Wednesday, 15 September 2021
Saincheisteanna Tráthúla - Topical Issue Debate
I thank the Minister of State, Deputy Heydon, for being in attendance. It is important to recall that the beef exceptional aid measure was put in place to provide farmers with temporary financial aid in response to a prolonged period of depressed beef prices. It was a recognition that farmers were on their knees. The difficulty with the scheme from the outset was that it included a provision that farmers were required to commit to a 5% reduction in bovine livestock manure nitrogen, effectively meaning they were to reduce their stocking rate. When you consider that most of the farmers availing of this scheme were suckler farmers, who are probably the most sustainable farmers and producers of beef in the world, it made little sense. It was something I had a little concern about from the very start.
Notwithstanding that, the scheme was beset with confusion from the very beginning. Almost immediately, we heard reports of farmers waiting up to six weeks to receive figures from the Department, and farm advisers who had figures that were different from the Department's. As a result of those debacles, a deferral or six-month extension to the scheme was secured, rightly, at the height of the third wave of Covid. This was the least that farmers should have expected. However, we now learn that 3,627 farmers within the State are now facing a clawback of €5,227,820. This is money that is now being taken from farmers who received the payment in the first place because of exceptional need.
I welcome the fact that the Minister of State today instructed his officials to apologise for attempting to raid areas of natural constraint, ANC, and targeted agricultural modernisation scheme, TAMS, payments in a very underhand manner. I appeal to him to put in place measures that we seek exceptional support at a European level to provide a further extension to those farmers who were not able to avail of the first one.
I acknowledge Deputy Carthy for allowing me to share his time on Topical Issue matters and I thank the Minister of State for being present. This scheme was brought in for hard-pressed beef finishers in 2019, who suffered continuous bad beef prices over a prolonged period. The conditions of the scheme were extremely bureaucratic for hard-pressed beef finishers. The fact that it was undersubscribed is a sign of how unattractive the scheme was for farmers. For a scheme for beef finishers to be undersubscribed, told its own story. It is now the case that many farmers who applied for the scheme are failing to meet the conditions and the money they received will have to be reimbursed.
These farmers are still under severe financial pressure. Beef finishing is still a very unprofitable business. I ask the Minister of State to bring in a system similar to what we had for the super levy in 2016, when farmers incurred a very large super levy bill but were given a period of years by the Commission to pay back the money. That is the very least that needs to be done in this case. We should have a prolonged period of time to allow these beef finishers to pay back the money in instalments. They just cannot afford to have the money taken from them in any calendar year. We need a sustained period of time to allow these beef finishers pay back this money.
We cannot argue that they failed to meet the criteria of the scheme. The Department will tell us an audit will insist the money be repaid. We can argue that point and, hopefully, the Minister of State will argue it strongly. These beef finishers cannot afford to pay back this money in one instalment. A precedent was set with the superlevy bill where farmers were allowed three years to pay back the money. I would seek an even longer period for these beef finishers who are still under severe financial pressure to repay this money.
I thank Deputies Carthy and Cahill for raising this issue. As has been rightly outlined, 2019 was a very difficult year for beef farmers. There was a need for support to help them cope with market difficulties, which were largely driven by Brexit. That is why we fought hard to get money from Europe to establish the beef exceptional aid measure, BEAM, which ended up with €77 million being paid to 33,000 farmers in 2019, €50 million of which came from the EU with the balance having come from the national Exchequer. In return, farmers were required over the following two years to reduce by 5% their bovine organic nitrogen produced on the farm. The European Commission insisted there was an element of restructuring of the Irish beef sector built into the scheme. Money is never given without some conditionality attached. That was clearly set out in article 1.3 of the Commission regulation 2019/113(2) of 2 July 2019 and it was also in section 7 of the BEAM scheme's terms and conditions in 2019. Such was the urgent nature of the market difficulty that the money was paid upfront, subject to the participants' compliance with the scheme requirements.
Almost 19,000 farmers have now met their requirements and exited the scheme. A further 11,000 farmers have opted to avail of the flexibility the Minister, Deputy McConalogoe, fought hard for and secured in January from the European Commission. This allowed a farmer to opt for a later reduction period over which the 5% could be delivered. The later period runs from 1 January 2021 to 31 December 2021 compared to the original period which ran from 1 July 2020 to 30 June 2021.
All 33,000 farmers in the BEAM scheme had the opportunity to avail of the later reduction period if they wished and if it was necessary. Farmers could apply for the deferral between 19 March and 21 June. The Department made it clear to farmers there was no downside to applying for the deferment option because we wanted to make sure everybody who wanted to apply for that deferment could do so without any fear. Those who opted for the deferment but met the scheme conditions in the original period were automatically removed from the later reduction period because they had met the requirements. Almost 5,300 farmer participants were in this category and have exited the scheme without recoupment. The remaining 3,600 farmers decided not to opt for the later reduction period and, as of the end of June 2021, have failed to meet the obligations they signed up to under the BEAM scheme's terms and conditions.
Of the 3,600 farmers, 66% or 2,396, who are in the recoupment situation increased their nitrates during that reduction period. These 3,600 farmers will have some or all of the money they received in 2019 recouped. The total being recouped is now €5.2 million with the average recoupment per farmer at €1,700. Among the 3,600 farmers, almost 10% of cases involve less than €200 and almost a quarter involve less than €400.
The rules on recoupment of interest are the same across all schemes. They are set down. There is conditionality with respect to European rules involving European money. The Deputies highlighted concern for the farmers involved. They had the option to continue on in the scheme but decided not to do that. As I said, two thirds of these farmers decided to increase their nitrogen organic output. The majority of those farmers made that conscious decision in the full knowledge that they were outside the terms and conditions of the scheme. That was a business decision for them to make and they felt it was the right thing to do, which was their right, but the terms of the scheme mean that money has to be recouped.
I accept the communication around the recoupment letter to the 3,600 farmers could have been clearer and was not handled properly. The Minister, Deputy McConalogue has instructed Department officials to issue an apology to this cohort of farmers for the premature manner in which their moneys were deducted. I take on board the concerns raised. I am happy to answer further in response to supplementary questions.
The difficulty is we are dealing with farmers who do not have this type of money. They received this payment because it was recognised they were in exceptional difficulties. To give the Minister of State a sense of the amounts involved, in my constituency in County Cavan 133 farmers will be expected to pay back €157,000 and in Monaghan 138 farmers will be expected to pay back €193,000. If they cannot make those payments within 30 days they will be expected to pay a 3% penalty rate. I would like a direct answer to this question. Will the Department make contact with the European Commission to find flexibility to allow those farmers who did not, for whatever reason, and in some cases it was because they were not fully aware of the proposition, seek an extension, which they can now do, or measures such as Deputy Cahill said that would allow flexibility in the repayments? The Minister of State has outlined the current situation but we will not know if we can change it unless we ask.
I thank the Minister of State for his reply. He said there is never a scheme without conditions attached. In 2020 we had a far more straightforward scheme. I accept that EU money was not put into the 2020 scheme, but it was a far more straightforward scheme and the money was used up. Before we finish this 2019 scheme a third of the money that was allocated to hard-pressed beef finishers will not have ended up in farmers' pockets. That is a serious indictment of a scheme that was introduced to provide for hard-pressed beef farmers. I support Deputy Carthy's call to the Minister of State to return to the Commission and ensure we are given the maximum flexibility possible for these affected farmers. Their income has not improved in the interim. They are still under severe financial pressure. We need to do the utmost to ensure the future financial viability of these farmers is not put under further threat. They cannot afford to pay back this money in any significant amounts. They need consideration to be shown by the Commission. A precedent was set on the superlevy bill where farmers faced with a bill were given ample time to repay it.
I thank the Deputies for their supplementary points. The fact of the matter is that almost €72 million of the €77 million has gone to beef farmers. Some 19,000 farmers met the scheme's requirements and have exited the scheme because of that. Deputy Cahill is right in saying the scheme was not over-subscribed. It was under-subscribed. A number of beef farmers who were in financial difficulties, as were all beef farmers at that time, checked the scheme's conditions and decided not to participate in it because of the conditionality attached, and that was their right. In terms of the decisions by farmers to join the scheme, lessons have been learned about the scheme's design. If one were designing a scheme from scratch in normal circumstances one would not design like this one, but it was exceptional because the need was exceptional. You would not normally pay in advance under such a scheme where the conditionality came to bear afterwards without some clawback. In an ideal world one would not do that because it can give rise to difficulties. Farmers have a right to make that decision in the full knowledge that, as two-thirds of the farmers have done, if they decide to increase their nitrogen organic output in the future - it is their right to do that - to be fair to everybody in the scheme and to those who decided not to go into it because of the conditions attached, there has to be recoupment. The rules on the interest rate and the recoupment periods are set down. They are EU regulations. Deputy Cahill mentioned the 2020 scheme and he rightly said that was fully Exchequer funded. There is much more flexibility with Exchequer funded schemes. There is not the same flexibility with EU schemes. That means we have to stick to the rules that apply. The flexibility shown in the earlier part of the year was hard fought for. Some 11,000 farmers are able to avail of that flexibility.