Willie Penrose (Westmeath, Labour)
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I wish to share time with Deputies Wall and Paul McGrath. I thank the Ceann Comhairle for allowing me to raise this matter which is extremely important to so many livestock farmers throughout the country. It is particularly important in the midlands and in Westmeath, Longford and the adjacent counties.

The problem of which the Minister of State ought to be aware revolves around the proposed €80 million penalty that Irish farmers face in respect of their 2004 premium payments from the overshoot that occurred at the end of 2004 and which clearly arose from the change to full decoupling, which I supported and which came into effect in January 2005. Ireland made the decision to opt for full decoupling in October 2004, and it was as clear as the nose on one's face that livestock farmers would increase their special beef premium applications under the 2004 premium scheme. This put the cut off date at 31 December 2004, and with such a small window of opportunity to make the applications, the overshoot duly took place.

The Minister of State's Department estimates that the special beef premium overshoot will be 27% on the nine month special beef premium and 23% on the 21 month special beef premium. The cutback as a result of the overshoot will be imposed on livestock farmers who applied for more than 25 animals under the 2004 scheme. In financial terms, individual farmers are facing cutbacks ranging from €53 to €78 per animal, including extensification premium. These penalties will, in many cases, exceed the net margin per animal which a farmer might make and, therefore, effectively wipe out any anticipated profit for beef enterprises which are already under fierce financial strain and pressure. Why should people who applied for, say, 70 animals in 2002, 2003 or 2004 have a financial penalty imposed on them as a result of the special beef premium overshoot?

I have been informed that when Ireland opted for full decoupling, the former Agriculture Commissioner, Franz Fischler, made it clear that no country or individual farmer would lose out from the changes to full decoupling. What efforts have been made by the Minister of State and his officials on behalf of these farmers to ensure they are not penalised or that they do not lose out in any way?

The average farmer is likely to lose up to €4,000 per annum. I know a young farmer in County Westmeath who has tried to increase his herd for the past four years. He leased a shed and the cut in his case will be approximately €6,000. This is the thanks he is getting for trying to be progressive, for leasing sheds and buying additional land. It is a devastating blow to this bright, young, energetic and go-ahead farmer and to many more who are in a similar position throughout Westmeath, Longford and beyond.

What solution will the Minister of State put in place to deal with the overshoot problems to ensure that approximately 30,000 farmers will not be penalised? Has he discussed the problem with the new Agriculture Commissioner and, if so, how often? What was the outcome? Was it in line with the commitment given by Commissioner Franz Fischler that none of these farmers would lose out from a financial perspective? Will it be thrashed out with the EU Agriculture Commissioner, or will the Minister of State bring forward his own Estimate to ensure farmers who are already on their knees will not be punished further? I call on the Minister of State to take urgent action now in this regard.

Jack Wall (Kildare South, Labour)
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I thank Deputy Penrose for sharing time. I met members of Kildare IFA on Monday and they expressed their major concerns that this will have a detrimental effect on farming in the county and the catchment area. I had a discussion with the Minister in the past couple of weeks on the uncertainty in regard to the sugar beet crop and this is a further death knell as far as these farmers are concerned. The average number of farmers leaving farming in recent years is frightening.

When these farmers met Commissioner Fischler in Goffs, in Kill, before decoupling began, they were promised no losses would be sustained by farmers as a result of decoupling. They cannot understand that, despite a number of meetings with the Minister for Agriculture and Food and the Commissioner, this matter has not been resolved. I ask the Minister of State to bring this matter to the attention of the Minister for Agriculture and Food. As I understand the new Commissioner is coming here next month, this matter must be resolved as a matter of urgency. Otherwise, there will be a further decline in the numbers of people involved in farming. There will be a further loss for mixed farmers in the midlands and there will be significant problems as a result of young farmers not taking up farming as a livelihood.

Paul McGrath (Westmeath, Fine Gael)
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I thank Deputy Penrose for sharing time.

As Deputy Penrose outlined, this difficulty arose from the introduction of the single payment which kicked in from 1 January 2005. The Minister informed me in response to a parliamentary question today that there was an increase of approximately 250,000 applications for various premia from the Department arising from the cessation of the payments. Heretofore, farmers knew how much they would be paid when they applied under the various schemes but many will lose a great deal of money under the new proposal. Deputy Penrose and I are aware of a young farmer who will lose €6,000 if the system kicks in, as outlined by the Minister of State. We know what is our salary and when we will be paid. However, farmers face a scenario whereby they will not be sure whether they will receive a payment and if they know, they will not be sure how much.

The Minister has kicked the issue to touch, even though it was clearly identified six months ago and forecast almost two years ago. It needs to be raised with the Agriculture Commissioner and a commitment must be secured that the €80 million involved will be paid to farmers. For example, farmers in counties Westmeath and Longford will lose between €3 million and €4 million.

Brendan Smith (Cavan-Monaghan, Fianna Fail)
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Ireland implemented the single payment scheme in January 2005. The special beef premium scheme, with the slaughter premium scheme, were the only schemes under which the deadline for the receipt of applications was 31 December 2004. This meant that as many farmers as possible submitted their applications in late December 2004 so that they could benefit from the special beef premium.

Under the 2004 scheme, applications for in excess of 2.4 million animals were lodged, of which almost 1.4 million were quota animals, that is, first age and bull categories. The application figure in each of the previous three years was 1.9 million animals. During December alone, applications in respect of 930,000 animals were submitted, compared to 600,000 during December 2003. More than 300,000 animals were applied on during the final two days of December.

The background to this issue is that under the special beef premium scheme each member state has an individual national ceiling or quota. Ireland's quota for 2004 was 1,077,458 animals. This quota is in respect of animals submitted under the first age and bull categories, as there is no quota for second age animals. However, Article 4.4 of Council Regulation EC 1254/1999 requires that a proportionate reduction be applied to the second age category where the national ceiling is breached.

Following discussions with the farming organisations in late 2003, it was decided that any overshoot reduction would not apply to the first 25 animals submitted by individual farmers. It is important to stress, therefore, that this decision, which was taken to assist small-scale producers, means that a farmer who applied for premium under the 2004 scheme in respect of a total of 25 animals or less will not suffer a reduction. In addition, all other farmers will be exempt from the quota reduction on their first 25 animals.

Paul McGrath (Westmeath, Fine Gael)
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Will there be a reduction for the rest?

Brendan Smith (Cavan-Monaghan, Fianna Fail)
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Following the submission of the unprecedented number of applications, the Minister took immediate steps to ensure applications were processed promptly and payment made to farmers as quickly as possible. I am satisfied this objective was met. The following were included in these measures to achieve these objectives: the implementation of procedures which resulted in the timely return of passports to farmers to allow them to dispose of their animals after the end of the retention period if they so wished; the processing of applications went ahead simultaneously in an efficient and effective manner.

As a result, my Department, despite the number of applications received, commenced advance payments on these animals in early March; the decision taken to estimate the special beef premium scheme overshoot reduction which enabled the balancing payments to be made to special beef, suckler cow and slaughter premium applicants. These balancing payments commenced in April 2005 and, consequently, farmers received payments in respect of the three schemes two months before they would otherwise have received them.

I refer to the impact of the overshoot reduction. The decision to opt for full decoupling was arrived at following careful consideration of all options and following a widespread public consultation process. A persuasive factor in this process was the suggestion that farmers in those member states who fully decoupled would not be disadvantaged during the transitional period. The level of the overshoot of the regional ceiling is attributable to the ending of the special beef premium scheme in 2004 and application patterns, both in terms of total numbers of animals applied upon and the timing of lodging of applications, strongly suggest this to be the case.

As has been made clear on numerous occasions, we are seeking a solution to this issue and will continue to do so with the European Commissioner. The Minister has raised the issue with the Commissioner on a number of occasions during recent meetings. My Department forwarded a detailed submission to the European Commission dealing with this matter last month. The matter has been discussed with the Commissioner's cabinet and with the most senior officials of the European Commission. Arrangements are being made for a meeting between my officials and the various services of the Commission's DG Agri. All aspects of the difficulties encountered by Irish farmers and all potential solutions will be explored during these discussions.

We have availed of every opportunity to press the European Commission for an appropriate solution to alleviate the difficulties encountered by beef farmers in Ireland as a result of the ending of the special beef premium in 2004. I assure the House that the Minister will continue to pursue the matter with the Agriculture Commissioner and Commission officials.

Paul McGrath (Westmeath, Fine Gael)
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Does the Minister of State expect a positive outcome? Do I see a nod?