Farmers fear EU proposals will erode incomes
It is expected to include decoupling the separation of farm subsidy payments from production and some form of modulation diverting a percentage of farm subsidies, possibly to rural development.
The radical changes to the Common Agricultural Policy would drastically alter the way Europe's eight million farmers go about their business.
But the moves are likely to provoke furious debate that will not be confined to the EU but will extend across the frontiers of world trade.
Most of the Irish farm lobby fear the proposals will adversely impact on their members through production cuts, especially in beef, and knock-on effects on the rural economy.
But the package is also likely to include some enticements for the country's 130,000 farmers including greater transparency and less of the EU's bewildering red tape.
The CAP was created some 40 years ago to encourage a constant supply of home-produced food in post-war Europe by providing farm price supports.
By the early 1990s, Europe's consumers had a constant supply of high-quality food at reasonable prices and its farmers were so successful they had become significant food exporters on world markets.
The average Irish farmer, for example, produced enough food to feed seven people in the early 1950s. By the 1990s, he was producing enough to feed 50 people.
Prior to 1992, farm product prices were supported through price and market support mechanisms, such as the removal of surplus product off the market and restricting imports from outside the EU.
In 1992, the method of supporting EU agriculture was changed with reforms of the CAP and ongoing free trade pressures.
European farmers were asked to produce less, get paid less for what they produce, import more food from outside the community and in return receive direct compensatory payments from the EU.
In addition, quotas on the production of most farm produce were introduced over the years to curtail production and balance market demands.
Direct payments to Irish farmers, which totalled €1.6 billion last year, are seen as being crucial to their economic survival as food producers.
The "cheques in the post" are also vital to the well being of rural Ireland, where the money is spent, and where the agri-food industry supports over 340,000 jobs.
But the CAP, with its direct payments system as a cornerstone, has come under pressure as the EU expands and world trade talks resume.
Critics of the system, which this year will gobble up almost €45 billion, nearly half the entire EU budget, say it distorts world trade and helps to keep people poor in the developing world by subsidising European farmers.
But supporters maintain it has helped protect farmers in Europe from the most severe fluctuations in supply and prices and has provided quality food to consumers.
Europe today, however, is more concerned about food safety, animal welfare and the environment than food shortages, which was the case when the EU set up the CAP.
Against this background, Dr Fischler, a wily Austrian, is set to embark on his farmyard revolution, which is expected to represent a whole shift in philosophy.
It is also geared towards putting the EU on the high moral ground in world trade talks, particularly with the US, which spends billions each year in domestic farm subsidies.
Dr Fischler's proposals are expected to cut the link between direct payments to farmers and production levels, which CAP critics argue has encouraged wasteful over-production.
Leaks suggest that a single annual payment that each farmer would receive in future would be linked to good environmental and other practices.
The payment would be related to past income in an historical reference period, which some sources believe will be 2000, 2001 and 2002.
Agriculture Minister Joe Walsh yesterday launched a study by the FAPRI-Ireland Partnership, which includes Teagasc and universities, on the likely impact on Irish agriculture of decoupling direct payments.
The study, which the Minister requested, said Irish beef and sheep production would be likely to decline by 12% by 2010 as a result of a reduction in suckler cow and ewe numbers.
Cattle prices would fall by 8% next year and 5% by 2005 as suckler cows are destocked but would then recover at a lower level of production and would be 8% above the baseline by 2010.
Sheep prices would fall by 15% initially, but would then recover and would be 21% above the baseline in seven years time.
Ireland's suckler cow herd would decline by 30% and although beef exports would fall by 12% by 2010, the study predicts there would be more likelihood of finding EU markets.
Cereal production would fall by around 4% but there would be minimal effect on prices.
Aggregate farm income (operating surplus) would decline initially (by 5% in 2004 and 3% in 2005) but would then recover to reach 11% above the baseline by 2010.
Dr Fischler firmly believes his reform proposals will benefit both farmers and consumers. But his task will not be easy.
For a combination of European farm lobby fury and governments protecting their own interests will ensure months of tough negotiations in Brussels.
