Agriculture Minister Michael Creed has said it is very clear that EU member states do not favour co-financing of Pillar 1 direct payments, writes Stephen Cadogan.
In Ireland, these payments typically account for 75% of a farm’s income, and the European Commission has hinted they may no longer be 100% financed by the EU budget, with national co-financing from 2020 suggested.
According to CAP expert Alan Matthews, co-financing was explicitly ruled out in a leaked draft from the Commission, but explicit rejection was removed from the final version communication issued by Phil Hogan at the end of November, so that it may still be in play in EU budget discussions.
National co-financing of Pillar 1 expenditure is also strongly opposed by farm organisations and various political groups.
National co-financing “would be a retrograde step which could undermine the Single Market and lead to nationalisation of agricultural policy,” said Minister Creed, in his recent speech to the ‘Cap sur la Pac’ Conference at the OECD in Paris.
“The communication proposes better targeting of direct payments through exploring a variety of options, including capping”, he said.
Any policy to reduce caps on payments to farmers should be voluntary, he said.
Mr Creed said the common narrative of 80% of payments to 20% of farms is emotive, and can be damaging to the reputation of the CAP, but member states are best positioned to assess the reality on the ground.
Any increased environmental ambition in the CAP must not lead to increased complexity, he told the Paris meeting.
“The key challenge for the CAP post-2020 will be to facilitate an increase in food production levels by up to 70% by 2050, in order to meet the requirements of a growing global population, while at the same time, facilitating adaptation to climate change mitigation strategies.
“ Put simply, CAP must continue to assist farmers in producing more food in a sustainable manner.
“Extreme market volatility is an increasing factor in managing farm enterprises.
“It is critically important that we have a flexible toolbox to deal with issues as they arise and to provide an effective safety net.
“Existing EU instruments can still make a vital contribution. Instruments such as intervention and the new more flexible exceptional measures provided for under the Common Market Organisation Regulation have proven their worth. They must be retained as options.
Mr Creed said the possibility of supporting income stability instruments, insurance, and mutual funds must also be explored.
“There should also be an increasing role for the private sector in managing risk. In Ireland, our dairy co-operatives have developed new instruments, including fixed milk price contracts and fixed margin schemes.
While the challenges are different, I would like to see other sectors make an effort to insulate suppliers from price volatility in this way.”