Farmers should be helped to get more income from the market place
Alan Matthews: Cap reform deal includes exciting measures to encourage innovation
Young heifers on a farm in Co Kildare. Photograph: Frank Miller 23.6.05
There has been considerable media coverage of the agreement reached by the Council of Agriculture Ministers in Brussels this week and its possible implications for the payments received by Irish farmers under the Common Agricultural Policy (Cap).
Minister for Agriculture Simon Coveney and his officials deserve credit for their success in brokering this agreement. It opens the way for tripartite negotiations with the Eu ropean Parliament and the commission to settle the future rules for the Cap by June according to the Irish presidency schedule.
The intense lobbying by the different farm organisations in the weeks leading up to the meeting shed rare light on one of the more puzzling features of Irish agriculture: the contrast between Ireland ’s hugely successful food companies based on a consistent record of innovation, and the primary production sector which produces less today than it did 20 years ago and which remains mired in disputes about Cap subsidies.
The focus of the lobbying on the way the council decisions might affect the distribution of Cap payments between farmers is not surprising. Irish agriculture produced an operating surplus (farm income) of €2.1 billion last year, of which €1.3 billion was due to the single farm payment. Payments under disadvantaged area, forestry, agri-environment and other schemes bring transfers to €1.7 billion.
With the single farm payment alone accounting on average for more than 60 per cent of farm income last year, how that money is divided up is hugely important to individual farmers.
Until now, the payments have been distributed according to the “historic model” which relates the payment per farm to the amount that farm received in the reference years 2000-2002. At that time, under a series of partial Cap reforms, market price support was partly replaced by coupled payments.
Farmers were compensated for reduced market price support (through lower intervention prices) by direct payments that were linked to what a farmer produced; in the case of arable farmers, the payments were linked to the number of hectares planted, and in the case of livestock farmers, they were coupled to the number of animals. The larger the farm, or the more intensively stocked the farm, the higher the payment received.
A major reform of the Cap in 2005 altered these payments from coupled to decoupled payments. With certain qualifications, this means that each farmer now receives the Cap payment they received on average in 2000-2002, regardless of their level of production or whether they produce at all. The sole requirement is compliance with standard food safety, animal health and environmental legislation and the maintenance of land in good agricultural and environmental condition.
The result is a very uneven and largely arbitrary distribution of payment levels per hectare linked to this outdated reference. Almost 13,000 farms have the good fortune to receive more than €500 per hectare, but more than 27,000 farms get less than €200 per hectare.
The European Commission ’s proposal at the start of the Cap negotiations was to move to a flat-rate payment per hectare on all farms by 2019, but allowing countries to designate regions which might have different flat-rate payments. Coveney favours an approximation model which would proportionately narrow the differences across farms but still leave significant disparities by the end of the process.