Willie Penrose (Longford-Westmeath, Labour)
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I thank the Ceann Comhairle for selecting this important issue for debate. The publication on 1 November 2013 of the TSE (fallen animal) subsidy scheme and, more particularly, the revised terms and conditions contained therein have been a cause of great concern and angst among the farming community, the Animal Collectors' Association and knackeries. This arises because of an invitation for expression of interest for inclusion in the relevant panels in the revised scheme. The major changes focus on clause 7.8 of the proposed scheme, which proposes, in effect, to limit the haulage of category 1 material to a plant less than 125 km from the intermediate plant or knackery and which would, for example, for many such operators exclude the availability of approved rendering plants located in Northern Ireland. Many such operators have contractual agreements with these approved renderers and have been provided with extremely efficient, effective and compliant service over recent years. The question arises as to why such mutually advantageous arrangements should be fractured by the implementation of a new set of rules and guidelines which will effectively be the death knell for many knackeries as they will find themselves subject to significant price increases because of the smaller number involved. This will lead to cost increases.

What is more serious is that these new rules are being introduced unilaterally without any recourse to consultation with the relevant industry stakeholders, which I find very surprising coming from the Department of Agriculture, Food and the Marine. It seems to be a new departure and one I certainly hope will not be a precursor of things to come.

Indeed, the 125 km have been calculated as the crow flies and do not take cognisance of the actual road distance involved. What inspired this great work of art? The Irish Farmers' Association, IFA, has branded this restriction anti-competitive and said it will increase the cost of animal disposal. Although I do not always agree with the IFA when I speak in this House, I wholeheartedly agree with its contention in this regard. This proposal effectively limits the subsidy for over 48 month old animals to operators rendering product within 125 km of their base and will therefore knock out a significant number of rendering plants that are normally available. At a meeting with the Department's officials in March, the Animal Collectors' Association was assured that any proposal relating to knackeries would proceed by way of discussion and agreement, but clearly no consultation took place.

A number of issues arise. On what basis are the changes being made to exclude the availability of fully compliant major renderers? Reducing competition will inevitably lead to an increase in costs. What is the basis or rationale for the 125 km calculation and exclusionary zone? It is specified that this stipulation cannot be breached except with the express permission of the Department. If there are not two or more rendering premises inside the 125 km radius from the knackery, delivery is permitted to either of the two nearest rendering premises as measured by road. This is making a scheme that should be simple complicated. It appears the Department wishes to ensure that lawyers will never be idle. Will the Minister revisit this scheme before it becomes operational on 30 November next? The scheme appears to be quite workable aside from the 125 km restriction. Why not take clause 7.8 out of it altogether?

Tom Hayes (Tipperary South, Fine Gael)
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I thank Deputy Penrose for raising this issue.

The fallen animal collection system is an essential element of the infrastructure underpinning Ireland's successful livestock and meat processing industries, which had an estimated combined export value of almost €3 billion in 2012. The TSE fallen animal subsidy scheme ensures that fallen bovine animals over 48 months are disposed of in compliance with all animal and public health and environmental regulations.

The original scheme was initiated at a time when there was a serious crisis of confidence in the European beef market, in which Ireland is a major player, as a result of the emergence of BSE in some member states where it had previously not been confirmed. The burial of animals on farm was prohibited by the EU from 2001 onwards, except in remote areas, which meant that farmers would have to arrange for the collection and disposal of all fallen animals. The introduction of the scheme was seen as an urgent necessity at a time when the market was unable to deal properly with the disposal of fallen stock. The scheme has been modified over the years, but implicit in the objective of the scheme as it now stands is the protection of the environment and the maintenance of Ireland's favourable BSE status.

The current scheme provides for the collection and rendering of over 48 month old fallen bovines required to be TSE tested under EU regulations. The scheme subsidises the collection by animal collectors of fallen cattle over 48 months old from farms and their transportation to Category 1 rendering plants. The rendering and disposal costs of over 48 month old fallen cattle in Category 1 plants are fully covered by the scheme. The subsidy has two components - €30 paid to animal collectors and €58 paid to Category 1 renderers in respect of each animal, excluding VAT. The collection charge to the farmer is capped at €54.03, including VAT. In 2012, there were 53,903 over 48 month old bovines TSE tested in accordance with EU regulations and fully disposed off, at a cost to the Exchequer of €5.78 million. The projected number of animals for the entire year for 2013 is estimated at 75,000, with a cost to the Exchequer of €7.49 million.

The operation of the TSE subsidy scheme has been examined in my Department and a number of changes have been introduced on a best practice basis. These include enhanced compliance provisions and putting some limits on the distance material can be carried while maintaining choice. This examination took into account a number of considerations, including TSE testing requirements, animal by-product regulations, the need to maintain competition and the need for an adequate collection and disposal infrastructure. Under the new arrangements each animal collector will be able to choose from at least two rendering companies. Each animal collector licensed by my Department and each rendering company on the island of Ireland has been invited to express an interest in being included in panels to operate the revised scheme, which it is envisaged will be in operation from 30 November 2013. There are 39 animal collectors who can potentially operate within the scheme and five category 1 rendering plants potentially eligible to provide a service under the terms of the scheme.

It is important to note that these revised terms and conditions only apply to material collected and disposed of under the TSE subsidy scheme, which my Department operates to facilitate the TSE testing of over 48 month old bovines as required by EU legislation. Any animal collector who wishes to opt out of this scheme will, subject to compliance with animal by-product regulatory requirements, not be bound by the revised scheme rules. The new arrangements will be reviewed after six months in light of experience and my officials are open to have discussions with stakeholders. They will talk to the various people mentioned by the Deputy.

Willie Penrose (Longford-Westmeath, Labour)
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Does the Minister of State not find it strange that they start closing the door when the horse has bolted? Why have post-event consultation rather than pre-event consultation? Why not work with the stakeholders and have a consultation with them to work through this? Unless I have gone bonkers altogether, if the cost of rendering rises due to the removal of the current competition and at the same time the Department is stipulating the maximum collection price for adult bovines, which I have set out, that will result in a loss of profitability for knackeries unless they pass on an increased collection price for animals under 48 months old to farmers. There will definitely be a price increase because that is the nature of business. I am a socialist who likes to help businesses to survive, but this is an inevitable result in the competitive marketplace. I cannot understand the policy.

Will the Minister of State review it after three months rather than six months? That might be a reasonable compromise. Hopefully, the Animal Collectors Association and the various other people involved will get a positive hearing from the Department's officials. The Department should not embark on this route in the future. It should work with people in a consultative manner and work together to ensure that what everybody wishes to achieve is achieved.

Tom Hayes (Tipperary South, Fine Gael)
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The underlying factor is that there is a huge export business at stake. Everybody wants to do what is best for the industry. With regard to consultation, we have been consulting with the IFA and the various stakeholders on an ongoing basis, although obviously not on the detail of the scheme. It would be very hard to get agreement across the board. We will review it at six months, but I take the Deputy's point about the three months. In fact, I am open to further discussions with the Deputy to try to deal with this. It is a problem that everybody acknowledges and I would certainly welcome the chance to talk to the Deputy about it at a later stage as we work through it.