Tuesday, 13 June 2000
Dáil Eireann Debate
Mr. Connaughton: I thank the Minister for his attendance. The decision last week by the European Commission not to approve the plans of the Department of Agriculture, Food and Rural Development to adopt a particular area based payment to replace headage payments could have far-reaching consequences for many Irish farmers.
In the Programme for Prosperity and Fairness a guarantee was given to the farm organisations that farmers would not lose financially from this  major switch from payment based on animals to payment based on area. It now appears that the EU Commission seeks total decoupling of headage payments from animals to a per hectare basis. I have no problem with an area based payment but it must reflect the size of headage payments already received by farmers.
This is of particular reference to the huge cohort of farmers who qualify for extensification and are in the rural environment protection scheme. This group already farms to a regime of low stocking density but if area payments are structured in a manner that will only suit a farmer with many acres and small livestock numbers, many farmers will lose. If this dilemma cannot be solved, the area based payments will get a bad name.
This is also important for beef producers with high stocking rates, suckler cow farmers and both hill and lowland sheep farmers. Unless the outcome of the change from headage to area based payments is such that a huge cohort of farmers with only reasonable stocking rates can qualify, there will be extensive opposition to the new regime. An area based payment has certain advantages, one being that it will not matter unduly how many cattle or sheep are on the land. That could result in better quality stock being reared.
However, the bottom line is whether farmers will be better off next year under the scheme or whether they will lose money they simply cannot afford. Most people would have no trouble with area based payments. The possibility has been debated for a number of years. However, if it means that the European Commission intends to decouple the payments from headage and link them to area, it is essential that the payments are set at a level whereby most farmers will not lose money.
There is great anxiety on this issue and I know where the Minister's heart lies. An effort was made to overcome the problem. The Minister's largest fight has yet to start, however. Of all the issues that arose in the past three years in rural Ireland, this will be one of the most important. Farmers will not accept a scheme under which they will be obliged to accept less money. Given that fact, there is an onus on the Government to convince the European Union that Irish farmers cannot be permitted to lose the moneys to which they were previously entitled.
Under the Agenda 2000 agreement, headage grants in the disadvantaged areas are to move from a payment per animal to a payment per hectare basis. This part of the agreement was well signalled at the time. Under transitional arrangements, the headage schemes as they have operated will continue to apply for this year. A new  area based scheme is to be introduced with effect from next year. Under the Programme for Prosperity and Fairness, the Department is committed to introducing a system which will protect the payment levels to the categories of farmers for whom disadvantaged areas payments are an important element of their total incomes.
As provided for in the PPF, a task force representative of my Department and the main farming bodies was established to formulate a new scheme. The task force met on a number of occasions and, having considered a range of options, the group recommended a scheme which would involve, inter alia, a payment per hectare depending on the type of livestock on the holding. It was envisaged that each livestock unit of stock would attract one per hectare payment.
I announced details of the proposed scheme on 29 May last. At the same time I announced an increase in the overall allocation of money for disadvantaged areas payments over the period 2000-06. I doubled the headage payments under the sheep regime for the disadvantaged areas. I was satisfied that the proposed scheme fulfilled the Government's commitment in the PPF and it was submitted to the EU Commission as part of the overall rural development plan. It is also important to clarify that this issue does not entail any overall loss of funds to the country or to the farmers in the disadvantaged areas.
Officials from my Department met Commission officials last Friday to discuss the proposed scheme. During those discussions, the Commission expressed dissatisfaction with aspects of the scheme mainly on the grounds that it did not represent a clear shift from headage related payments to area related payments. Mention was made of the fact that each livestock unit would attract one per hectare payment and this was seen as continuing the link to production.
In these circumstances, the Department is urgently examining alternative proposals. In this context further consultation will take place with the Commission and the farming bodies, who are the social partners in this case, with a view to formulating a scheme which is acceptable to the Commission. The agreement of the EU Commission is essential. The scheme cannot proceed without its approval. The task, therefore, is to devise a scheme which is best suited to Ireland's requirements but which meets with Commission approval. The scheme is a most important income source and is an important element of the White Paper on Rural Development. I am treating the issue with the seriousness it deserves.
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