Charlie McConalogue (Donegal, Fianna Fail) | Oireachtas source

I thank Senator Daly for raising this issue. The Senator is a strong advocate of the targeted agricultural modernisation scheme, TAMS, and has been in touch with me on a regular basis with regard to the development of this particular TAMS. This issue regarding reference costs is one on which he has been advocating very strongly. I will first give a general overview of the scheme for the House, much of which the Senator will know.

The Department's reference costs for the target agricultural modernisation scheme are developed as a maximum ceiling that can be paid for grant-aided equipment under the suite of ten schemes that are open to farmers. In all, there are more than 400 investment items that have a reference cost. I increased that under this Common Agricultural Policy, CAP, by 60 additional items compared to what was available in the outgoing TAMS. The costs are targeted as being for a good standard but not the best standard. For equipment that is required to be installed to operate, the reference cost calculated must also cover the cost of installation. It is also important that the reference costs are set at a level that does not drive inflation or building materials, labour or farming equipment costs. The reference costs are kept under review and are normally reviewed on an annual basis, with the latest review having been undertaken in the lead-up to the launch of TAMS 3. Any revised reference costs are developed and only applied to applications that are submitted after the completion of a review. That has always been the way it has operated with regard to TAMS.

These new reference calls are in place for all TAMS 3 applications to date, and the first payment claims under TAMS 3 were submitted in the past few weeks. The review of my Department's reference costs for the TAMS involves a number of steps, the first of which is a review of all the receipted costs submitted in support of claims, as downloaded from the TAMS computer system, to compare the actual claims costs for the relevant items over the preceding year with the reference costs in place. Once this has been completed, the Central Statistics Office, CSO, construction index figures are obtained for the period being reviewed to act as a guide for the potential expected increases in the prices of equipment and buildings.

Meetings were organised with reputable supplier companies to obtain quotes for the different types of equipment and buildings being evaluated, with quotations obtained from at least three separate companies for each item for which reference costs are being developed. This is to ensure that the average obtained is reflective of the true market costs of the items. Once the quotations have been received, the average cost is then calculated for each item. When revised reference costs are finalised and approved, they are uploaded to the TAMS 3 computer system to go live in conjunction with the beginning of the next tranche. A further review will be commenced later this year when there are sufficient claims submitted by applicants under the scheme to enable evaluation of the actual costs being incurred by farmers with regard to building works and equipment purchases. It is also important to be aware that the applicants avail of the reference costs that are in place at the date they make an application under TAMS, as I said, and any revision of reference costs only applies to future applications. That is the structure that is in place and operational under the scheme.

Obviously, costs change and evolve. It is important that they are considered and reflected. They do apply to future TAMS applicants going forward, however. We are only now getting into the stage where we are opening up tranche 3, with tranche 1 of TAMS having closed last June and the majority of those applicants having received their approval. The claims are starting to come in for those now as well. It is something I will closely monitor as those claims come in to ensure there is an updated reference assessment in order that it can be applied subsequent to that concluding.