Nitrates but no export refund
That committed the Government and farmers to together spend €1 billion on protecting water quality from farm animals - animals which will probably be halved in number, at least, over the next five years.
Farmers had been living in hopes the EU would resist pressures on the Common Agricultural Policy. They were coping as best they could with decoupling, but the declining terms of trade were too much for many Irish tillage farmers, who cut their grain production by a massive 28% in 2005, compared to 2004.
It was a hard year too for dairy farmers, with about four every day continuing to cease milk production. Cattle farmers needed foot and mouth to hit Brazil, the world’s No 1 beef exporter, to salvage some profits for 2005.
But it all got much worse faraway in Hong Kong last Sunday, with confirmation of the long feared end of export refunds.
Although worth only €3.7bn of the annual €44bn CAP expenditure, export refunds are more important for Irish farmers than most, enabling dairy exports to 76 non-EU countries and beef exports of up to 83,000 tonnes per year going to Russia alone.
In 1999, about 60% of our beef trade was export refunded; it’s much less now, but was still 35% in 2004, and ending export refunds by 2013 could be the last straw to squeeze out thousands of farmers who are already only wasting their Single Payments by keeping cattle. Those who make their living from exporting about 7,000 Irish cattle per year outside the EU knew their fate quickly this week, when Mariann Fischer Boel, the EU Commissioner for Agriculture and Rural Development, said she wants to follow up the WTO deal by immediately eliminating refunds for all EU exports of live cattle.
Fischer Boel had warned farmers earlier this year that export subsidies would be gone, and barriers against imports would also lowered, within 10 or 20 years. Her prediction will come true if other countries settle for the EU’s take-it-or-leave-it offer of 46% off import tariffs next spring.
Fischer Boel said the way forward for farms was to supply the safe food with excellent taste demanded by wealthier populations. She is asking farmers to gamble everything on the chance that EU consumers will pay over the odds for EU produce, and turn their backs on much cheaper produce which can be imported from countries where wages and other farming costs are a fraction of those in the EU.
Not only are Irish farmers being asked to take that big gamble; they must spend at least €500 million first to even get in the game, in the form of investment to stop pollution from farms damaging our water quality.
That’s the Nitrates Directive demand. It first surfaced in 1991, but the Government has only got around to it now, after some arm-twisting by the European Commission.
They couldn’t have picked a worse time, just as the Common Agricultural Policy starts coming apart.
But at least the decoupling agreement and the Single Payment has given farmers the option of backing out, mothballing the fields and sheds, and taking the Single Payment - the option which many tillage farmers have taken, resulting in our 28% slump in grain production.
IFA predicts that an eventual WTO deal will squeeze out 20% of Irish beef production, 18% of milk, 12% of pigs and poultry, and 22% of Irish sheep production. If they are even half right, many will forego anti-pollution measures in the next two or three years, and take the armchair route out of farming.
