CAP reform leaves farmers divided

By Ray Ryan FARMER opinion on the impact of CAP reform on their future income is divided according to the results of a Teagasc survey.

The study was carried out among a representative sample of 1,200 farmers involved in the Teagasc National Farm Survey.

It revealed that 42% feel the decoupling of farm payments from production will have no impact on their income. Some 40% expect their income to decline while 10% expect an increase.

Dairy farmers are most pessimistic about their prospects, with almost two-thirds indicating they expect the recent EU agreement to result in a drop in income. Liam Connolly, head of the Teagasc National Farm Survey, said it showed over 70% of farmers were familiar or very familiar with the concept of the decoupled system of payments which comes into effect in 2005. Some 28% said they were not familiar with the system.

Sheep and dairy farmers had the highest level of awareness. However, the survey also showed a widespread lack of knowledge across all sectors of farming about how the new regime will operate at farm level.

Despite divided opinion on the impact of the reforms on income, the vast majority of farmers fully supported the new policy direction.

Some 85% of those surveyed said they were in favour of complete decoupling of payments from production. The survey also pointed to an accelerated decline in the number of dairy farmers. Around 15% said they would exit milk production over the next two years. A further 32% said they would exit over the following three to 10 years.

This is in line with earlier analysis by Teagasc economists, which projected a drop in the number of dairy farmers from 26,500 at present to 18,000 by 2012.

However, dairy farmers intending to remain in production plan a substantial increase in the size of their business. The survey showed that three out of five dairy farmers intend to increase their herd size by an average of 20 cows.

In beef production, the survey indicated that almost 50% of producers plan to retain their existing stock numbers. Around 10% plan to increase numbers while almost 40% said they would reduce numbers. The overall drop in beef numbers would be around 10%.

The results indicated a drop in sheep numbers. The largest decline will be in hill sheep, where farmers say they will reduce numbers by 40%. While the top 10% of lowland producers plan to increase their flock size, total sheep on the lowlands are expected to fall by 6%, resulting in an overall drop of 11% in the national sheep flock.

Farmers were also asked for their views on the impact of the reforms on expenditure on farm inputs.

Over half felt their expenditure would not change, while 40% said they would purchase less after the new policies were introduced. Just 3% said their expenditure on inputs would increase.

Farmers were also questioned on their investment plans for 2004. The results indicated a planned investment of almost 300m by farmers next year.

Planned investment in machinery and buildings is down by 9% and 23% respectively while investment in milk quota is expected to double.

“It should be noted that farmers always understate their planned investment. While the previous survey showed a planned investment of 290m, actual investment in 2003 was almost 500m,” Mr Connolly said.

"While farmers stated that they would spend 70m on machinery last year, actual investment exceeded 180m," said Liam Connolly.

Meanwhile, the Department of Agriculture and Food has begun work on establishing the entitlements for every individual farmer in the country. However, Agriculture Minister Joe Walsh said it will not be possible to finalise this work until such time as the European Commission’s detailed rules are fully agreed. This is unlikely to be done before April.

An advertisement was recently published inviting Farmers who feel that their farming enterprise during the reference period was adversely affected by force majeure or exceptional circumstances were recently invited to apply to the Department to have their case considered. Application forms are available at all local offices of the Department. Farmers who apply for force majeure and are not satisfied with the Department’s decision can have their case determined by an independent appeals mechanism.