Seán Sherlock (Cork East, Labour)
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Question 2: To ask the Minister for Agriculture, Fisheries and Food if he will provide greater financial incentives for the production of miscanthus; and if he recognises the potential of this crop to add value to the local economy. [12071/10]

Tony Killeen (Clare, Fianna Fail)
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In 2007, the Department launched a bioenergy scheme on a pilot basis to encourage farmers to grow willow and miscanthus as a renewable source of energy up to the end of 2009. The legal basis for the scheme was Council Regulation 1782/2003 establishing common rules for direct support schemes under the Common Agriculture Policy. This regulation authorised member states to grant aid the production of miscanthus and willow on areas declared by farmers under the EU energy crops scheme in their single payment scheme application.

In accordance with the regulation, member states were authorised to grant aid 50% of the associated costs of establishment, and this was, therefore, the maximum level of aid permitted to establish willow and miscanthus crops. The Commission made this decision on the basis that both willow and miscanthus crops are classed as agriculture crops, not afforestation, which is longer term and where higher aid rates could be justified.

Under the bioenergy scheme, farmers were paid a once-off capital grant of up to €1,450 per hectare to cover 50% of establishment costs. Eligible costs included ground preparation operations, vegetation management, planting and the purchase of planting stock. Aid was paid in two instalments, namely, a maximum of 75% of the grant - €1,088 - in the first instalment following establishment of the crop, and the remaining 25% - €362 - in the year after establishment, provided the applicant had adequately established and maintained the crop. The pilot scheme generated considerable interest from farmers in growing miscanthus. Overall, 2,100 hectares of miscanthus were grant aided.

Drawing on the experience of the pilot scheme, the Department launched a new bioenergy scheme in February 2010 to grant aid miscanthus and willow planting to the end of 2012. A total of €1 million is available to support the planting of a further 1,000 hectares in 2010. The legal basis for the scheme has changed to Council Regulation (EC) No 1698/2005, on support for rural development by the European Agricultural Fund for Rural Development. Accordingly, the new bioenergy scheme will now be funded under the Department's revised rural development programme. The new scheme will follow a similar format to the pilot scheme in terms of the application, pre-planting approval and payment process.

Approved costs will be grant aided up to 50%, subject to a maximum grant of €1,300 per hectare for both crops. The Department is precluded from increasing the 50% ceiling to grant aid establishment costs. The maximum payment per hectare has been reduced by €150 per hectare on the pilot scheme, to take account of lower establishment costs in 2010 and to comply with EU requirements that aid is based on the actual costs of establishment. The Department will continue to monitor the level of establishment grant over the lifetime of the scheme. Additional information not given on the floor of the House.

In addition to establishment grants, areas planted with willow and miscanthus continue to qualify for the single farm payment and for payments under REPS and the disadvantaged areas scheme, subject to some restrictions on the areas planted.

It was evident from the response to the pilot bioenergy scheme that there is considerable interest in growing miscanthus. Ireland's climatic and soil conditions are very suitable for growing miscanthus and the sector has the potential to offer a new rural activity and provide farmers with added income streams. Miscanthus can also deliver positive outcomes in terms of reduced CO2 emissions and contribute an increased supply of biomass to meet Government targets on bioenergy. My Department will continue to work closely with industry stakeholders to ensure the development of the sector.

Seán Sherlock (Cork East, Labour)
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The reason I asked the question is because we have an opportunity in this country to phase out such fuels as coal and they can quite easily be replaced by miscanthus. Farmers tell me that the establishment costs are quite high and that the grant could be improved, if possible, to assist in that regard. Did I hear the Minister of State correctly when he stated that he is precluded by European Union rules from expanding or increasing that level of grant aid? I ask him to expand on that point. Once the crop has been established, is there any scope to improve the increments for weed control, the control of pests and also ploughing and cultivation? If he is unable to increase the grant for the establishment of the crop, perhaps he could consider an increase on the embedded side, if I could use that expression.

Tony Killeen (Clare, Fianna Fail)
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Deputy Sherlock is quite correct. The 50% maximum limit for grant aid continues but the level of grant aid is based on the establishment cost which is now estimated, under Teagasc figures, at €1,300 per hectare for the 50%.

The new scheme also has a number of new provisions in that unlike previous situations, it is not administered on a first-come, first-served basis; a number of criteria are attached. Deputy Sherlock is quite correct. In effect, the biggest difficulty facing people planning to grow miscanthus is the cost of the plant for establishment. It is particularly high because the level of take-up is relatively low here and the absolute imperative. in circumstances where we are not in a position to increase the grant above 50%, is to work to reduce the costs involved.

Seán Sherlock (Cork East, Labour)
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Will the Minister of State agree there are many companies facilitating farmers in establishing the crop in the first instance and that the expertise exists? Will he acknowledge the potential for this crop and that perhaps the Government is under-valuing the potential of this crop in meeting an alternative energy need? Will he also acknowledge that there may be a reluctance on the part of farmers to switch into this crop because the scheme itself is undersold? The Government needs to do a marketing job to encourage more farmers to diversify into this crop, given the level of expertise, particularly in the east Cork and west Limerick regions where two companies who are market leaders are only itching to get more farmers under their ambit but they need a greater financial incentive.

Tony Killeen (Clare, Fianna Fail)
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It is interesting that the development of the crop has tended to be centred around the locations where those companies as described by Deputy Sherlock operate. Naturally, there is some reluctance on the part of farmers who are not familiar with the growth of these crops and there are some concerns in that area, although very good quality research has been carried out in Oakpark since 1993. In some instances, farmers have run into difficulty because these are new crops. Pest control and all kinds of issues arise but support has been made available to them. In general terms, the Government would be very supportive of this scheme and will be taking whatever measures are necessary or available to try to ensure that farmers, for whom it is a viable crop, have the opportunity to begin growing it.