After marathon talks in Luxembourg the EU's Agriculture Commissioner, Dr Franz Fischler, yesterday emerged to hail a deal on farm reform - "a new era" that "fundamentally" changes the way the Union relates to its farming community.
The core principle of the reform, although partially diluted or delayed in some aspects of the deal, is a welcome and inevitable break of the link between subsidies and production - a link which defined the old Common Agriculture Policy (CAP) and has been seen as incentivising overproduction and rewarding inefficiency.
It was also a major barrier to dialogue on a new world trade round in facilitating the dumping of subsidised produce on developing country markets at the expense of local producers. The Commission warned yesterday, however, that this is no "unilateral disarmament", and for the talks to advance in Cancún in September, others, specifically the US, will also have to tackle their own trade-distorting subsidies. Development NGOs complain, however, that the EU has not gone far enough.
The Luxembourg deal does not mean the EU no longer has a CAP. Nor is it about saving money. At least, not at this stage. The EU retains a CAP, not the CAP so beloved of Irish farmers over its 45-year history, and total annual spending on the farm sector will remain at around €40 billion until 2006, rising to €45 billion in 2007 and hitting €48.5 billion by 2013. Or roughly half the EU's budget.
Farmers will continue to receive payments from the EU - currently running on average in Ireland at some €13,000 per head each year - but now in the form of a single cheque and subject, quite appropriately, to meeting environmental and animal health standards. Some claw-back from those earning most in subsidies will be applied to rural development projects.
Most of the participants will be pleased at an outcome that has provided "something for everyone in the audience". The Commission and the anti-CAP lobby led by Britain have "decoupling". France has been spared immediate pain in the cereals sector. Consumers should see prices fall and quality improve. And Ireland won, courtesy of the good offices of the commissioner, substantial increases in butter intervention.
There will be some pain for Irish producers, most particularly for our 27,000 dairy farmers, although the bulk of that cut was made in the Agenda 2000 negotiations in 1999. As the Minister has argued, the level of that pain will depend on how each farmer responds to the new market realities. A substantial switch of production from butter to high-value dairy products like cheese is, in any case, overdue.
Dr Fischler's reforms contain an important element of national discretion in phasing and such flexibility should allow welcome room, for example, to encourage our beef industry towards a higher-quality premium product. But to describe such provisions as "renationalisation" of CAP is to overstate the case. Farmers in Europe will be working under parallel regimes, marching slightly out of step, but to the same destination - a world-market-driven production system.