Radical changes will shape future of farming

IT was a landmark year for agriculture in Ireland and across the EU with decisions taken that will shape the future structure of farming for the early part of this century.

The most significant event was the culmination in June of the year-long negotiations on the mid-term review of the Common Agricultural Policy (CAP).

Agreement reached by the EU marked the most radical change to the CAP since it was formulated over 40 years ago.

The agreed reforms aim to ensure the CAP is firmly based on the principles of market orientation, sustainability and environmental awareness.

In a wide-ranging review of the year, Agriculture and Food Minister Joe Walsh said the outcome of the negotiations was very satisfactory for Ireland with the achievement of significant improvements to the original proposals.

The minister, following a lengthy consultative process, exercised discretion under the Luxembourg Agreement and decided in October that all direct payments for cattle, sheep and arable crops will be decoupled from production in Ireland as and from January 1, 2005.

Ireland was the first member State to decide on the new support arrangements. The decision was taken following consideration of 200 submissions received under the public consultative process as well as detailed economic analysis by FAPRI.

Mr Walsh said the early decision will allow farmers the opportunity to plan ahead with certainty as well as enabling the administrative arrangements for the changeover to a new single farm payment system to be completed.

"The new system, apart from reducing bureaucracy, will provide a better basis for a competitive agriculture and food industry than a system which required farmers to take farming decisions based on eligibility for premia," he said.

The year began, however, with IFA president John Dillon leading a countrywide tractorcade which began in Bantry, Co Cork, and ended five days later outside Government Buildings in Dublin. The aim was to highlight low farm incomes.

As the year progressed, fine weather helped farm work, and incomes stabilised with a 2.2% aggregate increase predicted.

Mr Walsh said improvements in some sectors, beef and cereals, were offset, however, by reduced output price for other commodities.

An increase in cattle slaughterings and exports led to a 5.5% rise in the output value of the sector. But the pick-up on international markets for milk commodities was not reflected in producer prices, although volumes did increase leading to a slight improvement for the dairy sector up 0.6%.

Mr Walsh said the good harvest combined with substantial price increases resulted in a much better year for cereals producers output value went up by 23%. Volume and price declines reduced the value of the pigs sector by 9% while output value of sheep fell by 6%, mainly as a result of reduced slaughterings.

The past year saw a dramatic decline in the numbers of BSE cases with the age profile of infected animals continuing to be positive. Up to last weekend, there were 184 cases compared with 333 cases in 2002 (a 44% reduction).

Mr Walsh said the vast majority of cases were in animals born prior to 1996 (eight-year-old cases) and only two cases were in cattle less than seven years. On this basis, it is expected that case numbers will decline to less than 100 in 2004.

"At the same time, and given the uncertainty in relation to BSE, the possibility of some cases in younger animals cannot be excluded," he said.

Dealing with sectoral issues, Mr Walsh said that for the first time since the BSE crisis, the EU beef market has returned to balance with consumption at 7.3m tonnes projected to exceed production by some 140,000 tonnes this year.

In 2004, the import requirement will rise to 210,000 tonnes.

Over the past 18 months close on 250,000 tonnes of intervention beef have been sold onto the EU market and absorbed without causing any trade distortion.

The recovery in consumption indicates that the market is likely to stabilise at firm levels in the next few years.

Mr Walsh recalled that in 2002 Ireland exported a total of 445,000 tonnes of which 245,000 tonnes went to Britain and 110,000 tonnes to the EU.

Penetration of these market outlets in 2003 is estimated at 260,000 tonnes for Britain and 145,000 tonnes for the EU, a rise of 6% and 3% respectively.

Russia continues to be our main non-EU country export market with 83,000 tonnes exported in 2002 with similar levels (80,000 tonnes) expected in 2003.

* Saturday Teagasc review and outlook.