CAP reforms can help to future proof our Co-ops

CAP reforms can help to future proof our Co-ops

By Martin Keane

The leaders of Ireland’s co-operatives, including dairy processors and national livestock marts, will gather at UCC tomorrow to discuss strategies for the future success of our industry in an increasingly competitive global environment.

The 41st ICOS National Conference will investigate the policy environment likely to influence future global conditions. It will also examine the measures we can take to grow and develop our businesses to ensure long-term, sustainable growth and development.

Very significant investments have been made in the future processing capabilities of our industry. Producers have contributed strongly to that, including investment and expanded production. The signals in surveys from various dairy co-operatives are all positive with a continuing growth in milk output anticipated. Co-ops have robust and strategic plans in place to deal with this combined challenge and opportunity.

In order to achieve success, we need a supportive framework in which to operate and that is why the currently proposed CAP reforms are crucially important, albeit with some caveats.

The EU Commission’s communication on the “Future of Food and Farming” sets out proposals for a range of CAP reforms post-2020. It aims to provide direction as to how the CAP should evolve to meet emerging challenges for European agriculture. It outlines a less prescriptive approach and greater subsidiarity at Member State level to make the CAP more relevant and practical.

Irish farmers and co-operatives are facing unprecedented challenges in the coming years as a result of Brexit, climate change and global market volatility. Under any CAP reforms, market supports and risk management measures will be necessary to protect against this volatility.

It’s essential for the CAP proposals to be supported with sufficient financing and strong and effective market support and risk management tools. This will provide much needed stability and will enable farmers to meet the outlined goals, including ambitious environmental targets. Income stabilisation tools will also help to address volatility, allowing farmers to defer a small proportion of their income in a good year and draw it down in a bad one. Seasonality is also a key issue that must be addressed to stabilise market prices throughout the year.

The CAP can also help promote the development of a European futures market. This would be a key tool that co-operatives could use to manage volatility through financial hedging. To achieve this, its use needs to be encouraged and training and advisory services provided for co-operatives so that they can effectively use it as a risk management tool.

We also welcome the focus on trade within the CAP and the commitment to promote EU food quality and standards worldwide. This will help to improve market access for EU products globally and will be critical to overcome the challenges posed to the Irish agri-food sector by Brexit.

The potential for increased national flexibility within the proposals will allow us to better address local issues, particularly within environmental schemes. With a strong and controlled EU framework, we can avoid any potential distortion to competition or the functioning of the single market.

However, ICOS opposes mandatory capping and degressive direct support payments. Decoupled direct payments are the main tool that farmers have at their disposal to support and stabilise farm income. Capping and degressive payments would only serve to reduce income for active farmers, who are in most need of this support.

The recent CAP Communication highlights the effective role which producer organisations can have in strengthening the position of farmers in the food supply chain.

Co-operatives are the most effective form of producer organisation. They integrate the role of producer, processor and the marketer, helping to rebalance the food chain, bringing viable incomes to their members and offering a level of protection from volatility. Therefore, we call on the Commission to encourage, promote and protect the role of co-operatives within the upcoming policy reforms.

Martin Keane is president of the Irish Co-operative Organisation Society (ICOS).

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