Subsidy on dairy cows proposed in plans to refine CAP

NEW annual subsidies to farmers of Pounds 161 per dairy cow are among the radical reforms of the Common Agriculture Policy (CAP) to be proposed by the European Commission next week.

The package of reforms also involves good news for consumers. Cuts in the intervention price of beef of 30 per cent, 20 per cent in cereals, and 10 per cent in milk should be reflected in some savings in supermarket trolleys.

The package is designed to meet the challenge of enlargement of the Union and another round of world trade talks. It is due to be announced to MEPs next week before starting the long process of approval by ministers.

The Agriculture Commissioner, Mr Franz Fischler, is to reinforce the system of propping up farm incomes with "cheques in the post" while reducing prices to, or close to, world market levels. This should pave the way for greater access of EU produce to the world markets, preventing the gluts and potentially huge intervention that are looming.

Mr Fischler's reforms are likely to add some Pounds 3.3 billion to the annual CAP budget, the bulk of the extra cost coming from the introduction for the first time of premiums on every dairy cow in the Union.

For each price cut Mr Fischler is to offer a cash compensation payment based on headage or land under cultivation. The effect on farm incomes, agricultural economists warn, will depend on whether EU market prices fill by as much as the intervention price. If they do, as is particularly likely in Ireland's crucial beef sector, farmers will certainly feel the pinch as the compensation will not match their losses.

Some may also lose out if Mr Fischler, as he intends, allows member- states a greater say in targeting compensation payments to the most in need. That means for example, limiting the number of cattle on which head age payments are made. Good news for small farmers, not so good for the larger.

The IFA yesterday called on the Government "to ensure that farm incomes are fully safeguarded and that the critical contribution of agriculture to the national economy is not undermined". Mr Michael Treacy, of the IFA's Brussels office, said the Commission's proposals would accentuate the unfortunate dependence of farmers on direct payments.

The Fine Gael MEP, Mr Joe McCartin, denounced the proposals, saying that they "would simply mean the replacement of a common agriculture policy by a scheme of rural social welfare". He called on the Government to reject them as "totally unaceptable".

An article on reform of the Common Agriculture Policy on Wednesday incorrectly reported farm incomes in Ireland in 1992 at Pounds 1.185 billion and in 1996 at Pounds 2.92 billion. The correct figures are Pounds 1.815 billion and Pounds 2.092 billion respectively.