Michael Creed (Cork North West, Fine Gael) | Oireachtas source

I thank the Members of Seanad Éireann for the opportunity to address them today on the future of the areas of natural constraints, ANC, scheme which is administered by my Department. As the House will be aware, the ANC scheme is one which farmers across the country are familiar with and is an important issue for many people.

The areas of natural constraints scheme, as it currently stands, was introduced under the 2014-2020 rural development programme as a replacement for the previous disadvantaged areas and less favoured areas schemes which had been in place since 1975. Payments under the ANC scheme are an important support for farmers across the country in addressing cash flow issues and contributing to the continued growth and development of the agrifood sector.

The scheme was originally introduced in 1975 in recognition of the fact that farmers in particular areas were faced with challenges relating to lower productivity and higher production costs compared with farmers in other areas where levels of disadvantage were not as pronounced. Given that the scheme in various guises has been in place for over 40 years, it is no surprise that the farming community is interested in how the scheme will develop in the coming years.

The original scheme was based on addressing issues, such as rural depopulation, threats to the conservation of the countryside, lower income levels and the presence of lands which were more difficult to efficiently farm. Since its introduction, the scheme has been subject to a number of reviews at EU level, and Ireland has been very successful over the course of those reviews in ensuring that areas facing particular difficulties and additional costs were included as eligible under the scheme.

From the first review of the scheme in 1976 through the fifth review in 1996, the amount of hectares in Ireland included as eligible under the scheme grew from just under 4 million ha to over 5 million ha. At the same time, these reviews also resulted in more land being designated as having higher levels of disadvantage which attract higher levels of payment. Thus, we can see that this scheme has a long history of review and refinement since its introduction in Ireland.

The significant level of financial support delivered through the scheme in the years since 1975, and the changes in eligible land in Ireland as part of the various reviews, show a recognition of the fact that the challenges faced by farmers in certain areas pose a significant threat to the future viability of these farming communities. The specific objectives of the ANC scheme are thus structured round themes such as ensuring continued agricultural land use, thereby contributing to the maintenance of a viable rural society, maintaining the countryside and maintaining and promoting sustainable farming systems which take environmental protection into account.

I am very aware of the importance of this scheme to the more than 95,000 farmers who receive the payment annually. With this in mind, I have prioritised the efficient payment of the ANC scheme in my Department in recent years. At present, the ANC scheme is structured around a tiered payment structure. Those farming on so-called mountain-type land receive €109.71 on their first 10 forage hectares, and €95.99 on remaining hectares up to a maximum of 34 ha. Farmers with land categorised as more severely handicapped lowland are paid €95.99 per forage hectare up to a maximum of 30 ha. Finally, those with less severely handicapped lowland are paid €82.27 per forage hectare up to a maximum of 30 ha.

As part of the negotiations of the new rural development programme, a new category was added to the scheme in 2015. In recognition of the particular barriers and costs that island farmers face, a new category of payment was introduced for off-shore island farmers. Farmers on off-shore island now qualify for payments of €250 per hectare on the first 20 ha, €170 per hectare on 20 ha to 34 ha, inclusive, and €70 per hectare on 34 ha to 40 ha, inclusive.

In 2016, payments under the scheme began in mid-September, and to date over €201 million has been paid to over 94,000 farmers. Along with the payment of €1.18 billion to some 124,000 farmers to date under the 2016 basic payment scheme, this is a very important financial support for the agrifood sector and for families in rural Ireland.

Under the new Common Agricultural Policy finalised in 2013, the new rural development regulation introduced a change in how eligible areas under the ANC scheme were to be defined. The designation of eligible areas under these schemes to date had been based on a range of socioeconomic factors. These factors included: particular stocking density levels, family farm income levels, population density and the percentage to the total working population engaged in agriculture. The change introduced in the new rural development regulation required that, from 2018, eligible areas must instead be designated using a set list of biophysical criteria. In cases where a member state does not introduce this new system for payment, the regulation sets out that the old scheme remains in place but payments must phase out on a digressive basis. The purpose of this change in approach is linked to a concern at EU level that areas were not being designated as disadvantaged in a consistent manner across the various member states. The biophysical criteria set out in the legislation to underpin the new system of designation are low temperature, dryness, excess soil moisture, limited soil drainage, unfavourable texture and stoniness, shallow rooting depth, poor chemical properties and steep slope.

My Department has commenced work on this project and relevant technical experts are currently working on sourcing and analysing the data regarding the new criteria.Department officials have been in contact with the Joint Research Centre and Directorate-General for Agriculture and Rural Development in the EU Commission in regard to technical issues arising. The ongoing analysis will identify areas deemed to be facing natural constraints, which will, in parallel, be subjected to a refinement process.

A number of the criteria I have listed will not have an impact on the new designation in Ireland, while others will have a small impact. In effect, the Irish process will be mostly affected by soil drainage and soil moisture excess. As outlined previously, in the original rural development regulations, the new ANC designation was scheduled to be in place for payment in the 2018 scheme year. This is the timeline towards which my Department has been working. However, as part of the ongoing discussion on amendments to regulations at EU level, Austria raised the possibility of extending the deadline on an optional basis. Ireland supported this proposal, along with Latvia, Slovenia, Poland, Luxembourg, France, Germany and Slovakia. The proposal is currently passing through the relevant approval process at EU level, along with a number of other regulatory changes in what is referred to as the "omnibus proposal". The technical work is ongoing, thus it is not currently possible to set out the final set of areas to be eligible for payment. However, given the importance of the ANC scheme in the Irish context, officials in my Department are continuing to engage with our colleagues at EU level in order to ensure the best possible outcome of the review is secured.

It has been proposed that the current category of mountain-type land be maintained in any new ANC scheme and that the rate of payment attaching to this land be increased to a rate more in line with the current rate payable to offshore island farmers. The redesignation project will entail a new ANC scheme to be inserted into the rural development programme by way of a formal amendment. This will entail categories of payments being agreed with the EU Commission. Any such categories of payment must be based on the level of constraint identified by the redesignation process and based on the income forgone and costs incurred by farmers in farming such lands. These are fundamental principles that the EU Commission will insist on being the basis for payment rates. Thus, while it is likely that there will be differentiated rates of payment, as in the current scheme, it is not possible at this stage to say how many categories there will be and what rates will be payable. It will, however, remain a key priority to ensure the payments under the ANC scheme continue to be focused on achieving the best possible value for money by targeting those areas faced with significant constraints. I am aware that many farmers will have a direct interest in the outcome of this process. Accordingly, I expect there will be consultation with key stakeholders as this process develops further.

I thank the Members of the Seanad again for the opportunity to outline to them the most recent developments in what is a very important scheme for the farming community.