An unpredictable experiment
There will be more string pulling in Brussels, and Ireland could bear the brunt of the effects, because agriculture is still relatively important here, with the countryside depending on a lot of small farms.
A far-seeing report issued last week warned that the very least which Ireland should demand from Brussels is a measured pace of movement towards an alternative EU farm policy, to ensure that Ireland's regions are not disadvantaged.
Our Government should heed that warning in John O'Connell of UCD's assessment of the CAP Reform for the Irish Banking Review.
He makes it clear that the CAP will become more and more a social policy from next January, and that its success will be assessed on the basis of farm household income trends which is very different from farm income.
Whereas farm income has been declining, the total income in Irish farm households has increased hardly surprising when one considers that two out of every three Irish farm households have acquired some off-farm income source, whether from off-farm employment, pension or social assistance.
As a result, farm households now have an better disposable income than other rural households, better than the "average" Irish household, but still slightly less than that of urban households.
The implications of that are clear, when farmers start getting EU money next year which is not tied to production from animals or crops. EU taxpayers will increasingly ask why relatively well off households get financial handouts.
Perhaps the fear of taxpayer kickbacks is why Brussels has not included provision for index linked inflation proofing of farmers' future entitlements.
Meanwhile, EU farmers will also come under attack from low-priced food imports from the rest of the world, as the EU is forced by the World Trade Organisation to remove protective trade barriers.
John O'Connell's assessment of the new look CAP questions the hidden agenda in Brussels and raises the possibility of EU bureaucrats planning to fully expose EU agriculture to world competition even though that would put European farms up against farms in South America, Australia, New Zealand, and North America which have hugely more favourable scale and cost structures.
Could Irish farming thrive in such a scenario? The verdict is negative in this report's welcome attempt to predict our farmers' uncertain future.
It agrees with the widely held view that suckler farmers, dairy farmers and others who did not receive premia on their animals will lose out from next January.
It also highlights the policy conflict whereby farmers are forced to hold onto their base acreage to fully draw down EU payments thus curtailing the land market, even while policy changes force farmers to acquire extra land and scale up for economic survival.
And the point is made that the CAP Reform does nothing to change the extreme westerly island location of Ireland, the economics of seasonal milk production in Ireland, nor the challenge for Irish processors in trying to break into continental EU markets.
