James Breen (Clare, Independent)
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Question 3: To ask the Minister for Agriculture and Food the action she will take to deal with the various anomalies in the farm retirement scheme; and if she will make a statement on the matter. [2130/05]

Brendan Smith (Cavan-Monaghan, Fianna Fail)
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A number of issues have been raised from time to time arising from the scheme of early retirement from farming. Those that come up most often are the fact that the rate of pension is not index-linked and the requirement that early retirement pensions can be paid only as a supplement to any national retirement pension payable to the participant.

It is not accurate to describe these as anomalies. Both the current early retirement scheme and the previous scheme, which closed to new entrants at the end of 1999, are governed by EU regulations. One requirement of the regulations is that the early retirement pension can be paid only as a supplement to a normal national retirement pension. Consequently, my Department has no option but to deduct the value of national retirement pensions from the early retirement pension.

As regards the rate of pension, under the previous scheme we are paying the maximum that the EU regulations allow — we cannot increase it. Commission officials have confirmed this several times in response to inquiries from my Department. In its proposals for the current early retirement scheme, which commenced in November 2000, my Department included a provision for annual increases in the rate of pension from 2000 until 2006. The European Commission rejected this proposal and insisted on legal grounds that a fixed rate be set instead.

The mid-term review of the CAP has implications for farmers in the early retirement scheme. In general, the new single payment scheme introduced in Ireland from 1 January 2005 is applicable to farmers who actively farmed during the reference years 2000, 2001 and 2002, who were paid livestock premia and-or arable aid in one or more of those years and who will continue to farm in 2005.

Farmers who joined the 1994 early retirement scheme, which closed to new applications in December 1999, did not farm during the reference period and cannot establish entitlements under the single payment scheme. Where they transferred their holdings by lease, the transferees actively farmed during the reference years and it is they who will have entitlements established for them. Entitlements are attached to the farmer who was actively farming during the reference period, not to the land.

During the course of negotiations with the European Commission on the single payment scheme, Ireland secured agreement for an arrangement that will benefit family members or others who now take over holdings that were farmed by third parties who had leased them during the reference period. Farmers who take over such holdings, by transfer free of charge or by a lease of five or more years at a nominal amount, may apply to the national reserve for payment entitlements under the single payment scheme.

Participants in the current early retirement scheme that was launched in November 2000 who farmed during part or all of the reference period will have entitlements in their own right and can, before 15 May 2005, use the private contract clause to lease these entitlements to the young farmer who holds the lease of their land under the early retirement scheme. In such circumstances, the retired farmer must establish the entitlements in 2005 on a special form provided by the Department. The qualifying young farmer may or may not have entitlements and land in his or her own right.

James Breen (Clare, Independent)
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Does the Minister of State agree with the former Minister, Deputy Walsh, when he said there are serious flaws in the farm retirement scheme? Does he agree that a person who retires through ill health and who returns to farming when his circumstances change should be entitled to resume his benefits? Does the Minister of State agree that if land is leased to a family member, the family member is penalised? If it leased to an outsider, it is the outsider who gains the entitlements. When these farmers retired they had quota and headage payments. When they returned to farming, however, they found that their farms' values had fallen by 50% because they were without quota and headage. Around 6,000 have been affected under this retirement scheme.

The Minister of State has so far refused to meet the group campaigning for the rights of those farmers. Will he meet it? How many acres of land in the State are without quota? Why did the Department of Agriculture and Food break its contract with these farmers? There should be an immediate meeting with those farmers who were affected and their entitlements must be restored forthwith.

Brendan Smith (Cavan-Monaghan, Fianna Fail)
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A number of groups purport to represent retired farmers with special concerns about the early retirement scheme. The Minister, Deputy Coughlan, and the Minister of State, Deputy Browne, met some of these groups and I met a deputation from the mid-west in the Department some time ago who outlined their concerns.

Deputy James Breen referred to comments by the former Minister, Deputy Walsh. The then Minister and his officials raised with the European Commission the possibility of increasing the maximum rate of payment in respect of the scheme that operated between 1994 and 1999. The Department and the Minister raised the matter with the Commission on several occasions at that time. The Commission firmly replied that the maximum payment of €12,075 could not be increased under any circumstances, even if the Exchequer paid for it. That is what Deputy Walsh referred to, as far as I know.

The Department sought index-linking when it submitted to the Commission its initial proposal in respect of the current scheme. That proposal was rejected by the Commission, through its legal services, on the basis that one could not index-link or pay by increments a "contract", which is what it considered the retirement scheme to be. I have spoken about some of the issues that have caused us concern over the years.

I discussed some of the issues raised by Deputy James Breen in my initial response to him. People who did not actively farm at that time cannot activate entitlements under the single payments scheme. The scheme pertains to people who actively farmed at that time. The Department and the then Minister succeeded in reaching agreement with the European Commission on a number of issues which will benefit family members or others who can take over holdings which were farmed by third parties who had leased them during the reference period.

James Breen (Clare, Independent)
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That is now.

Brendan Smith (Cavan-Monaghan, Fianna Fail)
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That concession was sought and granted by the Minister and the departmental officials after protracted and long negotiations with the European Commission. The Minister, Deputy Coughlan, the Minister of State, Deputy Browne, and I have listened to the concerns outlined by various groups. We had meetings with senior officials from the companies outlining and detailing certain matters. We responded to queries from a number of groups and individual farmers concerned about single payment entitlements, in particular.

James Breen (Clare, Independent)
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Does the Minister of State think this scheme would withstand a constitutional challenge based on people's right to inheritance and entitlement to property, as outlined in the Constitution? I do not think it would.

Brendan Smith (Cavan-Monaghan, Fianna Fail)
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The Department has been advised that the scheme is properly and legally constituted. It does not inhibit the constitutional rights of any individual farmer or landowner.