Cost of radical farm reform proves too much for EU leaders

So degressivity is out. At least for the time being. The French had invented the forbidding-sounding concept, which involved the progressive annual cutting back of direct aid payments to farmers by a certain percentage, and the French had scuppered it. Or rather President Chirac scuppered his own Prime Minister's idea.

In the end, the leaders agreed a budget to 2006 based on sustaining 1999 spending of £40.5 billion in real terms. In addition £14 billion will be allocated to rural development. And the agreement reflects the need to find savings of £5 billion over the period, achieved through delaying expensive reforms. The result will be farm-transfer payments to Ireland of £10 billion over seven years in the form of guarantee payments, direct aid, and export refunds.

The figure is not comparable with previous totals as significant extra costs are incurred by the taxpayer in compensation for price cuts where in the past the consumer paid the farmer directly.

Degressivity bit the dust overnight because the EU's leaders decided that Mr Chirac was immovable on the issue. And so, instead of radical farm reform at a price recouped through degressivity, we got partial reform for less, and a promise of more in 2002.

Until then, the Commission is required to try and find savings to curb any budget overrun and to report to ministers on "appropriate" measures to deal with them.

If at that stage the budget is out of control, degressivity will certainly rear its ugly head again. In essence the agreement reached between farm ministers 10 days ago has been partially dismantled at the instigation of Mr Chirac.

Beef reform is left intact. Reform of the dairy sector is pushed back a year to 2005, also pushing back the huge costs of compensation to farmers to 2007, the next budget.

Instead of the ministers' proposed cuts of 20 per cent in the cereals guarantee prices, the leaders agreed to 15 per cent cut with a review in 2002 and then perhaps a further 5 per cent cut.

The oilseed sector will also be a subject of review in 2002.

For Irish farmers the concessions to the French were a welcome alternative to direct aid cuts.

They have never been supporters of reforms of the hugely expensive Common Agriculture Policy and have relied on the political reality that to reform initially costs more. That hurdle proved too large to cross in one go.

The president of the Irish Farmers' Association, Mr Tom Parlon, said the deal was "as good as we could have got" and paid warm tribute to the Government team from the Taoiseach down for taking "a hard line on degressivity".

But he warned the Government the IFA would not tolerate different rates of aid in different parts of the State, the potential result of regionalisation. The difference would have to be made up by the Exchequer, he said.