Reports of the death of Irish agriculture, as we know it, have proven to be exaggerated. From an Irish perspective, the CAP reform deal finalised early yesterday by EU farm ministers is hardly ideal. But it is a great deal better than expected. The muted response of the IFA to the agreement tells its own story; there can be no gainsaying the fact that the Minister for Agriculture, Mr Walsh, and his teams of officials have secured a broadly satisfactory result for Ireland. Proposed cutbacks in the beef and dairy regime, which could have cost Irish agriculture some £226 million per year, have been significantly pared back.
It may be that EU finance ministers could demand deeper cuts as the agreement is significantly above the budget ceiling. But, as of now, the overall impact on Irish agriculture, allowing for gains in some sectors and losses in others, is broadly neutral. Indeed in the critical beef sector it could even be positive, as farmers receive increased headage payments to compensate them for cuts in support payments. In the dairy sector the pain has been postponed rather than abandoned; with a delay of three years in guarantee price cuts of 15 per cent. There is also an aspiration to abolish milk quotas from 2006. Cereal farmers, meanwhile, will have to endure guarantee price cuts of 20 per cent.
While the outcome of the negotiations is reasonable from the Irish vantage-point, the relatively modest scale of the reform package agreed by ministers will raise concerns that the CAP reform package has failed in its main purpose: to better prepare the EU for eastern enlargement. The EU may trumpet the agreement as the most radical reform of the CAP in its near 40-year history. Certainly there is reform, but there is also the sense that its pace has slowed and/or been delayed. For all that, the EU can justifiably say the process of reform - initiated by Mr Ray MacSharry seven years ago - has been consolidated.
Questions will also be raised about the EU's preparedness for the next round of world trade talks, due to begin later this year. The EU Agriculture Commissioner, Mr Fischler, says the farm deal sends a strong signal to Europe's trading partners; the question is what kind of signal? Certainly, the relatively modest changes in the beef sector will scarcely help the EU as it seeks to ward off American pressure in the WTO talks for cutbacks in its export refunds.
These are matters for another day. From Ireland's perspective, the farm agreement will lift hopes that the threatened cutbacks in structural and cohesion funds will not now be as severe as originally feared. The CAP reform discussions were marked by a significant softening in the German position at the eleventh hour. Inevitably, this will encourage Irish negotiators to believe that they can chip away at the hardline German stance on the EU budget. EU leaders are scheduled to decide on the frame of the EU budget - and the level of spending available for structural and cohesion funds - at a critical summit meeting in Berlin later this month.
It is to be hoped that this optimism is not misplaced: there must be some concern that the German government - having agreed to allow farm spending significantly to exceed its budget ceiling - will now seek to achieve still greater savings.