During the next six weeks, negotiations on reform of the Common Agricultural Policy and the allocation of Ireland's share of Structural and Cohesion funds will be completed in Brussels. The outcomes will have long-term implications for the future of traditional farming and the development of modern Ireland. EU Farm Commissioner Mr Franz Fischler is insisting on the need for the full implementation of his price reform package, involving a reduction of 30 per cent in beef, 20 per cent in cereals and 15 per cent in milk over a six-year period under the Agenda 2000 negotiations. At the same time, the compensatory direct payments to farmers in response to these cuts will not cover the shortfall. All of this will have profound implications for Irish agriculture and, perhaps also, for the Exchequer in the next decade, as Mr Con Lucey of the IFA writes in today's editions of this newspaper.
Mr Fischler argues that buoyant world market prices will bridge the income gap but, even allowing that his assessment is correct, farmers can only look forward to a static standard of living. In the light of falling farm incomes and the difficulties currently being generated by an acute fodder shortage, the reforms are understandably unpopular. Mr Fischler argues, with considerable justification, that they are necessary if world markets are to remain open to Irish products after the next round of negotiations involving the World Trade Organisation. And he points to the fact that this State exports 80 per cent of its agricultural produce.
The Government and farm organisations have pledged themselves to modify the proposed reforms, both in terms of reducing the severity of the cuts and increasing compensation payments. But even they recognise that change is inevitable, arising from the move towards EU enlargement and world market pressures. Mr Oskar Lafontaine, the German Finance Minister and president of the EU finance ministers' council, underlined the scale of the difficulty facing this State after last night's ECOFIN meeting: "There has got to be a stabilisation of (farm) expenditure", he said.
But reform of agriculture and of agribusiness should not flow only from EU demands for reduced spending on the Common Agricultural Policy. As an open, trading economy, we should adopt the same long-term approach to agriculture as we did to industry. Our climate normally gives us an edge on our competitors in the dairying, beef and sheep sectors. And if the fodder crisis has taught us anything, it is that the system was seriously overstocked and that the quality of livestock and of husbandry needs to be improved.
A Government-sponsored report on the food industry has argued, once again, that the heavy reliance on commodity products must be reduced in favour of added-value products and food ingredients. As its contribution to negotiations on Agenda 2000, it seeks £450 million in public funding of the industry as part of an overall investment of £1.6 billion - the bulk of it to come from the EU. Given the level of funding achieved under the last tranche of structural funds, the programme appears to be overly ambitious. But it points in the right direction when it rejects our stifling over-dependence on EU intervention in favour of a market-led approach.