€644m pension plan needed
Perhaps we should take a lesson from the Greeks, for whom the scheme has been most successful of the 10 member states who have used it.
It was popular with Greek farmers and uptake was high. What they seemed to do differently from other countries was to turn a blind eye to suspected widespread fraud - if you could describe as fraud farmers not complying with the requirement to cease farming.
In Ireland, we have taken the hint, with Agriculture Minister Joe Walsh recently announcing that retired farmers could work for a contractor, but they still cannot work on the farm from which they retire, nor work directly for another farmer.
Further work is needed to revitalise a scheme which had a nearly 25% success rate in its first four years. From 1994 to 1999 8,900 Irish farmers participated, out of about 40,000 that were believed to be eligible. The pension payout of about €472 million, 75% financed by the EU, had a number of positive effects. The participants brought forward their retirement by six years, on average. About half of all farms were transferred permanently rather than leased, resulting in a permanent improvement in our farm structure. Also, the average size of transferees’ holding increased by 17 hectares to 49 hectares, another badly needed structural improvement to make our farming sector more competitive against “big farm” countries.
Although it didn’t seem to be broken, the Department of Agriculture decided to “fix” the scheme in 2000.
The loophole which had allowed farmers’ wives to participate was closed; the maximum age of transferee was reduced from 50 to 45; the requirement to enlarge the new holdings was removed, as was the condition to practice farming as a main occupation.
It was hoped to get more smaller, part-time farmers participating but uptake has been very disappointing, far behind the targeted 7,250 farmers.
The Foot and Mouth disease outbreak hit the scheme, and Fischler’s CAP Reform proposals killed it off. But even before these unexpected developments, it was attracting few applications in the west of Ireland, where the need seemed greatest. The reduction in the age ceiling for transferees seemed to over-restrict the pool of available farmers. In the current difficult and unpredictable farming environment, farmers were reluctant to take on land for the required minimum of five years.
And, of course, the scheme, like the entire farming sector, has been left behind by the Celtic Tiger, with the maximum available payment less attractive than in the previous retirement round, because of our increased living standards in Ireland and higher State pensions.
Farmers can see plenty of other snags in the scheme. They say retired farmers should be allowed carry out manual tasks on farms, and aid and advise the young farmer, without becoming involved in management or financial matters.
They say the annual pension (now only 50% funded by the EU) should be boosted to €16,000, and a 3% increase per year built in to retain its value.
Farmers are no longer prepared to endure the scheme’s bureaucracy headaches, if it means they have to give up their familiar farming activity for life and see their national pension entitlements deducted from the Farmers Retirement pension.
It shouldn’t be too difficult for the Department to come up with a new useful version of the Early Retirement Scheme to run to 2006. Plenty of farmers want out of the new and unfamiliar decoupled era, and our farmers of the future are only waiting for the dust of decoupling to settle before making expansion moves.
With about €644 million of unused CAP Rural Development co-funding for retirement to play with, the Retirement Scheme could play a major role.
Surely a dignified exit mechanism and viability for successors can be engineered, with this kind of money available.
