Threat to Coveney’s convergence
The Ballingeary, Co Cork farmer predicts that SFP applicants will take full advantage of the window for entitlements trading before mid-May, in order to improve their positions prior to convergence starting in 2015.
He expects a lot of trading because, for example, a 100-hectares farmer with entitlement value of €1,000 per hectare could lose €156,000 of payments over the next six years to convergence — unless he ‘cashes in’ some entitlements, by trading them.
At the other end of the scale, a farmer with a 2013 entitlement value of €100 per hectare could boost that to €250 per hectare in 2019, by purchasing 40 € 200 entitlements.
However, if farmers engage in wholesale trading of entitlements, Minister Coveney’s convergence plan to shift more than €100m in annual payments from those who hold high-value entitlements to those with zero to low entitlements could be affected — because trading could radically alter the 2012 distribution of entitlements on which the plan is based.
The convergence model is designed to achieve gradual, phased redistribution of payments.
However, O’Sullivan says there is a danger that wholesale selling at the high-value end, and wholesale buying at €100 per hectare, could leave Minister Coveney without enough entitlements to distribute to thousands of marginal farmers with entitlements of less than €100 per hectare.
O’Sullivan says one way to avert this is to allow trading of entitlements only through the Department of Agriculture, and only at face value. This could also open the way for the minister to supply more entitlements to those most in need, such as young farmers and start-ups, while ensuring convergence works as expected.
Inducements to traders could be incorporated, through the VAT or capital gains tax systems.
The independent local election candidate fears that ‘disappearance’ of leased entitlements, plus trading, could leave a hole of up to €200m per year in the CAP reform plans.
