Farmers warn of doomsday scenario for Irish economy

Smaller price reductions, higher compensation, and fairness in the distribution of milk quota increases will dominate Ireland's position at the Agenda 2000 talks next week, when the Minister for Agriculture - who outlined those priorities in the Dail last night - argues, yet again, that Ireland is a special case.

The Irish Farmers' Association says the EU Commission's existing proposals would reduce farm income by £260 million and take £600 million out of the rural economy. Fifty thousand farmers would cease to be viable within five years, the association adds, and 20,000 other jobs would go in towns and cities.

With a quarter of all jobs depending, directly or indirectly, on agriculture, the IFA insists the impact of a bad deal on CAP reform "would reverberate throughout the economy", and drove home its point with demonstrations in 28 towns and cities throughout the State yesterday. The organisers played down suggestions that the turn-out was disappointing, insisting that the aim was to increase awareness of the issues without causing major disruption.

But a more important battle will be fought next week in Brussels when the association contributes about 100 of the expected 50,000 European farmers protesting in the Belgian capital; and when a team of 10 association officials will shadow the Minister for Agriculture's every move as he strives to make the case that - in the words of the IFA - farming is "10 times more important" to Ireland than to most EU states.

"The beef and milk sectors together account for 70 per cent of the Irish agricultural output, and 4 per cent of Irish GDP," Mr Walsh told the Dail. "In no other member-state is this the case, or even remotely so. In fact, each of these two sectors is more important to the Irish economy than the entire agriculture sector is to nine other member-states."

The good news for Ireland is that the German proposal for "co-funding" - under which member-states would contribute a quarter of the CAP's direct aid budget - no longer appears to be a runner.

Critics said this "re-nationalisation" would allow larger countries with few farmers to overrun states like Ireland by paying huge subsidies to their farmers.

Instead, the French alternative of "degressivity" - small annual cuts in direct aid compensation payments - is gaining ground. Talks this week between the Taoiseach and the French Prime Minister advanced the French model; but there has been no formal proposal from the Commission about this and for the moment, at least, the Department of Agriculture is still qualifying its support. Mr Walsh goes into the talks with the advantage of being one of the most experienced agriculture ministers in the Community, having al been through the negotiations that led to the MacSharry reforms earlier this decade.

He also has close allies, most notably the French. Britain shares with Ireland and France an interest in extensive grass-based beef farming, but the British Labour party's commitment to lower consumer prices makes it less supportive.

For more tactical reasons, Ireland will also look to Spain, Portugal and southern Europe for strategic help.

Where the Commission would reduce farm prices to global levels in order to open up new markets, Mr Walsh's alternative would effectively write off world markets in favour of balancing supply and demand within the EU.

The IFA president, Mr Tom Parlon, put the Irish position more succinctly yesterday: "The basic demand of Irish farmers is for product prices to cover the cost of production on good efficient family farms, whereas Commissioner Fischler's proposals are to cut prices 30 per cent below the cost of production.

"This would inevitably force out family farms and drive us down the American route to ranch-scale factory farming."

The IFA claims that its "supply management" proposals are a viable alternative to the Commission plan, but described Commissioner Fischler's blueprint as "a big liner, very difficult to turn around". The association's main concern for now is that the German-inspired haste to reach agreement next week should not deflect Ireland from defending its interests.

"We'll be saying to Mr Walsh that whatever you do, don't be bounced into an agreement."

Mr Walsh told the Dail yesterday that the "viability of rural communities" would be foremost in his mind during negotiations. But while the Department of Agriculture predicts future "concentration" of smaller farms in the west of Ireland and an increase in part-time farming, others are more pessimistic.

In some scenarios, only 30,000 of the current 140,000 farmers will be commercially viable by early next century, with another 50,000 or so relying on off-farm income and indirect supports like the REPS, environment-friendly, scheme.

Even the IFA accepts that fewer farmers, lower prices, and a greater reliance on direct payments are inevitable. The task for the organisation next week and for the foreseeable future is to slow the process down.