Committee Reports > List of Committees > Joint > 1975 > Committee on the Secondary Legislation of the European Communities > Report No. 10 - Disadvantaged Areas Scheme

REPORT

1. EEC Directive

The scheme which has become known in Ireland as the Disadvantaged Areas Scheme is governed by the Directive on Mountain and Hill Farming and Farming in certain Less-Favoured Areas which was adopted by the Council of Ministers on 28th April, 1975. The Joint Committee has been considering the scheme for some months and now wishes to report on its deliberations.

2. Eligible Areas

The Council Directive enables Member States to introduce a system of aids to encourage farming and to raise farm income in less-favoured areas which may be either (a) mountain areas or (b) areas which are in danger of depopulation or where the conservation of the countryside is not assured. The areas in Ireland where the scheme will operate all come within the second of those categories as no area in this country is deemed to meet the criteria in regard to terrain specified for inclusion in the first category. To be eligible for inclusion in the second of the categories an area must simultaneously exhibit all the following characteristics as set out in the Directive:—

“(a) the presence of infertile land, unsuitable for cultivation or intensification, with a limited potential which cannot be increased except at excessive cost, and mainly suitable for extensive livestock farming;

(b) because of this low productivity of the environment, results which are appreciably lower than the mean, as regards the main indices characterising the economic situation in agriculture;

(c) either a low or dwindling population predominantly dependent on agricultural activity, and the accelerated decline of which would jeopardise the viability of the area concerned and its continued habitation”.

The Directive also provides that less-favoured areas may include “small areas affected by specific handicaps and in which farming must be continued in order to protect the countryside and to preserve the tourist potential of the area or in order to protect the coastline. The total extent of such areas may not in any Member State exceed 2.5% of the area of hte State concerned”.

The areas in Ireland which have been designated by the Council as less-favoured areas are Cavan, Clare, Donegal, Galway, Kerry, Leitrim, Longford, Mayo, Monaghan, Roscommon, Sligo and West Cork, together with limited zones in Counties Laois, Offaly, Tipperary, Waterford, Wexford and Wicklow.

3. System of Aids

The system of aids includes the granting of (i) a compensatory allowance (ii) special aids for farms suitable for development under the Farm Modernisation Scheme (iii) aids for joint investment schemes for fodder production and (iv) investment aids for farmers unable to attain the level of earned incomes specified in the Farm Modernisation Scheme.

It has been decided that 25% of the expenditure incurred on (i) by Member States may be recouped by the Guidance Section of the FEOGA. Similar refunds are available in respect of (ii) and (iii) under the Farm Modernisation Scheme. There are no Community funds available for (iv).

Under the Farm Modernisation Scheme there is a system of incentives for development farmers who have submitted plans designed to bring their income up to specified targets. It will be noted that the present Directive enables those incentives to be improved in the case of development farmers in the less-favoured areas in the following respects:—

(a) the maximum interest rate subsidy (or, alternatively the corresponding capital subsidy) may be 7% as compared with 5% in other areas;

(b) the minimum interest charge borne by the beneficiary may be 2% instead of 3%;

(c) the guidance premium for stock production may be increased by one-third for farms with more than 0.5 livestock units per hectare of forage area;

(d) the proportion of income that may be derived from non-agricultural activities on completion of the plan is increased to 50 % instead of 20% as required under the Farm Modernisation Directive;

(e) such income in so far as it is derived from agricultural activities need equal only 70% of comparable earned income for one man-work unit in the mountain areas instead of 100% elsewhere;

(f) the compensatory allowance payable in less-favoured areas may be included as actual farm income in assessing the income earning capacity of the farmer;

(g) investment (up to 10,000 units of account per farm) for tourist and craft projects undertaken on the farm qualifies for the investment incentives.

Moreover national aid may be given to smaller farmers in the less-favoured areas by way of investment aids although they are not capable of attaining the level of earned income specified in the Farm Modernisation Scheme. In the case of investments for land improvement the aid may be on the same terms as those available to development farmers within the less-favoured areas and for other investments on the same terms as are available to development farmers outside those areas.

4. Compensatory Allowance

Under the scheme as it applies to Ireland the compensatory allowance will take the form of a livestock headage payment in respect of cattle, sheep and goats. In compliance with the Directive the amount of the allowance must be fixed “according to severity of the permanent natural handicaps affecting farming activities” and may not exceed 50 units of account (£27 approx.) or be less than 15 units of account (£8 approx.) per livestock unit. The total allowance granted may not exceed 50 units of account per hectare (2-5 acres) of the total forage area of the farm. Cattle over 2 years of age rate as a livestock unit; cattle between 6 months and 2 years as 0-6 of a unit, and sheep and goats as 0-15. The allowance payable in respect of a dairy cow is limited to 80% of the headage allowance payable and may not be paid in respect of more than 10 cows, in any one case.

To qualify a farmer must have a minimum utilised holding of 3 hectares (7-5 acres) and undertake to pursue farming for at least 5 years. Provision is made for his being released from the undertaking in certain circumstances.

The Department of Agriculture and Fisheries has announced that, within the areas designated as less-favoured, the livestock headage payment will be confined to those sections of the designated areas in the Western Region which are listed in the Appendix to this Report. In the areas outside the West of Ireland which are also specified in the Appendix the headage payments will also apply but only to mountain sheep. Where the livestock headage payment under the Directive is payable the existing Beef Cattle Incentive Scheme and the Mountain Sheep and Lamb Scheme will no longer apply. The Minister for Agriculture and Fisheries has indicated however that no farmer will suffer as a result of this and that the majority in the less-favoured areas will receive considerably more. The detailed provisions covering the operation of the new scheme have not yet been announced.

5. Other Aids

The Department of Agriculture and Fisheries has announced that in the parts of the less-favoured areas which will not qualify for livestock headage payments, farmers will benefit from other aids available under the Directive. These include, in the case of development farmers under the Farm Modernisation Scheme, extra investment grants and grant assistance for tourism or craft industry projects undertaken on the farms; and for smaller farmers improved grants for land improvement works and a scheme of special grants for joint projects relating to fodder production.

Details of these aids have not yet been announced.

6. Policy of the Directive

Article 39 of the EEC Treaty expressly acknowledges that in working out the Common Agricultural Policy account must be taken of the social structure of agriculture and of the structural and natural disparities between various agricultural regions. The Directive in pursuance of this obligation recognises the need for special aids where natural production conditions are less favourable. In this manner it is hoped to arrest the depopulation of farming areas where income is steadily declining as compared with other regions of the Community.

The problem with which the Directive is designed to deal is one which has existed in this country in a particularly acute form for a considerable time. In many areas there is an urgent need for measures to maintain a necessary nucleus of population without which future development of those areas will not be possible.

7. Consequences of the Financial Arrangements

The decision by the Council to reduce the level of the Community contribution for this scheme from the 50 % proposed by the Commission to 25 % is most disappointing and, indeed, difficult to reconcile with the aspirations of the Treaty. In the Treaty the problem is identified as a Community one to be solved in the working out of the Common Agricultural Policy. The Council’s decision places the burden of solution substantially on the national resources of a less well-off country like Ireland where the problem is greatest. Obviously this decision will greatly debilitate the effects of the scheme in practice.

The Joint Committee strongly urges, therefore, that every opportunity be taken to press for an improved Community contribution for which so strong a case in equity exists. Unless additional funds are forthcoming it is to be feared that little headway will be made in solving the problem. If it is desired to influence decisions, particularly by young persons, whether to remain on poor holdings or not it is obvious that the additions to individual incomes must be high enough to have a persuasive effect.

8. Particular Provisions in Council Directive

The Joint Committee finally would like to draw attention to improvements which should be made in the Community scheme to take account of conditions peculiar to Ireland.

(a) The restrictions on the allowance for dairy cows should be removed. In many instances the best hope the sort of a farmer with which the scheme is concerned would have of improving his income significantly would be through milk production.

(b) The conversion rate for conversion of sheep to livestock units should be increased from 0-15 to 0-20 to take account of the fact that Irish sheep arc generally larger and heavier than continental varieties.

(c) Provision should be made for aids for fruit and vegetable production similar to the provision in the Directive for acreage payments in designated mountain areas.

(d) The improved incentives which are being given to development farmers in the disadvantaged areas for investment in fixed assets and land improvement should be extented to transitional farmers.

(e) Horses, ponies and donkeys should qualify as livestock units for the purpose of headage payments with commercial bloodstock stud farms excluded.

The Joint Committee appreciates that these improvements can be effected only when the Directive is considered for possible amendment at Community level. It trusts that when the opportunity presents itself the amendments it has suggested will be pressed.

(Signed) CHARLES J. HAUGHEY,

Chairman of the Joint Committee.

4th June, 1975.