Martin Ferris (Kerry North-West Limerick, Sinn Fein)
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5. To ask the Minister for Agriculture, Food and the Marine his views that the imposition of a foal levy based on the advertised value of the nomination fee of a stallion means that when the actual fee paid is less than the advertised price and breeders are unfairly penalised [41418/15]

Martin Ferris (Kerry North-West Limerick, Sinn Fein)
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I would like to hear the Minister's views on the imposition of a foal levy based on the advertised value of the nomination fee of stallion which means that when the actual fee is paid, it is less than the advertised price. Are breeders being unfairly penalised?

Simon Coveney (Cork South Central, Fine Gael)
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I thank Deputy Ferris for raising this issue. We had a brief discussion on it in the committee a number of days ago. Horse Racing Ireland is a commercial State body established under the Horse and Greyhound Racing Act 2001 and it is responsible for the overall administration, promotion and development of the horse racing industry. The current foal levy scheme, which was introduced in 2000 on a statutory basis, applies to all thoroughbred foals registered in Ireland. The proceeds of the levy are used by Horse Racing Ireland to help fund the Irish Equine Centre, which is very important, the Irish Thoroughbred Breeders Association and Irish Thoroughbred Marketing. These organisations provide key support structures to the Irish thoroughbred breeding industry.

The foal levy is a relatively small element of the overall cost of keeping and covering a mare and, for reasons of practicality, is based on the advertised nomination fee rather than the actual fee paid. By way of example, the lowest foal levy band incurs a fee of €35 and the second band is €50. Most small breeders fall into one of these two bands. The highest band, for stallion fees in excess of €30,000, is €650. At coverings of up to €15,000, the differences between the foal levy bands are a maximum of €50. Breeders who pay an actual nomination fee that is less than the advertised nomination fee used to determine the foal levy band have already achieved a real saving. The associated levy should be considered in the context of the overall cost of breeding and keeping a foal. There is a very high compliance level with the foal levy scheme and it has been revised from time to time to ensure fairness in its application.

There is a foal levy committee which reviews annually the rates, bands and structure of the levy and there is quite a lot of consultation in this regard.

Martin Ferris (Kerry North-West Limerick, Sinn Fein)
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I understand that of the 7,000 or so registered breeders, 70% to 80% have only two or three mares. Many of them are small farmers. Would it not be far more equitable if breeders were to pay the foal levy based on the invoice price, that is, the actual cost of covering the mare, rather than the advertised price? The latter might be two or three times greater than what a small breeder is able to negotiate with a stallion owner. Moreover, such a change would be in line with other aspects of agricultural enterprise where levies are paid on invoice or sale price.

Simon Coveney (Cork South Central, Fine Gael)
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The Deputy's proposal is not unreasonable and it has been discussed. To be clear, small breeders in general operate at the lower end of the market in terms of the foal levy. In fact, last year, in the case of more than 30% of foals, or 2,346, the levy was paid at either €35 or €50, whereas 27% of the income for 2014 came from just 616 foals. The last time the levy was reviewed, the people who were paying at the higher end had their foal levy increased slightly and those at the lower end had it decreased slightly. In other words, we are trying to take into account the affordability issue. However, in the context of keeping a breeding mare and developing a foal for market, €35 or €50 is not a major factor one way or the other. The reason the levy is based on advertised value is that it is much easier to calculate and there is much less paperwork involved. Stallions are advertised at a certain value and it is on the basis of this advertised price that the foal levy is calculated. For administrative and accuracy reasons, it makes things much easier.

Martin Ferris (Kerry North-West Limerick, Sinn Fein)
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I thank the Minister for his reply. Is it not the case that other EU member states do not impose a foal levy? If so, are there implications for the regime in this country in the context of competition law and so forth? I have a list, which I presume came from the Department, which shows some breeders at the higher end paid a levy at 0.14% while some at the other end paid 3.3%. That is a significant discrepancy. I do not accept it would be far more difficult to charge based on the negotiated price of covering the mare rather than the advertised price. I cannot see how it would be any more difficult.

Simon Coveney (Cork South Central, Fine Gael)
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Whether or not foal levies are applied in other countries is not really the point. One might well ask whether other countries give €60 million per year towards the horse and greyhound racing industries. Ireland has its own structure in terms of supporting the racing industry. Indeed, I am not sure any other country in the world prioritises horse racing as much as we do. There are countries, like Britain and France, that have more wealth linked to horse racing in terms of private input, sponsorship and so on because they have larger audiences and they have links to betting tax and all the rest of it. We have a very supportive financial model for horse and greyhound racing which has helped to ensure the Irish thoroughbred industry remains a dominant force globally. Some 40% of thoroughbreds exported within the EU come from Ireland and we continue to be a hugely successful breeder of top thoroughbred horses. All the figures show that in terms of sales this year and so on.

Foal breeding is a small part of that large industry and it is right we should ask breeders to contribute. The calculation of the levy in terms of the rates, bands and structure must be handled by Horse Racing Ireland through its foal levy committee, in consultation with both big and small owners, to ensure we get the balance right. I have no problem with a change if that is what the industry wants, but we must ensure the levy remains simple to administer and easy to collect.