CAP reforms draw criticism from farmers' unions

Farmers' unions have described the Common Agriculture Policy (CAP) reforms agreed overnight as a "death warrant" for their members.

The policy revisions, which include ending the diversion of subsidies from large farms to countryside preservation schemes, will start in 2009 and run until 2013.

The reforms were agreed following an all-night negotiating session in Brussels attended by ministers from the 27 EU member states.

Minister for Agriculture Brendan Smith said this morning the reforms would deliver €170 million to Irish farmers over the next five years but farmer's unions rejected this and said the deal would put further pressure on their members.

Mr Smith said the revisions were "a very good deal for Irish farmers negotiated in very challenging circumstances".

"At a conservative estimate this deal will deliver €100m worth of additional milk production, and over the three years 2010-2012 it will also mean additional payments to farmers amounting to €70 million," the minister said.

"This is enormously positive for the sector and, while there are also elements in the package that I do not like, such as increased modulation, I have ensured that this will not lead to any loss to Irish farmers," he continued.

Under the modulation scheme farmers will from 2009 see more money being diverted from mainline farming into rural development.

Mr Smith's comments were contradicted by unions with Jackie Cahill, president of the Irish Creamery Milk Suppliers' Association (ICMSA), saying that the description of the reforms as a gain to farmers was "a spin that was both untrue and misleading".

Mr Cahill said that while some additional funds will be available, amounting to around €23 million per year, the loss in terms of reduced farm prices – most specifically, milk prices - will be many multiples of this figure.

He said the reforms contained "nothing which would brighten farmers prospects for 2009".

Apart from arguing over how much to divert handouts into countryside funding, the main hurdles in the overnight talks were how to liberalise the EU dairy sector before milk production quotas expire in 2015, public purchasing of key commodities like wheat and the future of the EU's remaining production-linked farm subsidies.

All holdings, subject to a basic threshold of €5,000 in subsidies a year, will shift 5 per cent of their EU farm money into countryside projects by 2012 - Ms Fischer Boel had wanted 8 per cent - on top of a compulsory 5 per cent already in force.

Instead of three thresholds for farms receiving subsidies, only one will now apply - €300,000 and higher, where 4 per cent of subsidies will be moved into rural projects by 2012.

"We can't see any positives in the deal for us. Obviously the minister was trying to defend Irish agriculture to the best of his abilities, but a 5 per cent in modulation isn't good news and, as an association, we'd be of the view that with the milk market being under extreme pressure, increasing quotas is ludicrous," said Mr Cahill.

He said the actual financial loss due to milk price reductions will be of the order of €500m a year as milk prices fall by up to 10 cents a litre.

"How the minister could talk about gains of €100 million worth of milk when dairy farmers would lose one half of a billion due to an unprecedented fall in milk price was a mystery that only Minister Smith would be able to explain," said Mr Cahill.

The Irish Cattle and Sheep Farmers' Association (ICSA), which has 10,000 members, also came out against the deal. Its general secretary Eddie Punch said the 5 per cent modulation cut to their single-farm payment would mean a cut of over €1,000 when fully implemented.

While giving a cautious welcome to the 1 per cent increase in milk quotas, Mr Punch said there needs to be a more creative approach taken to encourage new entrants into milk production.

Mr Punch also took exception to the Minister for Agriculture's claim that the deal will deliver €170 million to Irish farmers over the next five years.

"That's a little bit misleading because €100 million of that is actually dependent on extra work carried out by farmers; it's not EU cash being given to farmers." he said.

The Irish Farmers Association (IFA), the country's biggest farmers union, said it was "very disappointed" with the deal.

Speaking on RTÉ's Morning Ireland, IFA president Padraig Walshe criticised the increase in modulation payments which he said amounted to a deduction in farmers' single farm payment of around €42 million.

"I'm very disappointed that Minister Smith has agreed to this, I think he never should have agreed to the deduction," said Mr Walshe.

"Farmers are seeing their money eroded over time, and it's not being increased at any stage in terms of inflation. It's about 15 per cent less than it was already in 2003, and this is going to be a further erosion over the next number of years," he added.

Mr Walshe also claimed the reintroduction of market supports would have been better for farmers than an increase in milk quotas.

"To have a situation where you have an increase in the milk quota without market supports is the worse of all worlds," he said.

However, Mr Walshe did welcome the possibility of extra support for sheep farmers.