Full decoupling of payments welcomed
The decision to decouple supports from production and replace them with a single farm payment represents a radical policy change under the Common Agricultural Policy (CAP).
It will have a major impact on the country’s 140,000 farmers and on the food processing industry, which has gross output of over €14 billion, exports of nearly €7 billion and 50,000 employees.
The decision to fully decouple payments from January 1, 2005, follows the EU’s reform of the CAP, which gave member States full or partial decoupling options.
Studies by the FAPRI Ireland economic analysis unit concluded that full decoupling was the best available policy option for Ireland.
Teagasc economists attached to FAPRI said that when combined with agri-trade policy changes it would lead to a 10% increase in aggregate farm income in 2012, compared to what would occur under current policies.
The analysis also predicted that the number of dairy farmers would decline from over 26,000 at present to 18,000 in the same nine year period. Mr Walsh said he had carefully considered some 200 submissions and studied the outcome of the independent research he had commissioned from FAPRI Ireland.
He was also mindful of the overwhelming weight of opinion in favour of full decoupling among individual farmers whom he had met or who had attended information seminars held by his department countrywide in recent weeks.
In the final analysis, he said he had based his decision on what he saw as the best interests of Irish agriculture and the development of a sustainable, market orientated agri-food sector.
Mr Walsh said farmers will now be free to focus more sharply on the market and the demands of the final consumer. This provides a better basis for a competitive agriculture and food industry than a system which required farmers to take farming decisions based on eligibility for premia.
Under the new regime, the food industry will be provided with better opportunities to source quality raw material. Better market orientation of primary production should assist food processors in developing and supplying quality markets.
The level of bureaucracy for both farmers and the department would be significantly reduced. Full decouplng would also lead to a substantial reduction in the contribution by agriculture to greenhouse gas emissions from Ireland.
While some reduction in production can be expected under full decoupling, the minister said he was satisfied the resulting increase in prices and reduced input costs would lead to an aggregate increase in farm incomes.
IFA president John Dillon said the minister’s early decision will remove uncertainty and allow farmers plan for the future. It was in line with a groundswell of farmer opinion.
ICSA vice-president Joe Kilmartin said the minister had made the right decision.
Macra na Feirme president Thomas Honner said the decision had the potential to change the face of agriculture.
