Written answers

Tuesday, 24 May 2016

Department of Agriculture, Food and the Marine

State Aid

Photo of Thomas ByrneThomas Byrne (Meath East, Fianna Fail)
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529. To ask the Minister for Agriculture, Food and the Marine when he will initiate a scheme of state aid funded loan relief as authorised by the European Union for dairy farmers suffering from cashflow problems as a result of superlevy and other obligations; and if he will make a statement on the matter. [11345/16]

Photo of Michael CreedMichael Creed (Cork North West, Fine Gael)
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In response to the ongoing market difficulties in the dairy, pigmeat, and fruit and vegetables sectors, the Council of Agriculture Ministers agreed a further package of measures was agreed in March 2016. Among these was the making available of more flexible state aid support. It will now be possible for farmers (SMEs) to access temporary finance up to a maximum amount of €15,000 per farm per year in circumstances where they either:

(i) make a commitment to freeze or reduce production compared to a given reference period, or

(ii) use the funds to bridge a liquidity gap.

Aid as provisionally envisaged would be granted in the form of direct grants, loans or guarantees in the case of freezing/reducing production, and in the form of loans or guarantees in the case of liquidity assistance (remunerated in the form of an interest payment). Interaction and discussion with the Commission is ongoing in respect of finalising the details of such provisions.

The Department is continuing to monitor market developments very closely, and will continue to work with the Commission and with other Member States in developing appropriate responses.

Member States now have a suite of measures that have been made available since September 2015, and will respond in accordance with their domestic circumstances. To date Ireland has used the targeted aid package of €27.4m (€13.7m EU and €13.7m national funding) to support producers in the dairy and pigmeat sectors, and has pushed for appropriate changes in the operation of market support measures such as aids to private storage.

There are no plans to avail of the option to provide national funding to freeze or reduce milk supply compared to a given reference period. On the question of liquidity, the Department is at present commissioning an ex ante appraisal to examine the merits of including a provision for financial  instruments in its Rural Development Programme, and is continuing to  engage with banks and with the Strategic Banking Corporation of Ireland on the provision of flexible finance to farmers.

As the Deputy may be aware, a facility to phase the final superlevy payment over three years was introduced by the EU Commission last year at Ireland’s request. Farmers availing of the facility must pay at least one third of the bill in each of the first two years (2015 and 2016) with the balance to be paid in 2017. The Department implemented the scheme nationally and 3,741 farmers (out of a total of 6,109 farmers who incurred the levy) deferred repayments of €35.6m in superlevy liability, (out of a total national levy liability of €71.2m).

The mechanism required the Exchequer to pay the superlevy liability to the EU in full in 2015, and to recover the levy from farmers over the three years from 2015 to 2017. A wide process of consultation in the design of the scheme was undertaken with farm organisations and co-ops and it was agreed that once the initial farmer instalment was paid in 2015, the optimum repayment model for the balancing payments would involve ten equal instalments from the months of May-September in 2016 and 2017.

These amounts will be deducted by co-ops from a farmer’s monthly milk cheques to coincide with the peak milk supply months of April to August. The co-ops will then forward the money each month to the Department. This approach was also agreed as part of the sanction given by the Minister for Public Expenditure Reform.

As part of the discussions in the run-up to the March Council of Agriculture Ministers, Ireland proposed a further deferral of the payment to 2017 and 2018, to ease the financial burden on liable farmers in 2016. However the European Commission advised that the legal basis for the Regulations under-pinning the scheme are no longer in existence and therefore further amendments were not possible. While Ireland suggested a possible alternative legal approach, it was clear that the proposal enjoyed very little support from other Member States and was therefore unlikely to succeed.

On that basis the focus turned to other measures in the package which can be of assistance to Irish dairy farmers to help them through current difficulties, including the doubling of intervention fixed price buying-in thresholds. I did however raise the matter with Commissioner Phil Hogan, in our recent bilateral meeting, as well as at yesterday’s Council of Ministers meeting and encouraged him to reflect again on whether a legal basis could be found to facilitate a further deferral in superlevy repayments for farmers.

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