All to play for as battle over CAP funds escalates

These coming weeks will see something of a battle playing out in the corridors of power, both at home and in Brussels.

The reduced CAP budget or MFF (Multiannual Financial Framework) will be pored over and fought over to determine the who, what, when and where of the distribution of monies.

One key aspect of the upcoming horse-trading is in relation to the allocation of money between Pillar 1 (direct payments or subsidies) and Pillar 2 (rural development and agri-environment/ organic). The structure of the new CAP allows for the transfer of up to 15% of funds between Pillars 1 and 2. This transfer will be left up to member states and can go either way, so money can be moved from Pillar 1 to 2 and vice versa.

There is a strong case to support the transfer of funds from Pillar 1 to Pillar 2. A recent study by employment research consultancy, GHK, showed that investments in organic farming and agri-environment schemes have the potential to create up to three times more jobs than the equivalent investment in direct or Pillar 1 payments.

Certainly, with the benefits to the environment and rural communities, it is much easier to justify this kind of sustainable investment to the European taxpayers who will fund the CAP.

The possibility of money being taken from Pillar 2 and used in Pillar 1 to fund, for example, a coupled suckler cow payment, is unthinkable. Aside from depriving rural economies of much needed funding for rural development, the value for money that would be achieved by such a move is questionable.

While some farmers might take the view that a coupled suckler cow payment would be a welcome financial boost to a low margin enterprise, the biggest beneficiary of such a coupled payment would be the meat factories and large processors. Coupled payments represent a distortion to normal functioning markets.

Given the current economic climate, many of the biggest opportunities in Irish agriculture lie in diversifying our production. Imports of fruit and vegetables totalled over €950m in 2011.

Of course, we are a small island that depends on our food exports and we must remain open and outward looking, but even the most ardent of free-market ideologists would agree that importing potatoes and other staple vegetables into Ireland is akin to importing coal to Newcastle.

Rather than propping up a very large, and largely unprofitable (for farmers) sector of Irish agriculture, our Government must actively encourage greater diversity in farm production. Coupled payments to livestock farmers would be the antithesis of this.

Another important aspect of upcoming CAP negotiations is the level of co-financing available for Pillar 2 schemes. Co-financing rates of at least 75% would ensure the ability of national governments to strongly support rural development, organic and agri-environment schemes. This is the sort of sustainable investment that should be made in Irish agriculture.

* Organic Trust is an independent organic certification body for Irish-produced organic products