Living up to the REPS legacy

One of the key promises to garner support from farmers in the programme for government agreed at the beginning of the summer was to deliver “a new flagship environmental scheme”.

It was dubbed as a “new REPS” or “REPS II” and a message was conveyed that it would reward farmers for reducing farm emissions, enhancing biodiversity, improving water, soil and air quality, and planting forestry rich in native species.

The move by the Fianna Fáil, Fine Gael and Green Party coalition Government could be described as a masterstroke given the high regard that farmers still have for the four Rural Environment Protection Schemes (REPS) which operated from 1994 to 2015.

These schemes were succeeded firstly by the Agri-Environment Options Scheme (AEOS) and more recently by the Green Low-Carbon Agri-Environment Scheme (GLAS). The fact that farmers do not have a strong affinity to either of these schemes raises the pressure on the Government even more to deliver a scheme that meets their expectations.

Since the programme for government was agreed, agriculture has been rocked by the loss of two ministers. This is not the fault of farmers and they will want to see the new Minister for Agriculture quickly pick up the mantle and deliver an attractive agri-environmental scheme. Failure to do so will be seen as selling an idle promise and one that will negatively affect farmer confidence in the new coalition.

REPS legacy

Over the next four weeks, our REPS series will examine why REPS built up such a strong following, the budget required to deliver a substantial payment and examine what did and did not work in the previous scheme. We will look at what a new scheme might entail and hear what farmers and the wider industry would like to see included. REPS 1 was a totally new concept to farmers and, while it got off to a slow start, it quickly gained traction as detailed in Figure 1. Participation increased steadily over the first five years, reaching 45,553 by the end of 1999. The scheme was particularly appealing to suckler/beef and sheep farmers and its area-based payment mechanism quickly found favour.

It delivered in the region of €200m to farmers in 1999 and 2000, with over half of this paid to farmers in the western half of the country. It gave farmers a cash injection to invest in animal housing and over time was responsible for doing away with an image of livestock being fed around ring feeders and silage plastic scattered across the countryside.

A Teagasc analysis of National Farm Survey data found that investment in new buildings by farmers participating in REPS increased by 40% between 1994 and 1999. Investment in building maintenance increased by 70% during the same period. This compares to investment in new buildings by non-REPS farmers reducing by 17% in the same period.

Teething problems

There are always going to be teething problems with a new scheme and a higher than anticipated level of penalties and a maximum cut-off in payment slowed uptake to REPS 2. This prevented REPS 2 from meeting its target of hitting 70,000 farmers..

Participation increased when REPS 3 was introduced in February 2004. This was underpinned by a payment on every hectare of ground farmed and payments increasing on average by 28%. REPS 3 remained open until December 2006 and the high level of interest underpinned applications reaching 59,200 at the end of that year.

The number of applicants again spiked when REPS 4 opened in August 2007 and reached their highest level of in excess of 62,000 in 2008 and 2009. At the time, Minister for Agriculture Mary Coughlan announced the scheme and cited that while payments were made to farmers, the investment of some €3bn in funding over the period 2007-2013 would deliver greatly for society as a whole. She highlighted the Government’s commitment of €1.6bn, which was an increase of €850m from the national allocation in the 2000-2006 National Development Plan.

The scheme offered a 17% increase in payment rates compared to REPS 3, with Natura lands also benefiting. It brought payment levels for larger farms in excess of 55ha to in excess of €10,000 and was the first scheme to offer entry to more intensive dairy holdings.

Participation of over 62,000 farms meant that 45% of farms and some 1.8m hectares or 40% of the available agricultural area in Ireland was being farmed to REPS standards.

Over half of the participants continued to be located in counties in the western half of the country, many of which were typically smaller in size and had farm income challenges. Within this, the suckler and sheep strongholds of Galway and Mayo accounted for in the region of 19% to 20% of participants.

Financial support

In addition to the environmental benefits, the major advantage for farmers was the level of financial support it delivered. Yes, there were costs associated in adhering to scheme measures but it left farmers in a much better position of being able to invest in their farms with many using any surplus payments to improve their farmyards and infrastructure and manage nutrients much more efficiently.

An analysis of the influence of REPS on family farm income from the report Ex-Post Evaluation of the Rural Development Programme Ireland (2007-2013)(Table 1) shows clearly the positive effect of REPS on family farm income.

A user friendly scheme with a high average payment rate will attract applicants. So what is the Government’s ambition?

If it is for a scheme similar to GLAS, with 50,000 farmers and an average payment of €4,200, an annual budget of €210m will be needed. However, the indications are that such a flagship scheme needs to attract more farmers and a higher payment is needed to entice them.

The target for the scheme is 70,000 farmers. At existing GLAS payment rates an annual budget just shy of €300m would be needed.

However, for an agri-environmental scheme that provides a significantly higher payment of €10,000, some €700m would be needed annually. It is a tall order to deliver a five-year scheme with a budget of €3.5bn, almost equivalent to the total seven-year Rural Development Programme of €4bn. So is a middle of the road approach, somewhere below such a scheme but above GLAS likely? A scheme that attracts 70,000 farmers with a payment of €7,000 needs an annual budget of almost €500m, or €2.5bn over five years.

Where will the money come from?

So where could this budget come from? The only concrete figure provided to date is €1.5bn that will be allocated from the carbon tax, this will be supplemented by CAP funding. It is important to point out that this is new money and is not related to funding sources used for previous schemes.

Assuming the carbon tax portion would be available over five years, a big “if” given it is only projected to rake in just shy of €10bn in total by 2030, could CAP make up the €1bn shortfall?

Europe has committed to providing Ireland with €2.4bn in the next CAP for farm schemes. This must be topped up by National Exchequer funds and it is not yet known what level of co-financing Ireland will have to commit to as the CAP is not yet finalised. Previous REPS were financed 75% by EU funding and 25% by the National Exchequer. This level of co-financing is no longer available.

GLAS was allocated €1.45bn in the last programme, 36% of all spending. Without knowing what Ireland’s contribution will be, 36% of the EU’s allocation is over €850m, leaving a €150m shortfall.

It seems possible that this could be covered by the National Exchequer. However, the key question is whether the Government’s carbon tax allocation will be all the scheme will receive or if there will be more on offer.

Farm organisations are calling for the carbon tax allocation and a similar commitment from Government as was available in recent agri-environmental schemes.

NEXT WEEK

We will look at what has worked and what has not worked in recent agri-environmental schemes and what a new look REPS scheme could look like.