Simon Coveney (Cork South Central, Fine Gael) | Oireachtas source

The grassland sheep scheme is based on Article 68 of the current EU regulation that governs direct payments in the form of the single farm payment. From 1 January 2015, that regulation will be superseded by EU Regulation 1307/2013. Consequently, there will no longer be a legal basis for the continuation of the grassland sheep scheme in its present form. In developing the shape of the new system of direct payments in Ireland I have been very conscious of the needs of sheep farmers, particularly those who farm on hill and commonage land. In general, sheep farmers hold low value entitlements under the current single farm payment scheme and will benefit significantly from the model of convergence to be applied in Ireland. Those with a low initial unit value will see the value of their entitlements increase over the period of the scheme, which is seven years.

Essentially, we have looked to apply the same approach we applied to the beef sector. In the future we will not have a lump sum of unspent money that we can simply assign to a sheep grassland scheme as we did in the past. For this reason, we are proposing to decouple that payment and add it to a sheep farmer's single farm payment. As a result, in 2015 sheep farmers will get the full value, which is €15 million this year. I have increased that value from €13 million last year to try to maximise the amount of money I can put back directly into the sheep sector. That €15 million is as far as I can go in terms of the availability of unspent moneys. We wanted to maximise that amount of money, decouple the payment and add it to a farmer's single farm payment, as opposed to allowing the €15 million to go back into the general pot. The money will be staying within the sheep sector.

I am aware that some sheep farmers have said they would prefer a direct coupled payment. That would involve a great deal of additional bureaucracy in terms of inspections and form-filling, etc. The cleanest approach - it is the easiest approach to understand and implement - simply involves taking a decoupled payment, adding it to a farmer's single farm payment and ensuring the €15 million fund remains in place for sheep farmers. We have not yet finalised this, but we will do so in the coming weeks. I have set out the approach we are tending towards.

Additional information not given on the floor of the House

When determining the initial unit value of a farmer's entitlements under the basic payment scheme in 2015, Regulation 1307/2013 gives member states the option to take into account any payment the farmer received in 2014 under Article 68 schemes such as the grassland sheep scheme. Deputies should note that this option is only available where the member state is not applying voluntary coupled support to the sector concerned under the new Common Agricultural Policy. I have decided to apply this provision in Ireland as a means of safeguarding the value of the payments received under the grassland sheep scheme for those farmers concerned. The grassland sheep scheme is the only Article 68 scheme being incorporated into the calculation of entitlements under the new basic payment scheme. If such incorporation did not take place, the value of such payments would simply remain in the national fund and be redistributed generally among all farmers who establish entitlements.

The incorporation of the grassland sheep scheme payment into the calculation of a farmer’s initial unit value in 2015 will result in a higher entitlement value for the farmers concerned from the start of the scheme, rather than relying solely on the gradual process of convergence to increase the unit value over the five year period up to 2019. Our analysis confirms that as a result of this provision, the group of farmers who receive the grassland sheep scheme payment will have an immediate financial benefit in 2015 as part of their payment under the basic payment scheme. In the past two years sheep numbers have stabilised. While the breeding flock declined slightly in 2013, a return to growth is expected in 2014. I was pleased to note that Irish sheep throughput had grown for the third consecutive year, reaching 2.61 million head, which represents an increase of 7%. These developments led to sheepmeat production rising by around 3% to stand at just over 55,000 tonnes. The total value of Irish sheepmeat exports is estimated to have increased by over 4% in 2013 to reach €220 million.

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