Thomas Pringle (Donegal South West, Independent)
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I refer to the announcement yesterday of the agri-environment options scheme, AEOS, scheme for 2011 and this is to be welcomed. However, there is great disappointment within the farming community at the cap placed on the expenditure and entry into the scheme. The Minister for Agriculture, Fisheries and Food, Deputy Simon Coveney, has announced the scheme for 8,000 applicants with an expenditure limit of €25 million. Given that the average payment to farmers under last year's scheme was €4,200, this means that to have a scheme equivalent to last year would require funding of over €33 million. Farmers can now expect to have the amount of funding allocated per successful applicant to be reduced significantly to meet the budgeted target, a reduction of over €1,000 per applicant.

It is expected that 11,000 farmers nationally will come out of REPS 3 this year. With only 8,000 places available, very few farmers with marginal land in disadvantaged areas will qualify for entry. Based on this allocation, the scheme will barely provide for farmers with land in commonage, SACs and SPAs. In County Donegal alone, 840 farmers will be coming out of REPS this year and a further 1,040 next year. Many farmers in areas of Donegal, from Killybegs through Dunkineely, Donegal town to Laghey, will have little hope of gaining entry to this new scheme. This will mean they will suffer a significant drop in income support. The REPS and AEOS schemes are environmental protection schemes but as well as protecting and enhancing the environment REPS have in particular become vital in supporting farm families, as will the agri-environment options scheme, AEOS.

The schemes have also contributed to the local economy by providing income to local traders and suppliers where farmers have sold supplies in their local community to enhance their farms. The consequence will be depressed demand in the local economy and with the subsequent loss to the State in VAT and income tax returns. I fail to see, when 50% of the funding comes from the EU to support this scheme, why the Government could not find sufficient revenue to support a scheme with at least as much funding and access as the AEOS from 2010.

During the election campaign, Fine Gael candidates all over the country gave cast iron guarantees to farmers and IFA representatives that the AEOS would be protected and continue in the same form as existed at the time. Farmers took these promises in good faith and now feel a sense of betrayal when just a few short weeks into government, the new AEOS has been significantly reduced. They are very worried when they read the press release from the Minister's office, which states: "Due to the diminishing resources available to the Department in the coming years the Minister confirmed that significant savings would have to be achieved across a wide range of schemes and services in the 2012 Vote for his Department". Farmers should be worried because based on this announcement there will be greater reductions in available schemes for farmers. In the case of County Donegal, with 1,040 farmers coming out of REPS next year, there will be little hope of an adequate scheme for them to apply to. The closure of REPS by the previous Government and now the reduction of the AEOS will undermine confidence and will hit vulnerable less profitable cattle and sheep farmers. Farmers need a stable replacement scheme and not be left wondering what cuts will be made in coming years.

Farmers have to question the Government's commitment to Food Harvest 2020 and the role the Government foresees for the farming sector in the economic revival of rural areas. Food production and security should be an essential part in the overall strategic interests of the country but this reduction in supports and, as the Minister has indicated, further reductions next year and onwards, will leave farmers wondering where rural Ireland stands in the Government's plans.

Simon Coveney (Cork South Central, Fine Gael)
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I thank the Deputy for raising this matter as it gives me an opportunity to provide some clarity on a number of the issues he raised. I recall vividly while in Opposition being extremely frustrated with Ministers who chose to read long scripts and offer history lessons on schemes which were not relevant to the questions being asked. I will, therefore, address the specific issues the Deputy raised without recourse to my script, which he can read at a later stage as it contains some useful information.

I will comment first on the commitment given on the agri-environment options scheme, AEOS, by Fine Gael Party candidates during the election campaign. This commitment was based on the announcement by the previous Government that an agri-environment options scheme would be introduced, which would be worth €50 million and would have a ceiling of €5,000 for each of the 10,000 likely applicants. We assumed the scheme was accounted for in the four year expenditure and budget plan to which the Government signed up. When I entered my Department five weeks ago, however, I encountered a problem in respect of the scheme.

I understand the important role environmental schemes, including the rural environmental protection scheme, have played in the past five to ten years, especially in disadvantaged areas along the west and north-west coasts. Having been to agricultural college, I also understand the farming community. It was a major challenge for me to put in place an agri-environment options scheme because I was informed that the budget for this year and next year does not make any allocation for the scheme announced by the previous Government. Instead, we have a commitment under the four year plan to reduce current expenditure in my Department by €60 million. I was told in no uncertain terms by the Department of Finance that if I wanted to sponsor a new agri-environment options scheme to the tune of €30 million, €40 million or €50 million, I must find equivalent savings in my Department. This requirement arises from the expenditure ceilings to which we have signed up as part of the bailout deal if we are to access the stability fund. This is simple reality and I will not pretend it is not a problem. I and my officials must find imaginative solutions in next year's budget to try to minimise cuts in expenditure and payments in farmers. We will spend the entire summer trying to find these solutions.

I was determined to introduce an agri-environment options scheme because, as Deputy Pringle noted, approximately 11,000 farmers are completing REPS in the expectation that they will be able to avail of a new environmental scheme which will encourage them to farm in an environmentally friendly manner and supplement their income. For many farmers, REPS payments make up their entire profits. I had an obligation to try to do something for this group by prioritising them in any scheme I proposed to introduce. I have done this in the agri-environment options scheme. Farmers from special areas of conservation, special protection areas and commonage areas will have automatic access to the scheme and will be given priority over all other farmers.

The Deputy is correct that I have imposed an expenditure ceiling of €25 million on the scheme for next year and the year thereafter and we have set a maximum payment per applicant of €4,000. The average payment last year under the agri-environment options scheme was €3,800, not €4,200 as the Irish Farmers' Association has stated. I corrected representatives of the IFA on this figure when I met them last night. I deliberately set the payment ceiling for applicants entering the scheme in the coming months at a level higher than the average payment for last year.

The Department estimates that the average payment next year and in 2013 will be between €3,000 and €3,500, with the figure in commonage areas likely to be at the higher end of the scale. We also expect between 7,500 and 8,000 applicants for the scheme. Approximately 4,000 and 4,500 farmers located in special areas of conservation, special protection areas and commonage areas may apply for the scheme. They will be automatically entitled to payments provided they meet the criteria and will be given priority. The remaining places, of which there will be roughly 4,000, will be determined on the basis of whether an applicant was previously in REPS and on farm size. In other words, we will prioritise farmers with smallholdings and those who do not have significant income from commercial farming or have had their income supplemented by environmental farming or other support schemes such as disadvantaged area payments.

I would have found it impossible to secure approval from the Department of Finance to pay out more than the ceiling of €25 million for next year and 2013. It would not have been possible for me to achieve sufficient reductions in expenditure in other areas to meet a higher cost.

I have fought for the past two weeks to ensure we have an agri-environment options scheme that would enable me to offer something to farmers emerging from the rural environmental protection scheme, specifically in Deputy Pringle's area of the north-west. I accept the scheme does not meet everyone's expectations. Farmers in receipt of REPS payments of €12,000 or €15,000 are facing a payment next year of €4,000, which is a significant decline in income. I accept that the position is not ideal and wish I could have established a scheme worth €50 million for the next two years. I would have done so if I could have afforded such a scheme but I had to battle to have €25 million allocated to the scheme. Even this will cause major headaches for me in the four or five months leading up to the Estimates process.

I will not mislead farmers, as the previous Government did, by pretending we have easy solutions when no such solutions are available. There is much good news in farming in terms of prices. The agri-environment options scheme should be welcomed on the basis that something is available, although I accept it is a disappointment for many farmers who were expecting more. I will continue to maximise the payments I can allocate directly to farmers by making the necessary reductions in expenditure and finding efficiencies and making savings, where appropriate. However, I do not have access to a pot of gold, nor would the Department of Finance allow me to source money that does not exist.

I have allocated a significant amount of money and I am prioritising those who need it most, the majority of whom come from the Deputy's part of the country.