Committee Reports > List of Committees > Joint > 1979 > Committee on the Secondary Legislation of the European Communities > Report No. 45 - Agricultural Structures

REPORT

A. INTRODUCTION

Proposals Examined

1. The Joint Committee has examined the proposals made by the Commission to the Council on 22nd March, 1979 relating to policy with regard to agricultural structures [5720/79]. The Commission is formally proposing the amendment of Directives 72/159/EEC (Farm Modernisation. Scheme), 75/268/EEC (Disadvantaged Areas), 72/160/EEC (Farmers’ Retirement Scheme) and 72/161/EEC (Socio-economic Guidance and Vocational Training). As a first step in initiating programmes for Community financing of the development of agriculture in the Community’s severely less-favoured areas the Commission is also proposing the adoption of new Council Regulations dealing with agricultural development in the West of Ireland, beef cattle and sheep production in Italy and sheep farming in Greenland. New Regulations are also being proposed to assist the development of activities directly or indirectly connected with agriculture in the Western Isles of Scotland, Department of Lozere in France and the Belgian Province of Luxembourg. Finally the Commission is proposing an amending Regulation dealing with the slaughtering of pigs and the processing of pig meat in France and the United Kingdom.

2. The Committee is informed that these proposals are being examined by Council Working Groups and is advised that advantage will be taken of Ireland’s presidency of the Council from 1st July next to try to ensure that processing of them will be proceeded with as speedily as possible. However, the Committee believes that it would be unduly optimistic to expect firm decisions before the end of the year.

Acknowledgements

3. In connection with its examination of the Commission’s proposals the Joint Committee consulted the Irish Farmers’ Association and the Irish Creamery Milk Suppliers Association. It wishes to express its sincere thanks for the assistance it received.

B. FARM MODERNISATION SCHEME

Present Scheme

4. The Farm Modernisation Scheme is subject to the conditions of Directive 72/159/EEC. This Directive imposes a selective system of aids in favour of development farmers, who are defined at present as farmers who can submit a development plan which will achieve the projected comparable income of non-agricultural workers within 6 years. The EEC refunds 25 per cent of eligibile national expenditure under the Farm Modernisation Scheme in respect of development farmers only.

Amendments Proposed

5. To concentrate available funds on the farmers who have greatest need of assistance the Commission proposes that the criteria be altered for development farmers as follows:—

—the target income for development plans would be reduced to 90 per cent of the comparable income;

—Member States need not deduct more than 3.5 per cent in respect of the return on the farmer’s capital invested on the farm in the calculation of farm income;

—development aid would only be given to farmers undertaking plans which would have a target of not more than 120 per cent of the projected comparable income.

6. It is also proposed that

—the ceiling on investment eligible for aid under development plans should be raised from its present level of 43,000 ua per labour unit, without any limit on the number of labour units, to 60,000 ua per labour unit up to a maximum of three labour units;

—Member States could continue to pay from national funds the higher level of aids to farmers under 55 who cannot undertake development plans. These aids would be limited to investments up to a limit of 15,000 ua per farm and the farmers would have to keep accounts for at least five years.

7. The Commission is also proposing that as from 1st January, 1980 aid for investment would be suspended in respect of—

(i)dairy farming but aid could be continued to be given for farms not increasing their dairy herds which have at least 35 per cent of the utilised area under grass and except in the “mountain areas” and certain parts of Italy,

(ii)pig farming except for farms which are not increasing fat-stock or breeding sows by more than 10 per cent or are more than 65 per cent under crops. Investment relating to the use of liquid skimmed milk is also to be excepted. Excepted investment must be within the range 10,000-54,565 ua (£7,892 to £43,000) and on completion of the development, the farm must be capable of producing at least 35 per cent of its feeding stuffs, and

(iii)construction of glasshouses.

Access to Development Status

8. As the Joint Committee pointed out in its fifth report (Prl. 7103) of 19th April, 1978 the Farm Modernisation Scheme cannot be regarded as a success until many more farmers are able to undertake development. The Commission’s proposals to make access to development easier by lowering the target income and the rate of return on capital employed in calculating income should have the effect of enabling more farmers to enter the scheme. They are, therefore, welcome and worthy of support though it would be even better in the Irish situation if the target income were fixed at 85 per cent of comparable income instead of the 90 per cent proposed by the Commission.

Restrictions on Investment Aid

9. In its thirty-second report (Prl. 7615) of 6th December, 1978 on the situation in the milk sector the Joint Committee drew attention to the grave consequences for Irish dairying at its present state of development if there were any cut back in investment. The Committee regards the Commission proposal to suspend aid for farms increasing their dairy herd as totally unacceptable. To adopt the proposal would be to ensure that very many small and medium-size farms in this country would have no scope at all for development.

10. The severe restrictions on investment aid for pig farming are also objectionable and do not appear to the Committee to be justified having regard to the market situation in the Community. Likewise the complete suspension of aid for glasshouses which would apply to developed and under-developed areas alike is not acceptable. It is by no means clear what purpose this particular proposal is expected to serve.

11. While the productivity of Irish agriculture lags behind its continental counterparts the Joint Committee believes that Ireland has a strong case for seeking exemption from any restrictions that may be imposed on investment aids. It trusts that the case for such exemption will be vigorously pressed.

Aids for Non-Development Farmers

12. While 80 per cent of Irish farmers remain in the non-development category, it is essential that the present level of national aids should continue to be available to them. Indeed the Joint Committee believes that it would be more conducive to the solution of their structural problems if some financial assistance were available from the Community to assist them to reach a stage where they could undertake development plans. However, the Committee welcomes the Commission’s proposal to allow the national aids to be continued under certain conditions though it regards the proposed investment limit of 15,000 units of account as too low.

C. DISADVANTAGED AREAS SCHEME

Existing Scheme

13. Under Directive 75/268 Member States may pay in their disadvantaged areas

—compensatory allowances (per livestock unit of cattle and sheep) to producers who undertake to farm their holdings for at least five years more

—increased investment aids and guidance premiums to development farmers

—aid for joint investment schemes for fodder production and for improvement and equipment schemes for pasture and hill grazing land which is farmed jointly.

Amendments Proposed

14. It is proposed to increase

(a)the maximum for headage payments from 50 units of account per livestock unit to 75 ua/lu,

(b)the level of EAGGF subvention towards investment aid

—from 35 per cent to 50 per cent for Ireland and Italy in respect of headage payments,

—from 25 per cent to 50 per cent for Ireland and Italy in respect of investments undertaken by development farmers, and

—from 25 per cent to 30 per cent for Italy in respect of joint investment schemes for fodder production.

Views of the Joint Committee

15. The Commission’s proposal for an increase in the EAGGF contribution is identical with one which was submitted by the Commission to the Council in December, 1977 and which was dealt with in the Joint Committee’s fifth report (Prl. 7103) of 19th April, 1978. As indicated then the Committee welcomes the proposal which it hopes will be accepted by the Council on this occasion. It considers, moreover, that the same level of EAGGF assistance should be available for joint investment schemes for fodder production in Ireland as is proposed for Italy. The proposal to increase the maximum for headage payments has little relevancy for Ireland where the payments are at the minimum level.

D. FARMERS’ RETIREMENT SCHEME

Existing Directive

16. Directive 72/160/EEC, operative since 1972, makes it mandatory on Member States to operate a retirement scheme for farmers providing—

(a)an annuity, amount unspecified, to those aged between 55-65;

(b)a premium, amount unspecified, which may be varied or refused to recipients of the annuity or on grounds of age or means;

(c)an annuity to farm workers aged between 55-65 who were employed on farms benefitting from (a) or (b).

17. The beneficiary must retire from farming and must release 85 per cent of his land as follows:

18. The annuity only is subvented by the EEC and the amounts eligible for subvention are—

The rate of subvention is 65 per cent of above amounts for Ireland and Italy (i.e. single £307, married £460) and 25 per cent for the other States. Subvention is confined to cases where the land is finally reallocated in accordance with Article 5.1 and where the annuitant is between 55-65 years.

Irish Scheme

19. The Irish Farmers’ Retirement Scheme was introduced on 1st May, 1974 and currently provides the following benefits—

The beneficiary must retire from farming and must either—

(1) sell or lease his land to a development farmer or

(2) sell it to the Land Commission.

Amendments Proposed

20. The following are the details of the amendments now being proposed to Directive 72/160/EEC by the Commission:—

(a)Annuity

No change is proposed except that the subvention levels are being raised to 1,500 ua (£1,180) single and 2,000 ua (£1,574) married. Subvention will continue at 65 per cent (£767 single, £1,023 married).

(b)Premium

This is to be fixed at four times the rental value of the land released. It may, however, be refused in whole or in part to recipients of the annuity where the conditions for the receipt of the annuity are such that the land must be released to a development farmer or be withdrawn from agriculture (Article 5.1) or be released to a land agency (Article 5.3) for subsequent reallocation to a development farmer or withdrawal from agriculture. It can only be paid in addition to the annuity where the land is in fact released strictly in accordance with Articles 5.1 and 5.3. The thinking is that if the State does not force the beneficiary to release the land to a development farmer etc. in the award of the annuity, it should make a premium available in addition but this would only be payable where the land is so released. The premium will be subventable up to 300 ua (£236) per hectare at 65 per cent.

(c)Annuity for Farm Workers

No change is proposed except that the amount of subvention is increased.

(d)Anticipatory Premium

This is a new provision for farmers between 50-55 who promise to retire under Directive 160 within 5 years and will be payable in full at age 50 and be reduced by 20 per cent for each year after that, so that a farmer promising at 54 to retire would only get one-fifth of the premium. It will be subventable on the same basis as the Premium above (with a reduction of 20 per cent for every year after 50) except that the rate will be 50 per cent as against 65 per cent.

(e)Release of land in less-favoured regions

The Commission proposes recoupment (at 50 per cent) of the annuities payable in these regions where the land is released to enlarge a farm worked by a full time farmer for five years.

(f)Succession allowances

This is also a new provision for the less-favoured regions and consists of an allowance to farmers of 60 and upwards who hand over the running of the farm to a family heir who has been employed on the farm for more than five years. It will be subventable up to 1,000 ua (£787) per annum for ten years at 50 per cent.

(g)Less-favoured regions

The 1977 draft amendment of the Directive, now withdrawn, listed the less favoured regions as the West of Ireland and the Mezzogiorno. But the current draft sets out criteria which it seems the 13 Western Counties (i.e. disadvantaged areas, Western Region) would meet. The two immediately preceding provisions will apply in the less-favoured areas only.

(h)Release of land to development farmers or withdrawal from agriculture

The amount of land which must be so released (so as to qualify for subvention of the annuity/premium) is reduced from 85 per cent to 66 per cent.

Financial Implications

21. The following shows the financial implications:—

(i) Annuity

The relevant figures are—

The proposal would undoubtedly raise expectations of an increase in the Irish annuity to the subventable levels. Most of any such increase would fall on the Irish Exchequer for the reasons that—

(a)Subvention is confined to annuitants between the ages 55-65. The Irish scheme provides annuities for all over 55 and 40 per cent of annuitants are over 65 on retirement.

(b)The land must be released to development farmers or be withdrawn from agriculture. In the Irish context it is not always possible to meet this condition.

The increased subvention would, it is estimated result in an increase of £68,000 per annum in the amount recouped by the EEC, but greater participation by retiring farmers in the scheme would be expected to result in increased expenditure estimated at £215,000 per annum.

Net extra cost: £147,000 per annum.

(ii) Premium

The current premium is twice the lease rent (subject to a maximum of £3,000) or 10 per cent of purchase money (subject to a maximum of £1,500). The proposal is to fix a premium of four times the rental value without a maximum, but subvention will be given for the first time. It is estimated that the extra cost of the premiums will be £261,000 of which £167,000 will be recouped from EEC.

Net extra cost: £94,000.

(iii) Anticipatory Premium

The maximum level of subvention will be 300 ua per hectare at 50 years, reducing yearly. The mean level is estimated at 180 ua (£142) per hectare and for a holding of ten ha. the premium could be set at £1,420. Subvention will be at 50 per cent. It is difficult to assess the impact this proposal would have in Ireland but on the basis of the Commission’s calculations it is assumed that participation would be in the region of twenty cases per year.

Net estimated cost: £15,000 per year.

(iv) Release of land in less-favoured regions

This provision would it is estimated yield extra subvention of £28,000 per year.

(v) Succession allowance

The subvention level is 1,000 ua (£789) of which 50 per cent would be recouped by the EEC. A very rough estimate of cost (based on a participation figure of 200 p.a.) is £158,000 per annum, half of which would be recoupable.

Net estimated cost: £79,000 per year.

22. The following is a summary of the probable cost to the Irish Exchequer though it has been emphasised to the Committee that at this stage the estimate must be taken as very tentative:—

Views of the Joint Committee

23. This scheme has hardly been a success in Ireland and, as will be seen from the Appendix to this report, the number of pensions granted represents only about 26 per cent of the total number of applications received. The Joint Committee understands that this position is due not to a great many applications being refused but rather to withdrawal of applications or failure to agree on a price with the Land Commission or failure to effect a transfer to a development farmer.

24. The Committee believes that the adoption of the Commission’s proposal should make the scheme more attractive. The proposal to allow land released in the disadvantaged areas to go to full time farmers who are not operating a development plan should improve the impact of the scheme in Ireland. The increase in the level of annuities and the proposed anticipatory premium are also to be welcomed as well as the proposed succession allowance in the disadvantaged areas. The Committee is advised that if the proposals are accepted, the level of participation can be expected to exceed at least marginally the peak already achieved in this country.

E. SOCIO-ECONOMIC GUIDANCE AND VOCATIONAL TRAINING

Amendments Proposed

25. The Commission proposes the extension of schemes in operation in Member States under Directive 72/161/EEC by, (a) improving the financial incentives both to Member States (by way of increased levels of contribution payable by the EAGGF) and to farmers participating in training courses (by requiring Member States to give allowances to them for travelling and attendance expenses); and (b) including a new category of training designed for managers and staff of producer groups, co-operatives and other associations engaged in marketing and processing agricultural products.

Financial Implications

26. The proposals at (a) would involve EAGGF meeting 50 per cent of Member State expenditure on farmer training—by far the major item under the Directive—as against 25 per cent at present. They also provide for raising the limits on expenditure eligible for EAGGF reimbursement in respect of such training and also of the initial employment and training of socio-economic advisers. The present limits are proposed, in general, to be raised by about 50 per cent. The new category of training for managers of producer groups, co-operatives etc. would be eligible for EAGGF aids as for farmers trained i.e. to the extent of 50 per cent of cost up to 2,400 units of account (about IR £1,900) per person. The total annual increased cost to the EAGGF of the proposals is estimated at 12.16m. European Currency Units or about IR £8m. All but three per cent of this sum would be for agricultural training courses.

Implications for Ireland

27. The main effect of the proposals in Ireland’s case would be to increase substantially the amount of EAGGF financial assistance received. Currently the EAGGF contributes approximately £.75m. each year towards our farmer training courses under the Directive and this would go up to £1.5m, under the proposals. The increase in the once for all grant for full-time socio-economic advisers employed would in Ireland’s case amount to £65,000 as against £40,500 currently on the basis of the planned staff of 27 advisers.

28. The proposals would also require the organisation of specialised training courses for managers and staff of agricultural processing and marketing concerns. It is envisaged that such training would be provided through the new national agricultural training authority AnCOT with assistance from other agencies where necessary. Because of its specialised nature and the limited range of eligible personnel it is not anticipated that the numbers participating in this training will be large, the Commission’s estimate for the Community as a whole being 200 per year.

F. DEVELOPMENT OF AGRICULTURE IN THE WEST OF IRELAND

Commission’s Proposals

29. The measures proposed by the Commission for the development of agriculture are included in a draft Council Regulation. If the Regulation is adopted by the Council the measures will be implemented over a ten year period in the context of an outline programme to be drawn up by the Irish Government. The programme will indicate in detail how the measures will be implemented. The overall Community contribution towards the measures is estimated at around £150 million. The proposed measures would apply to the West of Ireland as designated in Directive 75/272/EEC (Community List of Less-Favoured areas under Directive 75/268/EEC).

30. The following items are provided for in the Commission proposal:

(a)Infrastructures: Community funding is proposed to aid the improvement of agricultural infrastructures in the area of rural electrification, piped water supplies and agricultural roads.

(b)Agricultural Education and Advisory Services: The expansion of facilities at Agricultural Colleges and the provision of 25 new Educational Training Centres are proposed. The construction of an Advisory Resource Development Centre for the training of advisory personnel is also envisaged.

(c)On-farm investments: This measure envisages the provision of the same level of aids to all farmers in the West for on-farm improvements as is currently available to Development Farmers. The aids currently available to this category of farmers do not attract any Community support. A special new scheme to encourage integrated calf to beef systems of production in the West is envisaged. An interest subsidy will be paid to those following production plans to encourage them to hold on to and finish to beef their animals on their own farms.

(d)Land improvement: The proposals envisage the payment of 70 per cent grant aid to farmers towards the cost of improving their lands. Land improvement includes soil preparation, fertilisation as well as reseeding and reclamation. It will cover both hill and lowlands. The proposal also provides for a scheme of aid for the division of commonages. Aid amounting to 70 per cent of the cost of fencing, reclamation, fertilising, etc. is proposed.

(e)Agricultural Marketing and Processing: This provides for an amendment to an existing EEC Scheme of EAGGF grant-aid for investment projects in the agricultural marketing and processing sector.

(f)Forestry Development: To encourage the afforestation of Western land not suitable for agricultural production, a special scheme of aids for forest development including associated measures such as ground preparation, drainage, fencing, etc. is envisaged.

Financial Implications

31. The following are the details of how the programme would be financed:—

(a)Infrastructures: An EAGGF contribution of 40 per cent of the total cost is envisaged. (Total Community aid is estimated at £45m.).

(b)Agricultural Education and Advisory Services: An EAGGF contribution of 50 per cent of the total cost is envisaged. (Total Community aid is estimated at £4m.).

(c)On-farm Investments: An EAGGF contribution of 50 per cent of national aid is envisaged. (Total Community aid is estimated at £31m.).

(d)Land improvement: An EAGGF contribution of 50 per cent of national aid is envisaged. (Total Community aid is estimated at £40m.).

(e)Agricultural processing and marketing: The normal rate of EAGGF grant is 25 per cent but it is envisaged that this will be increased to 50 per cent for the West. (Total Community aid is estimated at £19m.).

(f)Forestry: An EAGGF contribution of 50 per cent of national aid is envisaged. (Total Community aid is estimated at £10m.).

Views of the Joint Committee

32. The Joint Committee regards the proposals for structural improvement in the West of Ireland and in other less-favoured areas in the Community as indicating an acceptance by the Commission of the fact that a single common structural policy for the whole Community is not adequate and that special measures to solve the problems of particular regions are essential. The Committee whole-heartedly supports this approach and hopes that it will be followed by the Council. The programme envisaged for the West of Ireland is admirably comprehensive embracing, as it does, aid for infrastructure, education and forestry as well as direct assistance for agriculture. The Committee urges that every effort be made to ensure that the programme is adopted and started at the earliest possible date.

Vice-Chairman of the Joint Committee.

30th May, 1979.