Bord Snip blow to farming
That made it easier for the group to propose cuts in some of the subsidies which keep farmers in place, supplying raw material to the food industry.
Farming of itself barely contributes any personal income, it is subsidies that keep farmers producing the raw material which is turned into, for example, more than €8 billion of exports, in an industry which makes up 8.5% of the economy.
The special group on public service numbers and expenditure programmes – Snip Nua’s official title– proposed to cut €190m per year of subsidies paid by our exchequer to farmers, even though €146m of that is more than matched euro for euro by the EU – so the total loss to farmers would be €368m per year.
The group proposed the closure of REPS 4, which will save €80m per year (which would have been matched by €98m of EU funding, providing €178m for environmental protection). The recommended 30% cut in disadvantaged area expenditure will save Ireland €66m per year (which would have been matched by €81m of EU funding, providing €147m to keep farmers on the land in our most disadvantaged areas).
It seems the group ignored Agriculture Minister Brendan Smith’s claims that the agri-food sector remains one of our most important sectors, accounting for over 6.6% of gross value added, and 8.5% of employment.
High expenditure on local raw material and services ensures that the agri-food sector will play an integral part in economic recovery and rural and coastal viability, according to Mr Smith.
Perhaps the group believes the agri-food sector can rely on imported raw material, to help what Minister Brendan Smith calls the wider ‘‘bio-sector’’ continue bringing in one-third of Irelands’s net flow of funds from primary and manufacturing industries.
But why did Mr Smith close REPS, a few days before Bord Snip Nua came up with the same idea? His REPS cut will make it harder for farmers to repay loans. Any part-time farmers, who have lost jobs will also find it hard to bear the cut. Some farmers had come to rely heavily on REPS for income, even though it is not an income scheme. These farmers had already been hit by Minister Smith’s 4% cut in disadvantaged area payments, and halving of the suckler cow scheme.
The progress of many farm families had been halted by Mr Smith’s suspension of the EU co-funded early retirement and young farmer installation schemes.
Farm cash flow had been seriously damaged by his Government’s inability to honour its farm waste management scheme commitments.
He is forcing farmers to cut production. Expansion of farming activity to make up for lost subsidies is out of the question, due to historically low prices for farm produce, and unavailability of credit. Farmers will cut back, rather than risk losing more money in farming activity.
Mr Smith is putting in place the conditions for a further output slump in the agricultural sector. That will cut the Government’s tax take even further.
More farmers will have to apply to the farm assist scheme, which will pay them €204 per week if they pass a means test.
They will go from being productive farmers, relying, for example, on a 55% EU-funded REPS payment of about €5,500, to an additional €10,000 burden on the exchequer. This will add to Government spending, widening the €11 billion per year over-spend by the Government, compared to what it takes in.
Surely there are better areas to cut spending than schemes co-funded by the EU, which keep productive farmers in place? It’s easy to cut; what is difficult is to decide where best to cut.
The Snip Nua proposals coming on top of Mr Smith’s cuts will discourage even the most resilient farmers. Snip Nua recommend scrapping the suckler cow scheme to save €44m per year (including carbon credits which Snip Nua says Ireland would have to buy, to offset carbon dioxide emissions from extra cattle).
The suckler cow scheme (funded entirely from our own exchequer) is designed to improve our beef industry and add to its annual exports of €2.58 billion. Without it, the Irish agri-food industry will trail further behind in the cut-throat competition of the EU food sector, and would also be damaged by the recommended cuts to Teagasc advisory, training and research, and weakening of Bord Bia’s dedicated marketing and promotion work.
Snip Nua also recommends that disease levies be increased and eradication savings be made, for example, by cutting reactor compensation to 75% of market value.
There were plenty of areas where the Snip Nua group found easy pickings. The savings of over €5bn were not so difficult, when one considers, for example, that our public service spends €17bn every year on goods and services.
But when it encountered the handful of measures which help to maintain Irish farm production, the group should have spared the axe.
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