EU funds for Irish farmers to be reduced under EU Covid-19 recovery plan

EU agreement on a €750 billion coronavirus pandemic recovery fund is tied into a deal on long-term EU spending plans, including radical redirection of farming under the common agriculture policy (CAP) – with significantly reduced funds for Irish farmers.

The outcome has led to accusations from Irish farming organisations that the Government’s over-riding enthusiasm for concluding a deal on overall EU funding may mean Irish farming and rural support is sacrificed.

Agreement is on headline figures, while the exact level of contribution of Ireland to EU funds has yet to be determined.

The new CAP budget is €336.5 billion – a €39 billion reduction based on “constant prices” – with €258.6 billion going to direct payments and market measures (Pillar 1 funding), and €77.9 billion allocated for rural development (Pillar 2) over the 2021-2027 period.

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The cut was not as drastic as originally feared by farmers but the reduction in “recovery funding” for rural development measures, from €15 billion to €7.5 billion – demanded by “frugal four” countries – is a particular point of concern in Ireland.

Member states facing particular structural challenges in their agriculture sector, however, will benefit from a separate fund, with €300 million allocated for Ireland.

Co-financing need

The more substantial €5 billion “Brexit adjustment reserve” for unforeseen and adverse consequences in member states and sectors” is likely to see Ireland and its agri-food sector at the top of the list.

Reform of agriculture is reflected in agreement that “the share of the CAP expenditure that is expected to be dedicated to climate action shall be 40 per cent”.

The basic payment scheme, under which farmers receive payments is to be replaced by a new payment called, “basic income support for sustainability and will be capped at €100,000 per farmer. This is to prioritise less-intensive family farms.”

IFA President Tim Cullinan said that while a recovery deal was needed, the funding provided for the CAP was not consistent with the EU's aspirations for farming as part of the European green deal.

“On the one hand the Commission wants farmers to take costly actions to implement the farm to fork and biodiversity strategies, but on the other hand they don’t want to provide the necessary funding,” he said.

The overall allocation was down approximately 9 per cent, compared to the previous seven years. “The Government will need to come forward with significant co-financing to protect payments,” he added. “The Taoiseach now needs to give a clear commitment to all farmers that their payments will at least be maintained in real terms during the transition in 2021/2022 and beyond when the new CAP comes into play.”

Continually targeted

IFA director of European affairs Liam MacHale said Irish farmers would be disappointed that “agriculture continues to be targeted”. Their income was 40 per cent below the average European wage and they were “facing into additional regulations” and associated costs. CAP payments would not compensate for these, he added.

ICMSA president Pat McCormack expressed concern that “understandable enthusiasm” for concluding a deal around overall EU funding, will mean Irish farming and rural support is sacrificed. While it was premature to be definitive, “it did look suspiciously like Pillar II CAP funds were being targeted as an easy source of monies to be diverted to other funds”.

He added: “Within the context of Ireland being a net contributor, the Taoiseach needs to be fully aware that there’s not much point in maintaining or increasing Covid-related EU support for certain sectors of the economy, if that is at the expense of the already vulnerable and already exposed farming and food sectors and the rural communities in which those activities are based.”