Walsh hopes decoupling will reduce paperwork
In Ireland, Minister Joe Walsh hopes the result will reduce the paperwork associated with direct payments, and about which farmers have been extremely critical, and provide new opportunities for Irish farmers to respond to market demands.
A member states can fully decouple all payments. The French government says it will adopt the minimum amount of decoupled farm aid, of 75%.
Some of the other options which the Irish Government and farmer will consider include up to 100% coupling of the suckler cow premium (SCP), up to 100% coupling of the slaughter premium, and up to 75% coupling of the Special Beef Premium restrictions.
If the SCP is fully coupled, up to 40% of the Slaughter Premium may be retained coupled.
The sheep premium, and the supplementary ewe premium, may now be either fully or 50% decoupled.
Furthermore, payments up to 10% of a Member State’s direct payments may be allowed for the purpose of encouraging specific types of farming, which will give a welcome level of flexibility.
How each member state chooses from decoupling options will determine the EU stance in the forthcoming WTO negotiations.
Decoupled direct payments qualify as domestic support which has “no or at most minimal trade-distorting effects or effects on production”.
This places them in the so-called WTO Green Box, protecting them from challenge in the WTO negotiations.
Minister Joe Walsh said he intends to keep the decoupling arrangements under close review; last week’s Luxembourg agreement for a review by the European Commission of the operation of the new arrangements after two years.
The decoupled single farm payment (SFP) wil be linked to the respect of environmental, food safety, animal health and welfare standards, as well as requirements to keep all farmland in good condition (“cross-compliance”).
Modulation: Almost half of Ireland’s farmers will have modulation applied to them. Those earning more than €5,000 of direct payments per year will have 3% deducted in 2005, rising to 5% in 2007.
Minister Walsh said Ireland will retain more than €34m per annum of the €40m which will be raised through modulation.
This money goes to a fund for developing the countryside. (Generally, 80% of rural development money can remain in the member state where it was generated).
Milk: The milk quota regime has been extended seven years, to 2014/15, but the dairy reform is brought forward one year, to start in 2004.
In addition to a 15% cut in dairy intervention support agreed in Agenda 2000, a 4% cut was agreed in Luxembourg, for which farmers will be compensated at the rate of 80%.
Losses to the Irish dairy sector from the net effect of the 4% intervention price reduction and the increase in the dairy cow premium amount to less than €14m a year, says Minister Walsh.
But the combination with the Agenda 2000 agreement means that the intervention price for butter will be reduced by 25% over four years and for skimmed milk powder by 15% over three years.
The intervention limits for butter were agreed at 70,000 tonnes per year, reducing over five years to 30,000 tonnes.
The new dairy cow premium will not be decoupled until the reform in the sector is completed, thereby favouring active producers.
Arable aid: Member states can opt for 75% to 100% of cereals payments to be divorced from production.
It was agreed to leave the intervention price for cereals unchanged, but the monthly increments subsidy to fund storage is reduced by 50%.
The arrangements on set-aside are more workable in the Irish situation and allow further set-aside obligations as market needs arise, said Minister Walsh.
Young Farmers: The maximum support for young farmers undertaking investments within five years of setting up has been increased to 60% in less favoured areas and to 50% in other areas.
Flexibility has been built in to create a national reserve.
