Beef and sheep farmers to gain most from CAP reform, study finds

Beef and sheep producers are most likely to benefit from the reform of the Common Agricultural Policy, a new study by Teagasc has revealed.

The analysis also points to important issues that need consideration in making decisions on how the reform is implemented in Ireland.

EU member states were left with a series of choices in terms of how the reform would be implemented.

The Department of Agriculture has yet to announce the details of how the new CAP will operate in Ireland and has canvassed the views of stakeholders in advance of reaching its decision.

Teagasc has submitted a detailed economic analysis of the implications of the various payment models for farmers in Ireland.

Under the reform, Ireland’s total take from the CAP will fall slightly but there is also a requirement that the Government make changes about how the Basic Payment Scheme (BPS), the main support farmers will receive under the new policy, is distributed.

Teagasc said the end result will mean that some farmers will be better off, while others will lose out.

Currently, Ireland operates the so-called historical payment model, which means a farmer’s Single Farm Payment (SFP) is calculated based on the amount produced in the 2000 to 2002 period.

The payment is made to farmers on a per-hectare basis and the amount received per hectare varies from one farm to the next.

However, from 2015, under the reformed CAP, Ireland is required to move away from this historical model and payments will be redistributed to reduce the disparity that exists from one farm to another.

The reform has specified a minimum and maximum range of redistribution, meaning that the final level of redistribution must be decided by government.

As the budget available is fixed, a gain in direct income support for one farmer is necessarily associated with a loss in direct income support for another.

The Teagasc analysis shows that a greater number of farmers would see an income rise if the maximum redistribution is selected.

However, Dr Kevin Hanrahan, Teagasc economist, one of the main authors of the report, said agricultural output could fall if the redistribution of income support is applied to the maximum extent, as the farmers who would lose out account for the bulk of agricultural output in Ireland.

CAP reform includes the possibility of targeting support to certain agricultural activities via the reintroduction of so-called coupled payments.

While this could mean economic benefits for beef and sheep farmers, Dr Thia Hennessy, one of the authors of the report, said: “Coupling can only be funded by reducing the monies available to fund other CAP supports and in many cases this means that the net benefit of coupling to the farmer is far less than the face value of the payment.”


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