy and pigmeat sectors with a provision for a top-up for young farmers, this fund is available across the broader community with the specific exclusion, interestingly enough in light of the current difficulties, of the tillage sector. We are exploring ways to use the fund. Given the number of farmers who would be entitled to a slice of it if we went down the same road as the previous package, which was targeted more towards the dairy sector, the fund would be spread too thinly to have any effect. We are considering ways and means of delivering a better outcome for the sector generally. Obviously, a part of that work will be contingent on achieving matching funds. In the documentation, the Commission has clearly identified that this fund is not ring-fenced for dairy.

Jackie Cahill (Tipperary, Fianna Fail)
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I thank the Minister. Given the income crisis in all sectors, whatever the Government or the Department does, it must try to get the available funding to inside the farm gate. That is essential. Deputy McConalogue made points on the beef genomics scheme. Regarding the beef discussion groups, consider the restrictions and the requirement that one must sell cattle to factories to qualify for payment.

All those bullet points need to be re-examined to allow the maximum number of farmers to benefit.

While the Minister was waiting outside we heard from representatives of the horticulture and mushroom sectors about the huge difficulties in those sectors and the tillage sector generally. How will all these issues be addressed?

Currently there is a delay in payments from the targeted agricultural modernisation scheme, TAMS, and a huge cashflow pressure on farmers. They have returned all their paperwork to Johnstown Castle but still there is no sign of the payment coming through.

Another point that has been made to me is about the restoration of the full level of funding under the areas of natural constraints scheme, that is, the old disadvantaged areas scheme. It is essential that we get the level of funding back up. We have projected into the future when this funding will be restored. We need it restored immediately. That would be a simple way of getting funding back for farmers in the most disadvantaged areas in the country.

I am looking at the allocations to Bord Bia in the scheme. We have heard about the problems in the mushroom sector today, which were very well presented to us. There is no focus at the moment on the challenges that might be facing the beef sector. Some 50% of our cattle are still going to the UK. We fought for a generation to keep south American cattle from finding their way onto the European market. A decision was taken in the UK in the past couple of months and it can now do a trade deal without any hindrance from the rest of the European Union. It is not when that happens that we should be considering the implications of it. The ball will fall in Bord Bia's court if pressure comes on that market to identify alternative markets for cattle. We had the first shipment of cattle to Turkey in the past couple of weeks. That we have only one boat available to take cattle live out of the country is a huge encumbrance. We need to focus on our live export trade. I suggest Bord Bia would need more funding so that, if the UK tries to source beef from south America, we are not in a position like that of the horticulture and mushroom men who were here with us an hour or so ago and whose industry is in complete crisis.

The Minister spoke about the cessation scheme. I did not fully understand what he was saying when he spoke about the funding coming from it, the number of farmers who had applied and that it looks like only the first tranche will be taken up. With the recent couple of cents a litre rise in the price of milk, I do not know if one in four will participate in the scheme, but that is probably an argument for another day. My understanding is that that funding is completely separate from the €11 million we have spoken about. I thought the two funds were-----

Michael Creed (Cork North West, Fine Gael)
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Yes, the-----

Jackie Cahill (Tipperary, Fianna Fail)
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Sorry. That is my misunderstanding.

The Minister spoke about the co-funding for the €11 million. I wish the Minister luck when he goes to divide the €22 million given the income crisis that exists. Whatever route he takes, he will make more enemies than friends. We will leave that to the Minister to decide. Every sector is in crisis. The Minister mentioned that the grain sector is excluded. It is operating at huge losses at the moment, including in parts of the country where farmers cannot save their crops. It is a real loaves and fishes job for the Minister and I do not envy his task.

Michael Creed (Cork North West, Fine Gael)
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I would appreciate the Deputy's advice though.

Jackie Cahill (Tipperary, Fianna Fail)
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On the appeals and the O'Connor case, this is a real case of David versus Goliath. A farmer took the Department to the High Court, where he won his case, but now finds he has another Everest to climb. In our part of the country, there is huge unease about the inspection procedure that was in operation. A significant number of farmers in our area suffered significant penalties. I know of a farmer who successfully re-appealed a decision and got some of his money back. I tabled a parliamentary question about the level of penalties applied by one particular office. This will not go away. Given the result in the O'Connor case, farmers have come back with renewed vigour and are appealing fines imposed in the past.

A number of farmers suffered 100% penalties. From the information presented to me, proper inspection procedures were not followed in many of the cases. It is a serious issue. I mentioned this before and the Minister said the Department had its reasons for appealing. From the farmer's point of view, however, it seems extremely unfair that after going to the High Court and winning the case, he or she has to go to the Supreme Court. The issue is not resting easily with farmers. A number of cases in which people feel they were not fairly treated in the appeals procedure are coming down the tracks in my area.

Michelle Mulherin (Fine Gael)
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The common theme is that there are crises everywhere in agriculture and farming families are under pressure. The evidence is laid before us. The mushroom growers recently came before us. This puts pressure on the Minister for programmes and schemes to supplement farmers' incomes. Where I live, if farmers do not receive the single farm payment, or if the Minister does not introduce programmes, they make no income. They are eating into the money the Department pays them to keep their farms going. It is unsustainable and there have been many debates about the external causes. We touched on it with the mushroom producers earlier. The farmers and producers all seem to point back to the factory or the multiple retailer. Farmers seem to be totally at their mercy. These companies and big corporations seem to be in a dominant position, at least collectively.

While we can talk about the open market, the irony is that the Irish and European taxpayer is supplementing the price at which these corporations sell their produce on the supermarket shelf. The mushroom growers told us their fresh food is being sold as a loss leader. This can apply to alcohol and milk, and taxpayers' money subsidises it. Something is not right in that equation, and it keeps coming back to the Minister as a crisis. I understand there are complexities and it is all about good quality food for consumers, but it is also about lining the pockets of big corporations and the taxpayer paying. Is there any hope that there will be a different model in the future? I imagine we are not just talking about Ireland. There must be a balance. The market is artificial and there are rules and laws surrounding its operation. The corporations have too much of a free hand.

The mushroom growers made a request that the Government pay, as soon as possible, producer organisation the funding that is due to commercial mushroom producers for their 2015 programme. They could not enlighten us as to why there was a delay in the payment.

The Minister might consider a scheme which is not on his books. The mushroom growers explained to us that, from their height in 1996 of 600 growers, they are down to 60, having lost three businesses and 130 jobs recently. This is the fallout from Brexit. In many parts of the country there are empty polytunnels. The steel structures and concrete bases are there. Could the Minister come up with some scheme to support horticulture whereby we could grow produce more locally and supply it to local markets? The Minister could present it as an environmentally-friendly scheme which would reduce the carbon footprint associated with importing certain produce we cannot grow in the natural environment.

There should be some scheme for alternative crops because these empty polytunnels are eyesores. It would be an opportunity for farmers who have them on their land to get into another line of business and supply local markets. It would make much sense from an economic point of view and the great ambition we have to reduce carbon transport emissions created by importing and exporting.

Chairman:

After our meeting with the mushroom industry earlier, the committee will be making a submission to the Minister with recommendations for the industry over the next several days.

Thomas Pringle (Donegal, Independent)
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When the GLAS, green, low-carbon, agri-environment scheme, was introduced, there was talk about €250 million and 50,000 farmers with a payment of €5,000 per farmer. The average payment now is approximately €4,300 per farmer. Will the Minister consider opening up the scheme to allow up to 60,000 farmers avail of it? Such a move would not cost anything significantly more than the €250 million budgeted for it, but it would have a significant impact on tier three farmers who cannot currently access GLAS. It would probably also cater for all the demand.

Michael Creed (Cork North West, Fine Gael)
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There are currently 38,000 farmers in GLAS. There is a provision over the lifetime of the rural development programme for €1.4 billion up to 2020. When I attended the committee in June, I stated it was our ambition to re-open the scheme and it remains so. However, that is contingent on the budgetary process.

Deputy Jackie Cahill and Senator Michelle Mulherin raised the issue of the horticulture sector. I am cognisant of the difficulty it is experiencing. There has been a swing, year on year, in the sterling exchange rate to our disadvantage. It is 20% lower today than it would have been this time last year. That is a significant blow for those in the sector dependent on the UK market. I am acutely aware of the number of people who have lost their jobs and the plants which have closed while others are in crisis. This is exercising not just the minds in my Department, but across the Government, because it ties into the whole Brexit difficulties with which we are grappling. I am on the record saying that there is no upside for the agrifood sector and very few upsides for the Irish economy generally, given our, some would say, excessive trade dependency on UK markets. Deputy Jackie Cahill referred to how this is also affecting the beef sector.

It is not that we are doing nothing, however. For example, we paid out €4.3 million in commercial horticulture grants in 2016. Departmental funding is available for those interested in establishing local horticultural enterprises and refocusing from mushroom production. Through CEDRA, the Commission for the Economic Development of Rural Areas, we fund market opportunities. One way to tackle the power of the multiples is to have other outlets. Local markets are important in that regard. However, they are not the be-all and end-all. The commercial focus of the horticulture sector, the mushroom sector in particular, is export-oriented. It is grappling with difficulties for which we are trying to put a package together.

On the issue of the payment to the producer organisations, I do not want to get into a big debate on this because the Department is being sued by them. However, for paying out, accounts need to be submitted. Accounts have only been submitted in recent weeks for the relevant year. There are other obligations as well not just in respect of accounts, but environmental actions, which must be taken before we can verify them. It is our intention to pay as quickly when we have all of that material. It is important to reiterate that the accounts were only submitted in recent weeks.

Over 4,000 applicants have been approved under TAMS, targeted agricultural modernisation schemes.

We were behind the curve and much effort went into getting our systems ready for payment. There was much clamour at the last committee meeting about getting the payment system up and running. We gave a commitment then that we would have it by the end of July which did happen. However, we have not been overwhelmed by the numbers applying to have payments issued. In fact, only over 100 applicants have submitted online applications for payment and only 4,000 approvals have issued. One of the difficulties my Department faces is that it has funding approved for the drawdown of TAMS in 2016 but we would like to pay it. We would encourage farmers to apply.

There are two critical documents farmers must have for payment in this scheme. First, they will have to have completed a farm safety course. Second, they have to have a tax clearance certificate. Then there are basic matters such as signing forms. The system is up and running ready for payments but we have not been overwhelmed. In fact, we have underwhelmed by the number of applicants for payment.

Jackie Cahill (Tipperary, Fianna Fail)
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I know farmers who have their paperwork sent to the departmental offices at Johnstown Castle but the payment has not yet come through to them.

Michael Creed (Cork North West, Fine Gael)
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We have 100 applications in the system. There is no delay in those where they are properly received with farm safety course certificates or tax clearance certificates where the payment is over €10,000.

Jackie Cahill (Tipperary, Fianna Fail)
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How long does it take to process applications at Johnstown Castle?

Michael Creed (Cork North West, Fine Gael)
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They are turned around very quickly. There is no undue delay at all. We have provision made for these payments and the systems are up and running. We want to get the money out because it suits us. However, only 100 applications have come in.

Some people have been approved. While I acknowledge there have been difficulties in all sectors, many farmers, rightly and understandably, have decided that once they have an approval, they will hold on to that because they do not have the cash flow to manage repayments. It raises the question as to how we might better track approvals with work being carried out because in terms of financial management it is a challenge.

On ANC, areas of natural constraint scheme, payments, there is a provision in the programme for Government for €25 million but that is a 2018 payment. The €25 million this year is a sheep payment. I know there is ground to be made up in terms of cuts made in disadvantaged payments in recent and not-so recent years. Deputy Jackie Cahill will have to acknowledge we all have to share the blame for that. There is a programme to undo that but it will be in 2018.

To an extent, there is some Brexit fatigue setting in, particularly about the uncertainty around it and how we will deal with it. The Department has been extremely active in this area. We have established a dedicated unit in the Department, along with a stakeholders’ forum to include agrifood, seafood and the fishing industry representatives to allow them articulate their specific concerns. I have met with my Northern Ireland counterpart on three occasions and I will meet with my UK counterpart, Andrea Leadsom, in October. In October, I will also meet the UK multiples which are significant purchasers of Irish agricultural product, totalling €5.1 billion in exports. Although Britain is leaving the European Union, we are not surrendering any shelf space. We do not know the terms under which it will depart. However, we are anxious to protect the markets we have. We believe we have a good case to make in working with the UK because it has a reciprocal trade arrangement with us, exporting €3.8 billion in agrifood services to here. We believe we can make friends there.

We are also working on the other side in creating the political awareness across Europe. The Taoiseach has met the new UK Prime Minister, Theresa May, the French President, François Hollande, and the German Chancellor, Angela Merkel, to create the political awareness of our specific dependency. Due to this high level of dependency, the quest for other markets is a continuous challenge. Live exports are obviously an important safety valve. What the Department can do in that regard is open the markets. We have succeeded in opening the live export market to Turkey.

We hope that significant numbers of lighter cattle would begin to move, which would put some floor on the weanling trade for the back end of this year.

As well as that, we are looking at other market opportunities. The Minister of State, Deputy Doyle, and I visited China, Vietnam, Singapore and South Korea along with about 30 agrifood and seafood companies looking for new export opportunities. Obviously, the big prize in this regard is opening the Chinese market for beef. We have cleared one hurdle in respect of the Chinese Government lifting the BSE ban but we must progress other issues, and I had a series of meetings about that. We continue to look intensively for new markets. Bord Bia is a significant player and is extremely active in this regard. It opened a new office in Singapore recently because south-east Asia is identified in Food Wise 2025 as a powerful emerging market with significant potential for us.

I will give the committee an example of how significant it could be. Retail food sales in China, such as those in supermarkets, were €750 billion in 2015. It is projected that growth will reach €1 trillion by 2020. Exports to China, which has very quickly become our second biggest export destination, are worth about €640 million. It is our second biggest export destination for dairy and pork products. We are a very significant exporter of infant formula to three or four very significant players in the market and we are the world's leading manufacturer of infant formula. There is a significant growth opportunity in the market with the lifting of the one-child policy in China. We are always out there looking for new market opportunities.

In fairness to Bord Bia, I would say that it has been a trailblazer in this regard, and I acknowledge the role of Mr. Aidan Cotter and his staff, who are small in number. We work through the embassy network, and Bord Bia and Enterprise Ireland work together because if we do not pool our resources, we will not have as big a punch. From what I saw in south-east Asia, it is a very slick and interconnected operation between the diplomatic offensive that is necessary, the sales offensive that is necessary and the technical stuff, which people in my Department do all the time. In that context, if members wanted to get a handle on that, I am sure my Department officials would be very willing to come in and give them an overview, which they did in the beef forum and other fora, regarding what they do about market access. It is a phenomenally active sector in the Department and we work continuously at it.

We open markets and it is then up to the trade to step into the breach. We succeeded in opening the US market for beef for grinding. When I arrived in the Department on 6 May, the meat industry was continually knocking on the door about that issue. The market has been opened, the industry must do its bit and we hope it will avail of some of those opportunities.

In respect of the boats-----

Jackie Cahill (Tipperary, Fianna Fail)
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I was not criticising Bord Bia at all. I was looking for more funding for it.

Michael Creed (Cork North West, Fine Gael)
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I appreciate that and we are very conscious of the increased challenges associated with Brexit. Deputy Cahill mentioned the UK having the capacity to conduct its own trade deals when the negotiations on its exit are concluded, and that is true. The truth is that the UK could decide at that stage to conclude the Mercosur trade deal and that would be damaging to us. This is why that collaborative effort is critical. I hasten to add that the UK is our closest market and the most valuable market for us to be in and we are not surrendering any shelf space there. We are preparing contingency plans and the Department has been extremely active. The Department has fed into a whole-of-Government approach to the matter.

Senator Mulherin raised the issue of the farmer in the supply chain. This issue has a lot of currency at EU level and domestically. We await Commissioner Hogan's paper in this regard. In April or May of this year, we introduced some regulations under the groceries order to bring greater certainty for suppliers to the multiples in terms of getting a written contract and abolishing the concept of so-called hello money. We need to remain vigilant about the effectiveness of those regulations. There are conflicting voices at European level. Some want an overarching legal framework in the EU. We would certainly like that because we export 90% of what we produce.

However, other countries, particularly those whose focus is primarily on a domestic market, see this as a domestic competence. A point I made at the Commission was that this has been around for so long that the real challenge for us is whether we can get it off the table once and for all and avoid the kind of ad hocapproach that is the hallmark of the income crisis at the moment where, for example, those in the dairy industry jump up and down for six months and we get a package. Is having some kind of shared regime whereby everybody contributes to a fund which automatically becomes available to the primary producer when the price of a commodity dips below the cost of production a better way to proceed? That is something that will be the hallmark of success or failure of Commissioner Hogan's endeavours in this regard. As a nation that exports 90% of its produce, there is a limited amount we can do.

I am meeting stakeholders in the grain sector on 6 October. I have met and discussed this informally with farm organisations up to now and have also discussed it with individual farmers. I was in the north west yesterday and met representatives of farm organisations there. I appreciate the grain and fodder crisis and this is an issue we can discuss in that context. It is a very challenging issue because while we are probably in the fourth year of a difficult harvest, it probably coincides with the second if not the third year of bumper global harvests which are driving global prices down. If one compounds these lower prices with bad weather, difficulty in baling straw, high moisture content and sprouting, it is a very difficult issue. I want to meet the sector and listen to its solutions rather than be prescriptive. This meeting will take place on 6 October. I appreciate that it is a very difficult space at the moment.

In response to Deputy Cahill, it is worth noting that 35% of appeals are successful. Farmers should be made more aware of this figure. Deputy Penrose will be interested to know that the Ombudsman has complimented the independent appeals office on how it operates as an effective agent for farmers. A total of 35% of appeals are successful so it is worth exploring those options. I think I have covered most of the issues raised.

Chairman:

Did the Minister address the areas of natural constraint, ANC, issue?

Michael Creed (Cork North West, Fine Gael)
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To date, we have paid €140 million to 65,000 farmers. Entitlements will continue to flow under the ANC up to the end of the year as eligibility is met in terms of stocking density, etc. The provision for an additional €25 million is a commitment in the budget for 2018. It is not a commitment for 2017.

Tim Lombard (Fine Gael)
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I welcome the Minister's statement regarding the grain industry, an issue that was discussed at this meeting. Rarely have we seen such devastation in the grain industry. I have never seen anything like it in my part of the world. Yields are down, moisture is high and even the ability to bale straw is not there at the moment. I wish the Minister luck with the meeting to be held on 8 October. I think it is a very positive step, especially because grain farmers feel that the livestock farmer has received an opportunity for some direct aid while they again have been kept out of the loop. I welcome the announcement by the Minister.

Will the Minister comment on the knowledge transfer scheme and where we are with it? Is he happy with the uptake? The scheme will give €750 to farmers and €500 to the moderator of the scheme. About €100 million was put aside for it and it is hoped to attract up to 25,000 farmers.

Is the Minister happy with the uptake of the scheme and is he proposing any amendments going forward? The scheme, of course, follows on from two or three previous schemes run by Teagasc which were exceptionally successful. It is all about knowledge transfer and getting people into it. It is about the whole idea of having farmers be farmers so that they can get their experiences across. For the generations that left the agricultural institutions year ago, it was great way to get that information across. I am a little bit concerned about the uptake of the scheme and I wonder if the Minister has proposals to deal with the issue.

Pádraig Mac Lochlainn (Sinn Fein)
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Following on from Deputy McConalogue's earlier questions on aquaculture licensing, I receive regular feedback of considerable frustration around the length of time it takes to make decisions on these matters. Are there resource issues within the Department? The Minister has just talked about trade delegations, planning two and three year budgets and looking at new market opportunities. Companies ask how they can do that if they have to wait long periods of time for decisions on licenses. What is the Minister's response on that?

A lot of the other questions I had have been covered, but I want to get a sense from the Minister of his views on the following. He will be aware that we had the farming organisations before the committee two weeks ago. Every one of them raised the issue of prices. It is an issue today, including in the grain sector. What is the Government's strategy to address the crisis across all sectors in the prices they are being paid for their produce as opposed to what consumers pay? This is clearly the biggest issue and has been for many years. What is the plan at State and European level to address it?

Charlie McConalogue (Donegal, Fianna Fail)
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The issue of the grain sector has been touched on and the Minister is convening the first tillage forum on 6 October. However, there are particularly acute issues along the western seaboard in my own county and many others where a significant part of the spring barley crop could not be harvested. It looks like a significant part of it will not be harvested as time will run out. While there is an income issue in terms of the price being paid for barley not meeting the cost of producing it, the situation is particularly acute for those farmers who cannot get the grain out. They will be in a dire situation. Some have taken conacre and many bills are falling due. There have been a number of requests, including at European Parliament level, for a special crisis fund along the lines of the flood crisis fund that was put in place last year for people who had crop and property damage. It is a model which could be followed. Is that something the Minister is exploring? It is essential for those who are in that situation.

The programme for Government commits to an additional €25 million for areas of natural constraint for 2018. Is the Minister exploring with the Ministers for Finance and Public Expenditure and Reform the potential to bring that forward? Is he fighting for that given that it could make a real difference in terms of supporting farmers through the income crisis?

Chairman:

With approximately three weeks to go until basic payments are lodged in farmers' accounts, what progress has been made compared to where we were last year? There were a number of difficulties last year because it was the first year of the new system. Where are we regarding the partnership issue which became a big issue last year?

Willie Penrose (Longford-Westmeath, Labour)
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Why does the Department resort to paying it all out at one time? Given that the income situation varies throughout the year, why not use the facility that exists to make three or four separate payments? The Department has everyone's account, ibans and the devil knows what with computers. As such, why not pay the money out two or three times a year? It would be far more valuable to farmers to get the money in that way.

The Minister has that facility and is not precluded from doing it. It is just the Department itself that is doing that.

Martin Kenny (Sligo-Leitrim, Sinn Fein)
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We have had a huge crisis in terms of rainfall levels in the north west since the middle of June. A great many farmers have not got their second cut silage and some have not even had their first cut. There is also an issue in that slatted houses are full and farmers are looking to see what they can do to get the slurry out. We have an issue in that the deadline is coming and I hope there will be some flexibility in regard to extending it or providing flexibility so that farmers can actually get the slurry out. If this continues, as it is clearly going to, we will have a fodder crisis next spring. Does the Minister have any ideas as to what can be done to put a funding scheme in place for farmers, particularly in the northwest region which has had more than double the amount of rainfall it would normally get in a given year?

Paul Daly (Fianna Fail)
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Most of the points I wanted to raise have been and I anticipate the answers. There are a lot of rumours among those one meets in the sector about an increase in the budget in the price of agricultural diesel. Everybody here has mentioned the crisis and we are looking for funding and supports to help people. It would be a double whammy to start to hit the agriculture sector with an increase like that. I ask the Minister to bat for the agriculture sector in the budget negotiations if there is any truth to the rumours out there that this is something that is coming down the line.

Michael Creed (Cork North West, Fine Gael)
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Approximately 28,000 farmers are participating in the knowledge transfer scheme. The scheme is enormously beneficial in terms, literally, of the knowledge it transfers, but it has an equivalent value in respect of the socialisation opportunity it brings to a profession that is largely carried on in isolation. I have heard the concerns around the edges of the scheme. Obviously, there is a facility within the mid-term review of the rural development programme to look at those issues. At the moment, it is doing a very worthwhile job as evidenced by the number of participants, some of whom I have engaged with myself. I appreciate what it achieves.

A number of members have raised the issue of the grain sector, including Senator Lombard and Deputy McConalogue. I am meeting grain farmers on 6 October. There are very difficult issues to grapple with. It is a capital intensive business that cannot be sustained by the types of income that are being generated. The business is structured unusually in Ireland in so far as a lot of the produce is grown on rented land. We need to have a no-holds barred conversation around the solutions for farmers on a case-by-case basis. Farmers need to look at the economics of it. There is a limited amount that the State can do, just as there is a limited amount the State can do in respect of a crisis in any income sector. However, this is something that has been extremely difficult for a number of years and it is now reaching a tipping point. I want to go into it with an open mind and, respectfully, listen to the industry. There are alternative crops that could be looked at. I have spoken to my Cabinet colleague, Deputy Naughten, about energy crops. I acknowledge that we did not have a great experience in that space with miscathus. An effort was also made in respect of the Edenderry power plant to look at what could be grown there but that did not get off the ground. The current situation is not sustainable and if we all come to the table to explore all of the options, including ones that might involve other Departments and agencies, we might come up with solutions for some. It is very difficult and I appreciate that it is particularly so on the western seaboard.

I was in Donegal yesterday and I met with the IFA.

I appreciate the point that Deputy Kenny made about bad weather in the north west. The chairman of the County Leitrim IFA was part of that deputation and he cited chapter and verse on rainfall in the county from the meteorological service. In June, July and August it was pretty wet, which poses problems, particularly on heavier ground. The Department has had previous experience of fodder crises. It is true to say, however, that there is not a fodder crisis in the country as a whole. We have enough fodder but it is in the wrong places at the moment. I appreciate that cattle have been in for a number of weeks in certain places. Farmers will need to get appropriate advice on how to utilise scarce fodder resources. The farm advisory services are there to assist them in this regard, but my Department has a track record in dealing with such issues and we will be keeping the situation under observation while working with farmers.

Senator Paul Dalymentioned the diesel issue and I have seen all the speculation about that. Together with my departmental officials, I have regular engagements with my colleagues, including the Minister for Finance who deals with excise duties. We have been in contact on this issue.

The Chairman referred to the basic payment. This time last year, I was sitting on the committee members' side of the table and I appreciate the issues involved. I have discussed them with my colleagues in the Department. Some are due to teething difficulties in a new system that was introduced last year. There was an issue in prosecuting cases whereby if a person rang up more than once, he or she was talking to different people on successive days, so it was difficult. I am assured we have a better system in place now.

On Deputy Penrose's question, we are constrained by EU regulations as to when we can pay. The earliest date on which we can pay is 16 October. It is because of that constraint that we will pay 75% on 17 October. That is the maximum amount we can issue and it is the earliest date on which we can do so.

Senator Mac Lochlainn mentioned the income crisis and aquaculture licences. We are making some progress. In 2015, there were 104 licence determinations, while there are 150 this year, so we are playing catch-up. I appreciate, however, that the licensing system is very cumbersome. It is fraught with difficulties and the narrative is skewed against the industry and against licence applications. We need to work collectively at improving the narrative in order that this industry can comfortably co-exist with tourism and angling interests, provided the industry is properly policed and monitored. We need to do more, given the enormous potential, but we are catching up on the backlog.

Part of the solution to the income crisis is diversifying markets when one is in difficulty in one market. I have dealt with that aspect. We have received numerous submissions from farm organisations on income averaging and variations of that theme to allow farmers to shelter some of their income in a good year in order that it is available to them to draw down in a bad year. We have received submissions on that from various farm organisations, including the Irish Co-operative Organisation Society, ICOS. We are exploring those options as well.

We also fund facilitators for producer organisations, which is something that could work in the beef sector. A single farmer delivering a load of cattle to ABP or any other plant for that matter is a price taker. However, if a producer organisation is dealing for 100 or 500 farmers, it may be operating to a contract. It may say it can supply black white head heifers, 400 kg, on 1 August, 1 September, 1 October and 1 November in the numbers required, but it will only have a contract if it can get a guaranteed price. That gives a farmer muscle in the marketplace which he has been missing to date.

Funding of those kinds of producer organisations is an innovation under the rural development programme, which might address some of the issues. It is not a panacea and I appreciate that the markets are generally difficult anyway. However, it will go some way towards addressing the imbalance which Senator Mulherin referred to earlier. There are primary producers, processors, distributors, retailers and consumers. The people who get the worst of both worlds are primary producers and consumers. If we got everyone along that chain to take a little bit of the pain, we could ensure primary producers had a reasonable standard of living. None of the others will make a living if we do not have the primary producer.

Martin Kenny (Sligo-Leitrim, Sinn Fein)
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What about the slurry issue?

Michael Creed (Cork North West, Fine Gael)
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I am very conscious of this. The hallmark of the Department has always been to take a practical approach to it. We need to be extremely careful, however, because the derogation Irish agriculture has under the nitrates directive is up for renewal at the end of this year. It is a valuable asset that we have secured. In that context, for example, the Danes had a derogation but it has not been renewed. I am equally conscious of the fact that the Environmental Protection Agency, EPA, has raised issues concerning water quality, so we need to be extremely careful about drawing the Commission's attention to the issue. Flexibilities are required in certain circumstances. The Department and local authorities have always understood this matter when it is brought to their attention and we can work out solutions. We do not need adverse publicity around the issue at this time.

Chairman:

As regards the basic payment, is it possible that difficult cases that may not make the cut on 16 October could be paid 75% and whatever penalty arises is stopped out of the remaining 25% at a later stage? There are cashflow difficulties at the moment.

Michael Creed (Cork North West, Fine Gael)
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I am informed that is the plan.

Michael D'Arcy (Wexford, Fine Gael)
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Well done, Chairman.

Charlie McConalogue (Donegal, Fianna Fail)
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Has the Minister been pushing the Minister for Public Expenditure and Reform to try to secure extra funding for his Department, given the income crisis, to bring forward the €25 million of areas of natural constraint, ANC, payments to support farmers' incomes?

Michael Creed (Cork North West, Fine Gael)
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No. Let us be honest about it. The programme for Government is quite explicit on that. I have enough issues in the Department to try to get funding for in 2018. I am conscious that the Minister has been waiting for me since 7 p.m. to progress those. I have told the farm organisations that the commitment is for an additional €25 million in 2018.

Chairman:

I thank the Minister for dealing with these issues. I also thank the Department for providing briefing material for the committee. I warmly welcome the responses provided to queries in advance of today's meeting. In particular, I note that on several points in its response the Department has acknowledged the need to improve on the performance measures provided. It has indicated that steps are being taken to do so. The Department also stated it would welcome advice from the expertise available to the Oireachtas in this regard. Will the Minister confirm that his officials will liaise with the financial scrutiny unit and with the committee secretariat in pursuit of this goal?

Michael Creed (Cork North West, Fine Gael)
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Yes, I am sure they will.

Chairman:

I thank the Minister. We had initially proposed to take a break at this stage, but I understand that the Minister is under time pressure. Is that so?

Michael Creed (Cork North West, Fine Gael)
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If the committee wants to take a break, we can do so. Are we talking about five minutes?

Chairman:

Okay. We will take a break for five minutes and will then come back to deal with the last item on the agenda. Is that agreed? Agreed.