Future aid likely to depend on fixing sector's flaws

Future aid likely to depend on fixing sector's flaws

Farmers are to be offered compensation for losses incurred when they sold beef animals for slaughter from September 24 to May 12.

Farmers with suckler cows that calved in 2018 are eligible for compensation also.

This follows the Government’s submission last April to the European Commission for exceptional aid for ongoing market disturbance, which reduced the value of farmers’ sales from the autumn of 2018 to the spring of 2019, due to a variety of factors including Brexit uncertainty.

However, farmers who avail of the compensation offer must reduce the amount of bovine livestock per hectare by 5%.

It’s an important precedent, which led IFA President Joe Healy to pose the question, “Where’s the compensation for the continued fall in the price of beef cattle of 45c/kg, or €160 per head, since May?”

Farmers must be wondering if the compensation offer will be left in place until the beef market recovers.

But can the market recover? And will farmers have to get rid of another 5% of their cattle, every time farmers they avail of compensation?

However, it’s only a temporary exceptional adjustment aid, according to the Commission’s implementing regulation for its €50m contribution to this scheme.

And if there is more to follow, it will be conditional on solving a number of unique Irish beef problems which the Commission has highlighted.

The Commission noted that Ireland’s beef and veal sector has traditionally been the most fragile agri-food sector, due in particular to restricted market access to non-EU markets, and falling domestic consumption, with the sector’s contribution to greenhouse gas emissions an emerging additional challenge.

It was noted the structure of the industry makes it vulnerable, mainly due to its long life-cycle and high costs linked to extensive production.

These factors have been aggravated by the prospect of Brexit, and uncertainty about future UK  customs tariffs on the 52% of Ireland’s beef it has traditionally imported to its premium priced market.

According to the EU, such problems are more acute for the Irish beef and veal sector, concentrated in small-scale holdings in the poorer regions of the country where alternative types of production are limited, and hugely dependent on exports.

The EU noted Ireland’s extensive production system has slaughter typically at a later age, between 18 and 30 months, which is suited to the requirements of the UK’s beef market, but makes market adjustment particularly slow.

Future aid likely to depend on fixing sector's flaws

Efforts to open new markets continue to be hampered by third country restrictions related to outdated animal health requirements in particular, noted the Commission.

So measures that reinforce the resilience of Irish beef, are needed, in the interest of the market stability of the EU beef and veal sector, including the need to avoid falling prices for Irish beef spilling over to other member states.

With available CAP instruments such as public intervention and private storage aid inadequate to address the needs of the Irish sector, the Commission gave the OK to a financial grant to help Irish farmers enhance their resilience and sustainability, including the adjustment of production to markets other than the UK.

However, the temporary nature of the grant was emphasised. And the aid is conditional, only for measures that reduce production, or restructure the sector, and achieve one or more of the following objectives:

  • Implement quality schemes or projects to promote quality and value added;

  • Boost market diversification;

  • Protect and improve farmers’ environmental, climate and economic sustainability.

    Such requirements reveal the only lines along which the Irish beef sector can proceed, if the worst comes to the worst, and Brexit developments leave the sector at the mercy of compensatory aid allowed by the European Commission.

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