Noel Coonan (Fine Gael)

The farm package is well produced, polished and presented and will run over a lifetime of seven years. However, when one divides the package among the many thousands of farmers who are hoping to survive as a result of it, the Minister will be seen to be talking in small monetary terms.

I agree with the Minister that farming and food have a vital role to play, not only economically but also in a social context. Farming is the lifeblood of rural Ireland. We are all obliged to do our best to keep rural Ireland alive and to ensure that the agricultural industry prospers and flourishes. Numerous reforms are continually challenging the agricultural sector — I refer to a Teagasc report which states that the reform of the WTO means Irish agricultural income will fall by in excess of €200 million per annum. When that figure is multiplied by seven years, the Minister's figures of billions of euro become much smaller. We must remember that the modulation fund is provided by farmers themselves. They earned it and it is part of the agreement to which they signed up.

Elements of the package are undoubtedly welcome. I appeal to the Minister to improve the package and I intend to suggest ways by which she can achieve this. Why is the package not index linked? The Minister has not dealt with the issue of inflation in any way. When inflation is taken into account, the grant increases are minimal in key farm schemes such as REPS, the installation aid for the elderly scheme and the farm retirement scheme. The crisis in farming is worse than ever. In 2005, according to Teagasc, average farm income was €15,557, taking into account the impact of the initial single farm payment, which had an effect on incomes. According to Teagasc, in 1995 the average industrial wage was €30,000 while the average farming wage was half that amount. Government stealth taxes that year amounted to €4,000 while input costs for farmers amounted to approximately €15,000, meaning farmers lost almost €4,000.

Worse still, the figures for 2004 are shocking. The average income for farmers that year was €6,500. The harsh reality is that farmers' income will be wiped out by record increases in inflation between 2006 and 2013 because the Minister has failed to index agricultural schemes. The Ulster Bank predicts inflation of approximately 4% this year compared with 2.5% last year, which is the highest rate since 2002. The partnership deal contains no mechanism to counter the effect of prolonged and increased inflation. On the basis of my dealings with farmers, banks and co-operatives, debt has built up secretly within the farming community. Further increases in interest rates and production costs will have a serious impact on farmers. Charges for services essential to the farming community have increased significantly. I refer to the increases in the cost of electricity, water, interest rates and health insurance.

I am disappointed the Minister failed to address the issue of farm consolidation in this package, given there is an urgent need to attract young people into farming. Recent figures issued by the Central Statistics Office confirm that, on average, our farmers are the oldest in Europe, with only 13% under the age of 35. While the increase in installation aid is welcome, it is not enough because it falls well short of the money being spent by the State on creating jobs sponsored by IDA Ireland.

A level playing pitch should be provided. Young persons must be encouraged to stay in farming to prevent rural depopulation, maintain jobs and increase standards. The Government and the Minister have failed miserably to address land purchases by farmers, especially where they must consolidate their holdings as a result of CPOs. They must pay 20% capital gains tax on top of 9% stamp duty and that is not fair. Farmers lose almost one-third of the cost of the land in tax. I have no problem with CGT but it is a problem for farmers who are forced to sell their land. It is particularly crippling for young farmers who wish to consolidate their holdings and the Minister has continued to ignore this issue.

The drift from the land is proceeding at an alarming rate. In 1994, 141,000 people were employed in the agriculture industry, which represented 12% of the workforce, but by 2004 this number had fallen to 113,000 or 6% of the workforce. That does not include beet growers, whom the Minister did not mention. Normally, at this time of the year, they look forward to the disposal of their crop and collecting their cash but this year they will have no cash, no crop and no compensation.

The 3,800 growers have been treated disgracefully by the Government. The assistant director of Teagasc states in today's edition of The Irish Times that, "Many serious farmers, along with career guidance teachers, are discouraging their sons and daughters from planning a full-time career in farming and encouraging them to pursue a non-agricultural qualification". This is very serious.

The Minister takes pride in the early retirement scheme but it is also not index linked. She stated farmers receive approximately €15,000 per annum. The Minister for Finance stated he will make provision for an increase of up to €250 in the old age pension in the budget but even if the pension only exceeds €200 per week following the increase, the proposed increase by the Minister for Agriculture and Food under the farm retirement scheme will only match that and, in the years ahead, it will fall behind, again because it is not index linked. This major problem with the farm retirement scheme has been articulated over a number of years but it has fallen on deaf ears.

The Minister stated she will deliver on the REPS action plan but she did not deliver under REPS 3. The Government failed to reach its target of 70,000 participants under REPS 3 with only 48,000 farmers taking the scheme up. The scheme has presented many problems, for example, how it affects those entering milk partnerships. The milk quota system broke down last March when the Minister dangled a carrot of big money in front of the farming community. This had a negative effect, as farmers held out, but there is no guarantee her new system will work.

Turning to the nitrates directive, many farmers face significant capital costs because of the cross compliance requirements under the directive. The partnership package does not go far enough. When local authorities undertook various sewerage schemes, they received at least 75% of the cost in grants and, in many cases, they received 100% funding. Farmers should be given similar grants. They are being forced to bury money in concrete but where will they generate repayment capacity?

Farming income is declining at an alarming rate and hidden debt is a major problem. In addition, wintering systems have not been approved under the Minister's programme. For example, farmers in north Tipperary cannot secure planning permission for such systems because the Department of the Environment, Heritage and Local Government has not laid down adequate guidelines to enable the planners to grant permission. A recent conference outlined how effective and worthwhile these systems can be.

The aim should be to ensure a farmer's income matches the average industrial wage but, unfortunately, the current package means farmers' incomes will continue to decline. Under the farm charter, the Minister made a commitment that no notice inspections would not take place and farmers would receive a minimum of 14 days notice.