Dermot Ahern (Louth, Fianna Fail)

I thank the Senators for raising this matter. As they have said, the rural environment protection scheme has undoubtedly been a successful measure. By the end of 2009, payments made to farmers since the launch of the scheme in 1994 will have passed the €3 billion mark. REPS has always been about much more than money. It has delivered enormous benefits in enhancing the rural environment, water quality, biodiversity and the landscape.

However, the success of the scheme has brought its own challenges. When the applications submitted last week are included, the number of participants in REPS is at the highest ever level at well over 60,000. Payments arising from liabilities this year will also exceed expenditure under the scheme in any previous year. We are, therefore, now at a point of both record participation and record funding for the scheme. The scheme is now oversubscribed and, at a time when there are unprecedented pressures on the public finances, the Government had no option but to announce the closure of entry to the scheme last week.

It is important that I make the point that REPS was never intended to be purely an income support like the single payment or the disadvantaged areas schemes. In fact, the EU regulations are quite explicit in providing that agri-environmental schemes like REPS can only compensate farmers for income foregone and additional costs incurred through farming in a more environmentally friendly way than they are otherwise obliged to do, whether under legislation or, more recently, according to the requirements of the single payment scheme.

I want to stress the ongoing scale and benefits of payments under the scheme. Despite the closure of entry to the scheme, the fact is that this year, the Department will issue REPS payments amounting to €330 million to some 63,000 participants in the scheme. Next year, the numbers in the scheme will still be around 54,000, a level of participation as high as in any year to date. Applications received in the Department up to last Thursday are being processed and, if they are valid, the applicants will enter into new five-year contracts. If farmers, with contracts ending after 31 January 2010, submitted new applications by last Thursday, they will be eligible for REPS 4 contracts running to the end of 2015. The Department will continue to honour payments to all existing participants for the remainder of their five-year plans.

In acknowledging the impact of the closure of the scheme, its value since its introduction in 1994 and the need to replace REPS with an agri-environmental measure, the Government has decided to allocate all the modulation funds secured by the Minister in the recent CAP health check, as well as funding negotiated under the European economic recovery plan, to a new agri-environment measure.

The total funding of this new measure will be determined only in the context of the 2010 budget-Estimates process later in the year. It is not possible, therefore, to indicate, at this stage, what the level of individual payment under the new scheme will be; no decisions in this regard have yet been taken nor will any be taken until much later in the year.

The Government is determined, though, that all available EU funding will be drawn down and is committed to providing the necessary matching funding. The Government will have to provide an amount from national funds equivalent to one third of what is available from the EU to draw down the modulated funds, all of which are being allocated to the new agri-environment scheme.

The Department's intention is to give priority in this new measure to farmers who have previously been in REPS and officials will be entering into discussions very shortly with the farming organisations and the other stakeholders about the details of the new scheme.

In the meantime, an outline of the new measure is included in proposals to the European Commission for amendments to the current rural development programme, which will be with the Commission by tomorrow to ensure the availability of the modulation funds. I expect that the new agri-environmental measure will be available no later than 2010 for those who no longer have an opportunity to apply for REPS 4.

I readily acknowledge the response of farmers to the decision to close entry to REPS but I must emphasise that an alternative measure is being put in place, which will be quite different from REPS, in so far as it will involve the selection of individual measures, selected from a menu of such options, rather than the existing "whole of farm" approach. It will be a simpler scheme, both in terms of participation and administration, and the compliance costs will be considerably lower than those associated with REPS.

It is unfortunate that a range of significant investment measures also announced last week did not receive the appropriate coverage. This package of new measures, worth €113 million, includes a range of supports for the dairy and sheep sectors and for young farmers. These measures demonstrate that the Government, notwithstanding the extreme difficulties the country faces, is committed to continuing investment in the agri-food sector and to the long-term future of farming. I want to assure the House on behalf of the Government that this commitment will be delivered on.