Dáil debates
Wednesday, 28 January 2009
Adjournment Debate
Farm Waste Management.
9:00 pm
Tom Hayes (Tipperary South, Fine Gael)
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I thank the Ceann Comhairle for allowing me to raise the important issue of the farm waste management scheme. It is a good scheme and has had a positive impact not only for agriculture but for the environment. People were shocked when they heard that the Department of Agriculture, Fisheries and Food could not add the number of farmers who applied for grants under the scheme. The number of applicants went through Teagasc, the farm development service. The Department must have known the number of applicants, given that the number of planning permissions granted throughout the country could have been checked with the county councils. People are shocked, as am I, that the Department underestimated the number of applicants or the money required to cover the payments. However, that is the position and there is nothing we can do about it now.
In the limited time available, I want to impress on the Minister the hardship being experienced by farm families throughout the country and their concerns about farming. They are worried about milk prices falling to as low as 19 cent or 20 cent per litre this year. Farming is changing. The applicants under this scheme have borrowed a large amount of money from banks or other financial institutions. They had to meet high standards that were laid down in respect of these projects, which they did. I stress the worry, fear and the anxiety they are experiencing.
I appreciate the Minister coming into the House to listen to what we have to say. I cannot understand why a Department would underestimate the figures in question to such a degree. The Minister should give us a commitment tonight that these grants will be paid within the time specified. Banks, other financial institutions and, in some cases, contractors who carried out the work are waiting for the payment of this money. I implore the Minister to give us an answer that properly addresses this matter.
John O'Mahony (Mayo, Fine Gael)
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I thank the Ceann Comhairle for allowing me, along with my colleagues, to raise this important issue. It is an important but a simple one. Thousands of farmers around the country had to work day and night to meet the deadline of 31 December for the completion of the work on the projects under the farm waste management scheme. They took out loans based on the grants to which they are entitled. The Minister and the Government voted down the motion introduced by Deputy Creed and other members of the Fine Gael Party last October to extend the date for the completion of the works.
On making representations on behalf of our constituents in recent weeks, we were told by Department officials that the Minister had suspended payments under the scheme. The reasons for this were revealed in The Sunday Tribune last weekend when it emerged that the Minister totally underestimated the money needed to cover payments in respect of the approved applications.
How could the Minister have got it so wrong? I heard him state on "Morning Ireland" on Monday that he underestimated the late rush of applications. Given that he was well aware of the number of applications approved, how could he have underestimated the cost involved? For the Minister to say that the large demand took him by surprise can be compared to a person selling 20,000 tickets for a football match and then being surprised when 20,000 people turn up. If the deadline had been extended, the irony is that the work could have been done in a more orderly fashion and the Minister would not have been hit with all of the costs coming down the tracks at the one time.
The Minister said he will honour his commitments by way of some form of deferred payment. With banks putting pressure on farmers, deferred payments are not acceptable. Farmers need their money now in order to get the banks off their backs. The perception on the ground is that the Minister's Government bailed out the banks for their misadventures. All we ask here tonight is that the farmers get what they are entitled to get. I call on the Minister to do the honourable thing and pay the hard-pressed farmers the money to which they are entitled.
Seymour Crawford (Cavan-Monaghan, Fine Gael)
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I thank the Minister for coming to the House. The payment of grants under the farm waste management scheme is an extremely important issue. In spite of a three-hour debate in the Dáil some months ago, the Minister refused to allow time for the people to finish the job, thus putting increased costs and pressures on the farmers concerned to have all the necessary paperwork in by 31 December 2008.
The only answer we and individual farmers can get from the Department is that no payments are available, even for those applications received long before the December deadline. This is an extremely serious situation and cannot be ignored by the Government. Nobody denies that this was a generous scheme but it had to be allowed so that farmers could meet the necessary regulations with regard to preserving the environment. The Minister explained last week that this came about as a result of a legal situation in Brussels. This only happened because for many years a Fianna Fáil-led Government ignored the problem and the regulations until the matter went to law, but that is no excuse for the hold up in payments today.
The Minister, Deputy Smith, and his Department knew exactly how many farm grants had been sanctioned and they knew especially how many applicants had sent in their cards showing clearly that work was in progress. However, the Minister and his Department totally failed to budget for this, as recently as the much heralded October budget in which so many other figures were completely inaccurate.
When this scheme was announced by the then Minister for Agriculture, Fisheries and Food, Deputy Mary Coughlan, who is now Tánaiste, I specifically asked her in the House how she intended to fund the payments as it was clear to me, even at that early stage, that her Estimates were completely flawed. She assured me in no uncertain terms that money would not be a problem.
Farmers entered this scheme in good faith and bankers lent them significant sums of money on the clear understanding that the grants would be paid according to the agreed charter of farmers' rights. Many of the jobs cost more than farmers had originally budgeted for, due to weather conditions and pressures of time. It is vital that this money be paid immediately.
It is interesting that the prices of both ready-mix and steel have fallen dramatically within one month of the scheme ending. This proves that farmers were forced to pay over the odds in an unjustified rush to finish this work. Farm incomes are dropping. Farmers are under pressure. Farmers from the Minister's own county as well as my own contacted me in desperation. I urge the Minister to ensure that farmers are paid now or within the next two months at least.
Michael Creed (Cork North West, Fine Gael)
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I thank the Ceann Comhairle for permitting my colleagues and me to raise this matter and I thank the Minister for being here to take the debate in person.
There is very little I can add to what has been said by my colleagues. To say that applicants who are awaiting payment are alarmed is an understatement. It must be emphasised that in complying with the nitrates directive and in availing of this grant scheme, there is no financial gain for the farmers who have borrowed significant amounts of money. They are merely complying with their legal obligations, assisted by a grant scheme introduced by the Minister's Government.
The reality is that this money will pass through the hands of the applicants only on its way to the bank managers who approved these farmers for matching funds to complete the works. Loan facilities were approved to carry out the works on the basis of the grants that would be available.
Reference was made by previous speakers to bailing out the banking sector. Money makes the world go round. If one is talking about a figure of approximately €400 million as the liability for which the Department stands, this by itself, if denied to the banking institutions, will create a liquidity problem for them. I urge the Minister to act and I hope he can allay our fears. I hope he can tell us that he is in negotiation with the Minister for Finance or that he has concluded negotiations with him.
I am alarmed that the Taoiseach said in the House yesterday that no Supplementary Estimate was envisaged. The prospect of robbing Peter to pay Paul is raised if the Minister has to fund this scheme out of departmental resources. In addition to the disproportionate cuts that agriculture has already been asked to carry in the recent budget, that is a scenario that we cannot countenance.
I hope the Minister is in an position to allay our fears. It is incredible that he was not in a position to predict this situation on the basis of precedent. There were 42,000 applicants. An average payment, established from existing grants, was to be in the region of €33,000. A total of 17,000 had already been paid and approximately 17,000 remained to be paid. The mathematics are quite simple. The Minister had an allocation of €125 million which was entirely inadequate.
I can assure the Minister that if he does not pay this grant at its due time to members who are due their payments, it will make the protests that arose in respect of the disadvantaged area scheme, the installation aid scheme and the early retirement scheme look like the teddybears' picnic party. This issue will not go away.
Brendan Smith (Cavan-Monaghan, Fianna Fail)
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The farm waste management scheme is the most successful on-farm investment scheme in the history of the State. It will see over €2 billion invested by both farmers and the Irish taxpayer in providing essential on-farm infrastructure and represents a long-term investment in improving the productive capacity of the most important indigenous sector in the economy. The scheme represents an enormous vote of confidence in the sector and is well justified on the basis of our export performance. Significantly, a recent analytical study showed that the agrifood industry contributed over 30% of net foreign earnings from the manufacturing sector.
Ireland must compete on the basis of quality, productivity and efficiency and must ensure that we meet the needs of consumers and society in general. We must ensure that the sector operates in a manner that is consistent with the preservation of the natural environment. Investment in the farm waste management scheme is consistent with all these priorities.
While market conditions are difficult at the moment, as Deputy Crawford mentioned, the global demand for meat and milk is forecast to double over the next 40 years and Irish agriculture and the agrifood sector——
Paul Connaughton Snr (Galway East, Fine Gael)
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We must hang in long enough then.
Brendan Smith (Cavan-Monaghan, Fianna Fail)
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I referred to the fact that my constituency colleague, Deputy Crawford, was right when he referred to the price and the demands on commodity prices. I state the facts——
Paul Connaughton Snr (Galway East, Fine Gael)
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When will the Minister pay the cheques? He should simply pay the cheques.
Brendan Smith (Cavan-Monaghan, Fianna Fail)
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Deputy Connaughton's intervention is not much use. Can I refer to a constructive contribution that my constituency colleague made?
Tom Hayes (Tipperary South, Fine Gael)
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The Minister is looking for his preferences.
John O'DonoghuePaul Connaughton Snr (Galway East, Fine Gael)
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It is a breach of contracts.
Brendan Smith (Cavan-Monaghan, Fianna Fail)
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When the Deputy was a Minister of State, there were not too many on-farm investment schemes in his day in Agriculture House.
Brendan Smith (Cavan-Monaghan, Fianna Fail)
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They were not allowed in the first place.
While market conditions are difficult at the moment, the global demand for meat and milk is forecast to double over the next 40 years and Irish agriculture, and the agrifood sector which is built on it, with the benefit of the investment under the farm waste management scheme, will be well positioned to take advantage of these trends.
As Deputies will be aware, a revised, and greatly improved, farm waste management scheme was introduced by the Department in March 2006 in order to assist farmers meet the additional requirements of the nitrates directive. The amendments to the scheme included, in particular, an increase in the standard grant rate from the previous 40% to 60%, with 70% available in the four Zone C counties, namely counties Cavan, Donegal, Leitrim and Monaghan. In addition, the new scheme provided for an increase in the maximum eligible investment ceiling from €75,000 to €120,000 and removed any minimum income requirements from farming from the scheme so that all small farmers could participate in it.
It is acknowledged that Ireland was in a very difficult position prior to the introduction of the revised scheme in 2006, having been found to be in breach of the terms of the nitrates directive in 2004 by virtue of a judgment of the European Court of Justice. Continued failure to implement this directive to the satisfaction of the EU Commission would have had serious implications for Ireland, including the threat of substantial daily fines and the undermining of EU funding for rural development schemes and the single payment scheme. The annual EU funding to Ireland under both headings amounts to approximately €1.6 billion. To have continued to have ignored those threats would have represented nothing less than gross irresponsibility which the Government was not prepared to countenance.
The immense success of the scheme is demonstrated by the 48,500 applications which were received by the closing date of end-December 2006, of which over 30,000 were received during the final month for receipt of applications. By responding thus to the Government's generous scheme, not only was the farming sector demonstrating a willingness to address the nitrates issue but it was also showing a huge amount of confidence in the future of the sector. Almost 43,000 approvals to commence work were issued to farmers under the scheme prior to the end-2008 deadline for completion of work. These figures are virtually unprecedented within the context of on-farm investment schemes.
The financial commitment of the Government to the scheme has been very substantial, particularly during these challenging economic times, and all of this grant aid comes directly from the Exchequer. This is demonstrated by the fact that €413.7 million was paid out to farmers under the scheme in 2008. This was in addition to amounts of €21 million in 2006 and €114 million in 2007. The high level of expenditure under the scheme last year was made possible by the agreement of this House to a Supplementary Estimate of €195 million, which enabled a further 6,000 farmers to receive timely payments under the scheme during 2008.
The 2008 expenditure of €413.7 million should be seen against the original provision of €129 million in the Estimates. In addition to savings of €53 million, identified in mid-year, and the Supplementary Estimate of €195 million, the Department devoted an additional €36 million to funding the scheme before the end of the year.
The Government places a very high value on the Irish agri-food sector and it was in view of the sector's importance that the Government agreed to fund such a generous scheme in support of an essential infrastructure investment that is every bit as important to the agri-food sector as other infrastructural investments were to other sectors of the economy. There is no doubt the scheme has already dramatically transformed the Irish farming infrastructure through this major injection of capital and it has left the sector well-positioned to meet the highest international environmental standards required of Irish farming, as well as the changing market requirements. It will also continue to strengthen the competitiveness of Irish agriculture into the future as well as protect Irish farmers from the threat to their EU payments.
The deadline of 31 December for completion of investment works under the scheme was an integral part of the EU state aid approval and had to be strictly adhered to. The state aid approval was granted by the Commission on the clear understanding that the scheme represented a once-off opportunity to enable farmers to meet the requirements of the nitrates directive. The Commission consistently reiterated that position, both in writing and to me personally, as well as to our officials on several occasions. Indeed, only recently an MEP representing Leinster was advised of this specific condition.
The imposition of this deadline was known at all stages of the scheme and has been shown in the final analysis not to have hindered the participation of most interested farmers. Despite the urgings of others, I was consistent in my advice to farmers that the deadline would not be revised and that they should spare no effort to ensure the necessary work was done and the paperwork submitted to my Department by the end of December last. All of the evidence suggests this advice was adhered to and approximately 35,000 claims were received in respect of completed works under the scheme prior to the closing date, over 14,200 of which were submitted during the month of December.
In an effort to facilitate those farmers who may, for whatever reason, not have wanted to proceed with the full extent of the project for which they had approval, I introduced a facility whereby the scheme participants could proceed with distinct discrete units of work, for which the Department would provide funding. I am satisfied this important initiative will have been of considerable assistance to thousands of farmers who might otherwise have lost the opportunity to provide important storage facilities.
By 31 December, almost 17,600 farmers had been paid and approximately 17,400 payment claims now remain to be processed. The Department is currently assessing these claims with a view to estimating the overall cost involved in grant terms. Though this review is not yet complete, I expect it will be completed shortly.
I am pleased to confirm to the House, as I have done earlier this week both through the media and again last night at the Irish Farmers' Association national AGM, that all farmers who completed work in accordance with the terms and conditions of the scheme will be paid.
Brendan Smith (Cavan-Monaghan, Fianna Fail)
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I am currently discussing the funding arrangements with the Minister for Finance, Deputy Brian Lenihan, and I expect that a determination on those arrangements will be made shortly. As the Taoiseach said last night, "the Government's aim is to ensure that funding is available to meet claims for properly completed and validated work under the scheme."
In the short intervening period, payments to farmers under the scheme have been deferred but they will be resumed as soon as possible. I reassure Deputies that the Department continues to carry out the necessary inspections and to process claims to payment stage. I am aware of the concerns among farmers that these payments will not be honoured but I would again reiterate my commitment and that of the Government to full payment of these claims, subject to their meeting the terms and conditions of the scheme.
Before concluding, it is important to stress that the Government has made and continues to make very significant financial commitments to underpin the future development of a sustainable and competitive agriculture and food sector capable of meeting the demands of modern consumers. This year, the Department spend is in excess of €3.4 billion in support of Irish agriculture, fisheries and forestry. Notwithstanding the overriding need for budgetary restraint in these difficult times, we are making every effort to preserve measures designed to underpin the productive capacity of the sector. I can assure the House that the Government will continue to utilise whatever means it can to enable agriculture and the agri-food sector to maximise its contribution to the wider economy.
I again thank the Deputies for giving me the opportunity to set out the position on this matter and to reiterate the Government's commitment to honouring in full those farm waste management scheme claims that meet the Department's specifications. In response to Deputy O'Mahony, I never spoke about the late flood of applications on the national airwaves. I spoke about the number of claims that came in, which are quite different to applications. On a point made by Deputy Creed and others, there is a gain for farmers in this scheme. Many people I spoke to and whom we all represent have said that for the first time they have good on-farm facilities. They are able to keep cattle indoors for longer to save and preserve their grassland. Similarly, individual farmers——
Tom Hayes (Tipperary South, Fine Gael)
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We know all that. We need the money from the banks.
Brendan Smith (Cavan-Monaghan, Fianna Fail)
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Deputy Hayes does not like to hear the facts. Similarly, any individual who did not meet the cross-compliance criteria would be in danger of losing his or her single payment, which is now a very important part of farming income. That scheme has enabled farmers to ensure they are in a position to meet the criteria for the single payment scheme and, from that point of view, it is extremely beneficial to the farming community.
Tom Hayes (Tipperary South, Fine Gael)
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That is why we wanted it extended.