The European Commission says it is to axe the current system of offering pre-financing export refunds for farmers in six months. The decision by agricultural commissioner Mariann Fischer Boel is likely to affect 90 per cent of Irish beef farmers who use pre-financing to support their export trade.
Minister for Agriculture Mary Coughlan strongly criticised the commission's decision yesterday and said it would not be good for the Irish beef industry.
Export subsidies are provided under the Common Agricultural Policy (Cap) as a mechanism to help EU farmers sell their cattle outside the community. Under the system, farmers can apply for pre-payment of these export refunds while their beef is held up in transit or at customs, which can last several months.
The pre-financing of export refunds was criticised by the EU Court of Auditors in 2003 as a financing mechanism that was open to abuse.
Ms Coughlan said there were no problems with the refunds system in the Republic. "Exporters will now carry a lot of risk when this takes effect," she said. "We feel we have adequate controls in place for this measure."
Irish farmers use the system of pre-financing more than any other EU farmers. Export refunds may be abolished completely under Cap reform in 2013.
Meanwhile, EU agriculture ministers discussed a policy paper on Cap reform published by the French government yesterday. The paper, which has been signed up to by Ireland, focused on promoting the positive elements of the Cap system. In the debate, 15 of the 25 delegations expressed support for the French initiative.