Oireachtas Joint and Select Committees
Tuesday, 27 November 2018
Joint Oireachtas Committee on Agriculture, Food and the Marine
Areas of Natural Constraint: Department of Agriculture, Food and the Marine
I remind members and witnesses to ensure that their mobile phones are turned off. The purpose of this meeting is to discuss the issue of areas of natural constraints. From the Department of Agriculture, Food and the Marine, I welcome Mr. Paul Dillon, assistant secretary general, Mr. Fintan O’Brien, principal officer, Mr. Larry Cashman, assistant principal, and Mr. Thomas Harty, assistant principal. I thank them for attending in order to brief the committee.
Before we begin, I wish to bring to the attention of our guests the issue of privilege. Witnesses are protected by absolute privilege in respect of their evidence to the committee. However, if they are directed to cease giving evidence on a particular matter and continue to do so, they are entitled thereafter only to qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person or entity by name or in such a way as to make him, her or it identifiable. Members are reminded of the long-standing practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official, either by name or in such a way as to make him or her identifiable.
I invite Mr. Dillon to make his opening statement.
Mr. Paul Dillon:
I thank the committee for giving us the opportunity to update it on the changes to be made to the areas of natural constraint, ANC, scheme for 2019. The scheme has been in existence in various forms in Ireland since the 1970s. It was previously known as the disadvantaged areas scheme and the less favoured areas scheme. In its various iterations it has played a very important income support role for farmers in many areas of the country. To date in 2018, €216 million has been paid to 89,000 farmers under the scheme. Over the course of the scheme year, a total of €227 million will be paid to 96,000 farmers. This is indicative of the importance and size of the scheme in Ireland.
I will now outline the new approach to designating eligible lands under the scheme. Until 2018, Ireland had identified areas eligible under the scheme using a range of socioeconomic indicators such as family farm income, population density, percentage of the working population engaged in agriculture and stocking density.
This approach is now required to change on foot of EU regulations.
The genesis of the change in approach lies in discussions at EU level whereby concerns were raised by the European Court of Auditors as to the inconsistent approach taken across member states in the designation of land using socioeconomic indicators. From 2019 eligible areas must instead be designated using the following list of bio-physical criteria: low temperature; dryness; excess soil moisture; limited soil drainage; unfavourable texture and stoniness; shallow rooting depth; poor chemical properties; and steep slope. All EU member states that wish to implement the ANC scheme in 2019 must use this new approach to identifying lands, or else take the other option of continuing the old approach but with sharp cuts to payments for all beneficiaries. The approach of continuing the current system with sharp cuts across the scheme is not a viable one for Ireland, given the importance of the scheme.
How were eligible areas for 2019 identified? The process of identifying eligible areas has been carried out at townland level. Essentially, where a townland displays one or more of the biophysical criteria listed above at a level above the 60% threshold set out in the regulation, it is identified as being "constrained". In parallel to this biophysical approach, two other processes set out in the EU regulations have been used to refine the identification of eligible land. First, a number of areas were identified as having overcome the constraint by reference to high levels of stocking density and arable land cover, and are thus not eligible for the 2019 ANC scheme. This is referred to as the "fine tuning" in the EU regulations and was a mandatory step for all member states. Second, areas were identified as eligible for the 2019 scheme as they are facing other specific constraints. In Ireland’s case, this process identified townlands as eligible areas of specific environmental importance and townlands facing structural issues relating to farm size, field size, farm fragmentation and the level of permanent grassland cover. Taken together, these steps have identified the lands deemed to now be eligible under the scheme.
What are the impact of these changes? This has been a lengthy project, involving protracted technical engagement with the European Commission. The outcome of this process can be summarised as follows. For the vast majority of farmers who were eligible under the scheme until now, they will remain eligible from 2019, which means 98% of townlands which were eligible to date remain eligible. Some 700 townlands that would have previously been eligible will not be eligible under the new designation. The 760 farmers impacted financially by this change will receive a degressive phasing out payment in 2019 of 80% and in 2020 of 20%. In the majority of cases, the financial impact of this change is relatively small. Some 2,200 new townlands with 4,000 farmers will become eligible under the new approach and these townlands will be eligible to receive a payment for the first time in 2019.
Given the importance of this scheme to a large number of farmers, the Department is conscious of the need to ensure that farmers are made aware of the changes. In addition to putting in place a series of meetings with stakeholders, the Department’s website has published a list of eligible townlands by county where farmers can check the status of the townlands in which they hold land. A map representing this is also available to view online, and dedicated email and phone query support is in place. A copy of the map which is on the website has been circulated for the information of the members of the committee.
In addition, we are in the process of writing to farmers in regard to the process. For the vast majority of farmers, this letter will simply inform them there has been no change in the status of any of the land they hold and that no further action is required of them at this stage. For farmers who hold land in townlands that will no longer be eligible in 2019, this letter will also set out some details of the appeals process that is being put in place. It is important that farmers can avail of such an appeals process and arrangements are now being finalised to put in place an independently chaired appeals committee, which will also have appropriate technical expertise. It is important also for farmers to be aware that, if they are in the process of appealing in regard to a particular townland, they can still apply for the scheme when the 2019 basic payment scheme and ANC application period opens next February.
In budget 2019 an additional €23 million was allocated to the ANC scheme, which means the total allocation for the scheme has increased by €50 million to €250 million over the past two budgets. Following on from the redesignation project, a proportion of the additional €23 million allocated in budget 2019 will be expended on payments to farmers who will now be eligible for the first time under the scheme in 2019 and existing beneficiaries who are gaining new eligible land under the redesignation. The remaining allocation is expected to be allocated via increased payment rates across the land categories in the scheme.
The Department has held a series of meetings with farm bodies to update them on the current position with regard to the redesignation process and to seek their views on the shape of the scheme for 2019. It is not intended to change existing eligibility requirements in the scheme, in particular the stocking rate requirement. However, views have been sought in regard to the level of categorisation of land within the scheme and the most targeted way of allocating the additional funds in 2019. Without pre-empting the outcome of these discussions, the Department would be in favour of continuing the current policy direction of targeting the highest level of funding at those areas experiencing the highest level of constraint or disadvantage. The feedback from the discussion so far is that the farm organisations are broadly in favour of keeping the structure of the scheme similar to the 2018 scheme.
The ANC scheme is a key part of Ireland’s €4 billion rural development programme, which is co-funded by the EU. Given the changes required in the scheme for 2019, the rural development programme will have to be formally amended. Discussions with the European Commission have commenced in this regard with a view to providing clarity to farmers in advance of the application period, which starts in February 2019.
I thank the members of the committee for taking the time to discuss the changes to the 2019 ANC scheme. As we have set out, the new designation, along with the increased financial allocation for the scheme, will both be implemented in 2019. It is vital that stakeholders and farmers are aware of these developments. The Department continues to work towards ensuring that the ANC scheme can continue its important role over the coming years. I and my colleagues are happy to discuss this further with the committee and we will do our best to answer questions.
I thank Mr. Dillon and the Department for the presentation. First, I want to express disappointment at our ability to get information on the changes. I tried everywhere over the weekend to get a list of the townlands that have been added and, for that matter, those that have been taken out. I can get a list of all the eligible townlands in the country but there are changes in my county, and unless people knew exactly who was in the last time, they do not know who has been added this time. In my own locality I can identify townlands that have been added. I would like to have a guarantee that, before the day is out, we get a list of the townlands that have been added and a separate list of those that have been excluded.
I will not argue with the Department's figures, which suggest 700 townlands have been taken out and that this affects 760 farmers. The same applies to 2,200 new townlands that will be added, affecting 4,000 farmers. While I find those figures hard to tally, if that is what the Department says, I accept it, but in my neck of the woods townlands are of greater scale. At the same time, there have not been the kind of extensive changes we feared at the start might happen. In my part of Tipperary some areas were discriminated against the last time on the basis of income level. There are a significant number of dairy farmers in the area and, even though the land quality was definitely on the marshy side, they were excluded on the income criteria. That this has been excluded this time has obviously benefited the area and, in my view, they have got their just reward. To have the list would make it a lot easier for us to communicate with people and tell them if they are in or out, and I would like the Department to give us that list without delay.
The percentage of the country that is included must be in the middle to high 70s, and perhaps 75% of the country is receiving some disadvantaged area payment at this stage. How many hectares do we lose because of the ceiling attributed to each farmer? Exactly how many hectares are paid for? What percentage of this eligible area is lost because of the ceiling, given the ceiling was reduced in the past?
To be fair to the Department, we could always be accused of criticising it but it has done a good job on this. There was a lot of trepidation when the review was announced two or three years ago but the changes are minimal and we are definitely gaining more than we are losing.
It is an outcome we would have accepted when the review was first mooted. I would like the detailed information to be supplied.
I thank Mr. Dillon for his comprehensive report. I wish to focus on the categorisation of land within the scheme. Most of the farmers in the west and north-west would be working mountain-type land or land that is considered disadvantaged or more severely handicapped. The areas where land is of less severely handicapped are in the midlands and the south. Will the categorisation of land under the new scheme be along the same lines as previously? Does Mr. Dillon expect there to be much change?
Will the rates of payment be similar or, as suggested in the presentation, will it be the case that areas affected by the highest levels of constraint or disadvantage will be prioritised? Is it moving in that direction? In the context of the impact of climate change, we are very conscious that working low-intensity grazing or upland-type land where farmers find it very hard to survive represents a solid, public good. ANC payments are vital to keep these individuals involved in this type of farming.
It would be useful to get a list of the townlands that have been excluded or included and to obtain a sense of where they are located. Additional money has been allocated in respect of the scheme. We will probably have to ask the Minister about it. Last year, an additional €23 million was put into the budget. In the context of a new emphasis on areas of natural constraint, is it expected that more funds would go into the pot to ensure that the scheme continues to deliver the public good it was originally designed to deliver?
I thank Mr. Dillon and his colleagues. We should not be churlish. We should congratulate the Department and the officials on a job very well done. As I recall, when the issue arose 18 months or two years ago, there was speculation that the roof would cave in. All sorts of things were said. People in the media engaged in ill-founded speculation and this gave rise to concern among farmers involved with the scheme and to those who might attempt to become involved with it. This has turned out to be a good news story. Let us cut out the nonsense of always being down on things. This is a good news story so let us acknowledge that. Ultimately, this new EU regulation has given us an opportunity to examine biophysical factors and criteria that were not available under the previous scheme.
Being parochial, I want to find out what parts of Westmeath are affected. I am pleased to see many bits of green on the map because areas of Westmeath and Longford were excluded. There are little bits of pink too but we must accept that there are objective criteria that have been clearly evaluated. If some area is excluded, I cannot whinge about that for the sake of doing so. Any scheme dealing with areas of natural constraint should be focused on ensuring that the maximum compensation is paid to those affected by the highest level of constraint, as evaluated. I agree with Deputy Martin Kenny in that regard. Areas were evaluated on objective criteria, not for political reasons. The objective criteria have been greatly facilitated by the biophysical factors or criteria set out. The country was evaluated at townland level, which I always thought was a good idea, but I accept that some people thought it was not. The analysis of the biophysical criteria can be used to exceed the 60% threshold and then qualify thereafter.
Is it approximately 100,000 farmers that will qualify for ANC payments and is the pot €250 million? How much additional money will be required to deal with an increased number of areas or townlands designated? If 700 townlands are being removed and 4,000 are coming in, that is a net additional 3,300 farmers, and 1,500 new townlands will become eligible for payments from 2019 onwards. They will consume approximately €12 million of the additional €23 million, which means there is approximately another €12 million, depending on what way it is worked out, available for existing farmers. That amount will be available to increase the bias of payment for those who are most constrained, which is the objective of the scheme. Those are the factors must be taken into account in that regard.
How soon will the next stage of the implementation process of the ANC review be carried out? The officials will have to refine the process and notify people who are not included. I am interested to hear about the appeals process. There must always be an appeals process. Will the appeals process have one independent chairperson or will there be someone with scientific knowledge of dealing with the biophysical criteria? One cannot put someone in who does not have a clue. I want to make sure that the people involved will have knowledge of the various criteria.
In terms of the biophysical criteria, I am interested in the additional factors that permitted the refinement of the eligible land. Land with higher stocking rate levels and more arable land cover were going to be excluded. Those were the dominant parameters and they were part of the exclusion categories but that was balanced with specific constraints, especially fragmentation, which is fairly predominant in the west, where it is an important issue. The level of grassland cover deals with rocky outcroppings and other such factors. It appears that 98% of existing townlands are going to remain eligible. It is a goodish news story in comparison to where we started off. Like Deputy Cahill, I was rooting around trying to discover what parts of Westmeath and Longford are in, but I am not very good with maps. I will take Mr. Dillon's word on it that he will give me a rough idea of what parts are in. I say well done to the officials in that regard.
Some of my questions are predicated on what the answers might be to some of the questions that have already been asked. Is the mountain grazing area retained? Also, have the two lowland designations - the more severely impacted and the less severely impacted - been retained?
Reference was made to what the Department is directed to do by the EU. What are the Department's areas of flexibility?
In terms of the extra €50 million, it was said that an extra 4,000 farmers are being brought into the ANC and is the money divided up among them? The scheme is designed to compensate for areas that are most severely impacted. How is that being done? How has the scheme been balanced so that the areas that the payments will be paid to farmers in areas that have the highest or most severe constraints?
I thank Mr. Dillon for his presentation. On the face of it, the scheme looks pretty good. Where can we get the information on the townlands? There is some information about Shannonbridge and the Eyrcourt area in Galway.
What criteria were used to include areas? I see some areas down south that I would have imagined was fairly good ground. What will the rates be and what will be the limit? Reference was made to the extra €23 million for this year.
There was €25 million before that and possibly €50 million in total over a three or four-year period. What will the rates for the different sections be and what will be the maximum amount that can be drawn down? Is that increasing, as was the case in 2008 or before the financial crash?
Our guests referred to the appeals system. Can they explain who will be dealing with appeals?
I thank our guests for their statements. Obviously, the ANC payment is a hugely important part of farming income. Overall, it appears that a good job was done but I must focus on my county of Wexford, which seems to be one of the hardest hit. Matters are only beginning to come right for many farmers in the county who are recovering from the effects of several fodder crises, including those caused by storms, snow and drought. Can the witnesses tell me how many townlands in Wexford are being removed and how many farmers in Wexford will be affected? When will these farmers be notified that they are being excluded? What will be the loss of value in terms of income to the county? Was the 60% threshold for townlands that takes townlands out decided by the European Court of Auditors or was it set locally in Dublin?
I have a few questions to ask before I go back to Mr. Dillon. Could our guests tease out the appeals process and indicate, for example, when it might commence? Is it just for those who have been excluded on this occasion? There is a group of farmers who would have expected to be included and who have felt disappointed at not being included in the past. Are they eligible for the appeals process? How is that process instigated? What is the timeframe involved?
Mr. Paul Dillon:
We are writing to all the farmers affected. Many farmers will not suffer any adverse impact so they will get a letter telling them there will be no change. Some townlands are being removed, some are staying the same and others are coming in for the first time. As a result, we must ensure that those letters are correct and that is what we are working on at the moment. Our immediate priority is to get that official notification out to them regarding the impact it will have.
Mr. Thomas Harty:
Regarding the fact that only 760 farmers have been impacted across 700 townlands, what we are saying that they have been financially impacted. As a result of the design of the current scheme, farmers get paid up to a maximum so if a farmer has 100 ha of land, the scheme maxes out at 30. For some of these farmers, while there is a loss in terms of what was designated land, it is not a financial loss to the farmer. People may have had tillage crops in the past, hence the loss of the land represents a financial loss. Over 2,000 individuals are farming those townlands and it will have a financial impact on approximately 760 farmers. With regard to those coming in, we estimate that the number is over 4,000 but history has shown us that not all farmers apply for the scheme. The number is approximately 4,000 but we are surprised that every year, certain farmers do not fulfil stocking obligations or do not apply for whatever reason so there is an element of estimation regarding what people will do next year.
We will have to come back to the Deputy about the percentage. I think the Deputy asked how many hectares are, in effect, not paid on due to the ceiling issue. The Deputy asked about hectares and eligibility due to scheme limits. Some of that is dependent on what the new scheme limits will be as in whether we carry over the 30 or 34 ha limits. As Mr. Dillon has already alluded to, in talking to the farm bodies about that, there is broad acceptance that there would be a cap of some sort. Some of those figures will depend on-----
Mr. Thomas Harty:
The other question concerned the percentage now constrained. In 2018, 3.5 million ha were constrained. We are looking at just over 3.7 million ha being constrained. There is a net gain between the 2018 and 2019 schemes. I do not have the exact figure for the total utilised agricultural area in the country but I can send on an explicit figure. We are looking at an increase of more than 100,000 ha. In excess of 3.7 million ha are potentially eligible for payment under the scheme. I will provide the percentage to be sure but they are the figures.
Mr. Paul Dillon:
Deputy Martin Kenny inquired about the categorisation of the land and whether it will be along roughly the same lines as previously. Broadly speaking, that is the thrust of the consultation we have had with the farming bodies so far. Broadly speaking, our thinking is that we would stay with pretty much the same delineation so what was regarded as mountain or mountain type grazing will be still be regarded as such and the more severely handicapped areas and less severely handicapped areas will still be pretty much the same. That is the way we are thinking.
In terms of the rates we pay, we have had a round of consultations with the farming bodies. The issue then is how much money we have to spend and how much money is taken up by the new entrants. The figure for new entrants is probably of the order of €10 million. There will be €10 million or €11 million to spend after we accommodate the people who are coming in for the first time. This then allows us headroom to give increases across all the existing people in the scheme. That is what we are discussing with the farming bodies at the moment regarding the way they see the greatest increases going.
Mr. Paul Dillon:
Logic would say that they would. When we had an extra €25 million to distribute last year for 2018, the way that was approached by the Minister and ourselves involved the greatest increase in terms of percentages and the volume of money going to the people in the mountain-type category and so on down through the categories. The farming bodies indicate that this is the way they see it as well for now and that they would apply the same logic. In other words, we will redistribute whatever money is available to people who are there and those who were involved beforehand in that fashion.
So there will be not be much movement from people in more severely handicapped areas the last time who would now be in less severely handicapped areas? Mr. Dillon does not see much movement around that?
Mr. Paul Dillon:
I thank Deputy Penrose for his comments about the way in which it has gone so far. We will supply the details at county level of the townlands that are in and out. We know how many farmers are coming in for the first time. We treat them as if they are coming into the less severely handicapped areas. We know roughly much money that will take, which will tell us how much money is available.
The appeals process will have an independent chair and be supported by independent technical advice and administrative support. That is being set up. It has to be somebody who is broadly acceptable to all the stakeholders, which is what we are doing.
Mr. Paul Dillon:
There can be but it is entirely up to the committee. To come back to the Chairman's question, we will be setting up the committee straight away. The Minister will make an announcement about that. We will be writing to the farmers who are being adversely affected so they will be told about their right of appeal. They will simply have to write back and say they want to appeal. That is all they have to do at the outset.
We can then tell them the reason they have been dropped from the scheme or have not got in, for instance which of the biophysical criteria or fine tuning they have failed and so on. That would allow them to focus their appeal. There is no point in making it any longer, which is why there is a two-step process. That will not take very long.
On the timeline, the 2019 scheme will open in February in tandem with the basic payment scheme, BPS, for 2019. The closing date is 15 May. Anyone who is in doubt should apply anyway by ticking the box on the BPS form, as they would have done previously. It is critical that we have those appeals in time for payments in autumn 2019. That is the window for all that work to be done and dusted.
Mr. Thomas Harty:
The process that led us to the current map included specific constraint. One of those included small farm size, around 80% less than the national average. That is already built into this final process so that farmers of smaller, fragmented holdings or in respect of the land quality can have an impact on viability. That data is already in there. In the appeals process we will be able to tell people why they did not get in and they can examine that to see if there is an issue that they want to bring back to the committee.
Has the status of the islands been resolved? I ask particularly regarding one within a mile of my home, Barna Island, where the landowners have waited for three years to establish whether they meet the criteria. Is there a specific person in the Department to deal with the islands' status?
Mr. Larry Cashman:
The island scheme, as an entity, will remain unchanged and is separate to the discussions we are having today. They continue to be an area of specific constraint. I am not sure of the geographic location of the island to which the Senator referred but the basic criteria for an island to be eligible for the scheme as an offshore island with no permanent land bridge. The equivalent of Valentia and Achill would not qualify as they have a permanent land bridge. The only islands which are more inland are within the Shannon Estuary. I am the person responsible so if she wishes to do so, the Senator may contact me and I will look into the case.
Mr. Thomas Harty:
We can provide the Deputy with a list of the townlands to which we have committed and he will see the change. We are writing to all farmers who are coming out, who are getting new land or are staying the same. Those letters are being issued now but it will take some time to get over 150,000 letters out.
The last question related to the biophysical 60% threshold. That is within the regulations. According to the regulations 60% of the utilisable agricultural area of a townland had to be constrained for it to be deemed biophysically constrained. That implies that there are areas that have some constraint but do not hit the 60% level and therefore do not get in to the scheme.
Mr. Thomas Harty:
The Court of Auditors view of the last scheme fed into the discussions throughout Europe on the need to move to biophysical. That percentage was put in as part of the 2013 discussions on the regulations. The court would have said that it had to move to biophysical and the exact biophysical and thresholds were part of the negotiations that formed the Common Agricultural Policy, CAP, the last time, and now the 60% level is in the regulations.
I am just doing the maths. The €25 million works out at something like €260 or €270 to everyone in the last batch. When the new people are brought in, by what I am looking at, the increase across the board will be about €100. Is that correct?
There are more green areas in than out. I assume those areas met one criterion on the menu of physical constraints. Is there a formula to decide what areas are severely or less severely disadvantaged? Do they have to have two or three criteria or is there a formula? Is it done in an ad hocway based on what was done before? I would like some clarity on that.
Deputy Fitzmaurice asked about how the money was divided out. In the past, it divided up on a formula of close to 3:2:1. Were that to be done again, it would make a big difference. I am very conscious of farmers in the west and north west in particular who probably tick all the boxes, let alone one or two. I am very conscious of the need to make sure that, while farmers everywhere need support and to be helped and given every assistance possible, we ensure that they are productive and have sustainable farms. This scheme relates to the constraint of the land and therefore should be paid on that. We should not lose that focus. I would like reassurance that there is a clear commitment to pay it on that basis.
Mr. Thomas Harty:
I will explain how biophysical designation worked. To be deemed biophysically constrained, a farmer had to meet at least one of the criteria listed, at least 60% of the townland. Some townlands had one over 60% applying whereas, the Deputy is correct in saying that others had all of them. However, within the regulations it was that at least 60% of the utilisable agricultural area had to be constrained.
As we set out in our opening statement, it then had to be fine-tuned. In our case, we used a stocking rate and arable and the effects that people had learned to live with or functioned with the constraint. These became fine-tuned out. In the areas on the map marked pink, some would not have hit the biophysical status, so they would not have got over 60%, where others may have hit that level but, following fine tuning, they then came back out. There are other specific constraints at play. Different pink areas on the map are not in the new scheme for different reasons. Some did not hit the biophysical threshold and others did but were fine-tuned out because of stock levels or the level of arable land. We have had discussions with all the farm bodies. There has been broad agreement that the money would move towards the areas of greatest constraint. Both the percentage increase and the amount increase was greater in the mountain areas. We anticipate that would broadly be the case in the allocation of moneys to these areas in the new scheme.
Mr. Paul Dillon:
It all depends on the number of appeals that we receive. We will set up the process straightaway and write to all of the affected farmers. As soon as they receive our letter they can lodge their appeal, if necessary. We will make every effort to get them processed in time for the closing date of 15 May. Even if the cases are not fully concluded at that stage we advise farmers to apply for the ANC scheme anyway. We will have the work done by the time we reach the payment date so they will not lose out. It is easier to do that than for them to not apply, which would create a problem with the EU because the farmers would not have committed to abiding by the terms and conditions of the scheme.
I wish to mention another matter that we have not mentioned. The new regulation requires us to have an element of what the EU calls "a degressive payment" but what we call front-loading. Therefore, one must pay a higher rate for the first number of hectares than in each of the tiers. We have not settled on the first amount of hectares. Let us say it is ten hectares, for example. The new regulation means that one must pay more for the first ten hectares per farmer than one does for the rest, and we are required to apply that aspect to each of the three categories. That clause did not exist for all of the categories before this.