Michael Creed (Cork North West, Fine Gael)
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Question 64: To ask the Minister for Agriculture, Fisheries and Food the way he proposes to allocate to farmers funding accruing to his Department arising from the 5% reduction in the single farm payment as approved by him in negotiations on the CAP; and if he will make a statement on the matter. [44382/08]

Brendan Smith (Cavan-Monaghan, Fianna Fail)
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The agreed rates of additional modulation will generate approximately €120 million in total over the four years from 2009 to 2012 in transfers from the single farm payment to rural development. As I have previously made clear, these additional funds will stay in Ireland and be passed back to Irish farmers under the rural development programme.

In line with the new regulations they must be used for measures to address the so-called new challenges associated with climate change, water management, bio-energy and biodiversity, dairy restructuring and innovation. I will consult stakeholders widely as to how these funds can best be used for the development of Irish agriculture.

Michael Creed (Cork North West, Fine Gael)
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I understood there was an obligation on the State to match modulated funds exactly. What amount of matching State funding will the Department provide? What are the schemes he envisages financing? When will we see the application forms and the detail in respect thereof?

Brendan Smith (Cavan-Monaghan, Fianna Fail)
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Our national contribution in respect of the rural development programme far exceeds our national requirement. These new measures will probably serve as an addendum to the existing programme. Our co-financing obligation——

Michael Creed (Cork North West, Fine Gael)
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This is not devoted to rural development per se but to the agriculture budget.

Brendan Smith (Cavan-Monaghan, Fianna Fail)
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Absolutely. There may be a perception that the funds will be allocated for some rural development measures beyond the farm gate but this is not true. The modulated funds will be allocated for on-farm activities. The scheme or schemes we will propose to the Commission for approval will have to be linked to the new challenges of climate change, achieving biodiversity and water management. A scheme could involve an additional REPS measure. A grassland premium scheme, which may in some instances refer to under-grazing or over-grazing of land, could be considered. There is a measure that can be considered in regard to dairy restructuring. A number of schemes can be proposed but the basic requirement is that they address the new challenges of protecting the environment, enhancing biodiversity and tackling climate change. I assure the House that all the funding will be allocated directly for on-farm activities and not to Leader type programmes or programmes that would operate beyond the farm gate.

Michael Creed (Cork North West, Fine Gael)
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All farmers will be hit by the modulation proposals but only farmers who apply to participate in the schemes envisaged by the Department will recoup the funding. I want a specific answer to my specific question on the additional State funding required to match the modulated fund.

Brendan Smith (Cavan-Monaghan, Fianna Fail)
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With the level of modulation coming in at present, we would have to put our proposal to Brussels. The decision on whether our co-financing is adequate will be made there. The current national Exchequer contribution to our rural development programme substantially exceeds the EU requirement.

We will put forward our particular programme to Brussels when we have completed consultation in respect of a scheme, or schemes. For example, if we wished to extend the REPS programme or to introduce an animal welfare measure that might be linked directly to new challenges, we would have to put forward those proposals to Brussels for clearance. Of our farmers, 50,000 will not be affected by modulation because they are below the single payment rate where modulation applies.