Paudie Coffey (Fine Gael)
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I propose to share time with Senators John Paul Phelan and McFadden.

Paddy Burke (Fine Gael)
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Is that agreed? Agreed.

Paudie Coffey (Fine Gael)
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In recent weeks I have met many farmers who were approved for grant aid under the farm waste management scheme. These farmers understood they had a clear contract with the State and that the specified grant moneys would be paid. I was horrified to discover that many of the farmers are seriously exposed as a consequence of the large loans they took out in good faith on the understanding that grant moneys would be paid by the Department.

These farmers were obliged to upgrade their farm buildings and infrastructure to comply with nitrates directives and they did that. However, they now find themselves with serious cash flow difficulties that could put many of them out of business if they are not addressed urgently. Farmers spent a great deal of money in an effort to comply with these regulations and are now hugely indebted to the banks. As a result, some of them find themselves in difficult, if not dire, financial circumstances. They are depending on these grants as the means by which their farms will survive. I have met many young farmers who are exposed to the banks for more than €100,000 and they cannot wait much longer for these grant allocations to be paid. Cash flow is now very restricted and could possibly be withdrawn by banks if farmers cannot make repayments on their loans.

These farmers seek only some certainty with regard to the contract they had with the State and the promise of grant aid. I urge the Minister of State, Deputy Sargent, to ensure that his Department issues to the approved applicants letters of comfort which would provide them and the banks with some certainty in regard to payments. I understand the Department faces a shortfall of €105 million in the allocation for this scheme in its 2009 budget and that it is intended to deal with this matter in the Revised Estimates. Will the Minister of State tell the House when these Revised Estimates will issue? Will he ensure that we do not rob Peter to pay Paul, that is, that we do not make up the shortfall by withdrawing funds from other farm assistance schemes?

I come from a predominantly rural constituency in County Waterford where many young farmers are exposed and where restricted cash flows could put them out of business. I understand 424 farmers are still awaiting payment under the farm waste management scheme. The Department is introducing a deferred payment system whereby 40% will be paid in year one, another 40% in year two and the final 20% in year three. I urge the Minister of State to ensure the initial payments are paid to the approved farmers as soon as possible to ease their financial difficulties and help the cash flow in farming enterprises. Farm waste management schemes were set up as a regulatory requirement and farmers have had to comply with the guidelines of the Departments of Agriculture, Fisheries and Food, the Environment, Heritage and Local Government and the EU. They have done so and farmers cannot be left in the lurch or isolated. They depend on the Minister of State to assist them in this time of difficulty and to support farming enterprises so that they stay in business and keep our economy and rural Ireland going. In the interim I ask the Minister of State to examine giving tax credits for any interest paid on bridging loans to give farmers some relief in this regard. Fine Gael has tabled an amendment to this effect in the Financial Emergency Measures in the Public Interest Bill being debated in the Dáil. I hope the Minister of State and the Government do not ignore this proposal or guillotine the Bill without giving it due consideration. I hope to hear some positive news for farmers and a clear statement from the Minister of State when farmers will be paid this grant.

Nicky McFadden (Fine Gael)
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I thank the Leas-Chathaoirleach for the indulgence of one minute. I share the concerns of my colleagues and I raised this matter on the Order of Business last week after numerous representations from farmers in the constituency of Longford-Westmeath. I have serious concerns about how farmers will make ends meet because of the horrendous pressure they are under in repaying these loans, on which they were given commitments. A commitment means a promise or a contract that the commitment will be honoured. This was given by the Minister, Deputy Brendan Smith, to the farming community of Ireland because Irish farmers had to abide by EU directives. Now the farmers have elaborate slatted sheds but they have no money to pay the bridging loans. I ask the Minister of State to consider the individual hardships experienced by farmers and their families. Installation aid and the early retirement scheme have been removed and now the commitments given are being reneged upon.

John Paul Phelan (Fine Gael)
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I thank Senator Coffey for sharing his time. Like Senator McFadden, I raised this matter on the Order of Business last week and this week I am seeking a full debate. Like the previous speakers I come from a rural constituency, Carlow-Kilkenny, and I know of a great deal of people affected by the Government announcement that the outstanding grants will be paid over a three-year period rather than in one year. This is a severe imposition on those affected, many of whom are young farmers who are losing their installation aid grant and whose parents or predecessors cannot avail of the pension scheme. The same people are being affected by this announcement.

Surely someone in the Department realised that there would be many applications for this scheme. I have two brothers, both of whom are full-time farmers and who availed of the scheme. I find it amazing that the Department's excuse was that there was an underestimate of how many people would apply for the scheme. It smacks of what happens when the medical card for those over 70 was introduced. The Government later said it did not know how many people over 70 would take up the offer. The same excuses are being used at this time. It is a difficult time for anyone involved in business and farmers are business people. If they have a bridging loan to pay for the construction of these sheds, they have repayments to meet and it is not much consolation to the bank manager in the current climate to be told that the Government has changed its mind mid-stream and that the scheme will be repaid over three years rather than one. As Senator Coffey pointed out, these people are in serious financial difficulty because the cash flow situation is not too hectic. I hope this can be improved and that additional funds can be found. In the overall scheme of things this is not a huge sum of money. I realise that money is tight across the board but perhaps some can be found to rectify the situation.

Trevor Sargent (Dublin North, Green Party)
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Ba mhaith liom buíochas a ghabháil leis na Seanadóirí as an cheist seo a ardú. I am pleased to have the opportunity to outline the current position regarding the farm waste management scheme. There is particular reference to Waterford but Senator John Paul Phelan will be glad to hear that the reply also refers to south Kilkenny.

A revised and greatly improved farm waste management scheme was introduced by my Department in March 2006 to assist farmers to meet the additional requirements of the nitrates directive. The amendments to the scheme included an increase in the standard grant rate from the previous 40% to 60%, with 70% being available in the zone C counties of Cavan, Donegal, Leitrim and Monaghan. The new scheme also provided for an increase in the maximum eligible investment ceiling from €75,000 to €120,000 and removed any minimum income requirements from farming so that all small farmers could participate in the scheme.

It is acknowledged that Ireland was in a very difficult position prior to the introduction of the revised scheme in 2006 because Ireland had been found to be in breach of the terms of the nitrates directive in 2004 by virtue of a judgment of the European Court of Justice. Continued failure to implement this directive to the satisfaction of the Commission would have had serious implications for Ireland, including the threat of substantial daily fines and the undermining of EU funding for rural development schemes and the single farm payment. The annual EU funding to Ireland under both headings amounts to about €1.6 billion.

The immense success of the scheme is demonstrated by the 48,580 applications which were received from Irish farmers by the closing date of the end of December 2006, of which more than 30,000 were received during the final month for receipt of applications. Almost 43,000 approvals to commence work issued to farmers under the scheme prior to the end of 2008 deadline for completion of work. These figures are virtually unprecedented within the context of on-farm investment schemes in Ireland. This could explain why the Department was surprised at the extent of applications.

The financial commitment of this Government to the scheme is substantial, especially during these challenging economic times. This is demonstrated by the fact that in 2008, €413.7 million was paid out to farmers under the scheme. Of these, almost 17,600 farmers were paid by 31 December 2008 and about 17,400 payment claims now remain to be processed in 2009. In excess of 14,200 of these claims were received in the last month of operation of the scheme, December 2008.

All farmers who completed work in accordance with the terms and conditions of the scheme will be paid. This has been made clear on several previous occasions. Around 17,400 payment claims remain to be processed in 2009. Based on the average grant payment in the past, the cost of these claims is likely to be of the order of €550 million. Given the current economic and fiscal situation, the Government has decided, with little choice, that payment of outstanding grants under the scheme will be made on the basis of 40% in 2009, 40% in 2010 and the balance of 20% in 2011. Expeditious payment of the initial 40% in respect of approved claims will commence shortly.

To date the Government has contributed around €527 million in grant aid under this scheme to about 17,600 farmers. Further grant aid of around €550 million is envisaged over the coming years to the 17,400 farmers whose claims are being processed. This expenditure in excess of €1 billion represents a massive level of public support by any standards.

The current position with regard to applications under the scheme in County Waterford is as follows. In 2006, 67 payments totalling approximately €590,000 were made; in 2007, 116 payments totalling approximately €2.4 million were made; and in 2008, 225 payments totalling more than €6 million were made. By way of clarification, I point out that the 2006 figures would have included some expenditure under previous versions of the scheme. A total of 762 payment claims under the scheme remain to be processed by the Department's offices in County Waterford. This figure also includes claims in respect of farmers in south Kilkenny.

Paudie Coffey (Fine Gael)
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I thank the Minister of State for his response. I do not doubt for one minute the success of the scheme which has allowed farmers to upgrade their infrastructure and improve their positions. That comes as a result of the significant investment in this area. I welcome the Minister of State's indication that farmers will be paid as it has been a concern. It is good to hear it clearly outlined that such farmers will be paid.

The Minister of State mentioned that 40% of the grant will be paid shortly but what is the exact timescale? The matter must be dealt with urgently as farmers are concerned because cash flow is seriously restricted. We must have a definitive timescale for this payment. The Minister of State and I believe in a future for farming but this will only happen if farming and agriculture as a whole is properly supported and assisted by Government. One way we can inspire confidence is by making this scheme happen as quickly as possible.

Trevor Sargent (Dublin North, Green Party)
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I agree with the Senator in that the scheme has been very successful. Even in the programme for Government when the projected growth rate in the country was of a totally different order to what we are now experiencing, at €2 million it was only a fraction of what we are now faced with. It is a reflection of the need for farmers to upgrade their facilities.

My understanding of the term "shortly" is next week or in that timeframe. I do not know if each farmer will be paid next week but the priority of the Department is to recognise that although it is not a perfect situation, within the boundaries of the available money it will not be held back. It will be paid out shortly which is the most my Department has been able to say. We are talking about days rather than months.