Ireland needs EU allies who share unique combination

Moves in Brussels to reduce money for agriculture in the 2015 budget have predictably been opposed by agriculture and fisheries ministers.

However, heads of state, the European Parliament, and the Commission could have different views when they eventually agree the EU budget for 2015.

For example, what might be the view in Luxembourg, where each farm received, on average, €63,000 in subsidies in 2012, compared to the average per farm in 27 EU member states of €11,500?

It might be felt that Luxembourg farmers could spare a few euro.The view might also be very different in Finland, where farming is seen as something good for consumers, and so it is financed by the taxpayer in return for the non-economic values it provides.

Rural development and direct payments in Finland exceed agricultural value added. This means agriculture adds nothing to the Finland economy, which is one of the net contributors to the EU budget.

So tweaking the money for agriculture in the 2015 EU budget might be a small concern for Finland.

However, it is a big concern for Ireland, where total subsidies are 96% of family farm income, according to analysis by economist Alan Matthews of recently released farm accountancy data for 2012 from the European Commission. His figures show any cut in EU money for agriculture could dip the average Irish farmer into a loss-making situation.

Alan Matthews has worked out that the average dependence of farm income in the EU on subsidies is 58%. But the average hides a wide range of dependency. In Sweden, total subsidies were estimated to be nearly two and a half times the family farm income.

In Italy, total subsidies were estimated to be only about 25% of the family farm income.

Another measure of farmer dependency on the EU budget estimates that current subsidies are only 14% of agricultural value added in the Netherlands, and 22% Denmark and Italy.

At the other end of the scale, countries where total subsidies were close to or greater than family farm income include Latvia (100%), Estonia (112%), Slovenia (156%), and the Czech Republic (177%).

The varying reliance of farms in each member state on public support and subsidies, revealed by Alan Matthews in the blog, points to unpredictable decisions around agriculture funding, and may help to explain why the European Commission proposed to significantly reduce money for agriculture, and divert “spare” CAP money — which came from spending errors and ‘superlevy’ fines — away from agriculture, and towards humanitarian and development aid.

The clear differences across member states in subsidies — whether from national sources or Brussels — explain where such thinking might come from, and points to likely varying reactions from member states.

For Ireland, it points to the importance of forming alliances in Brussels with member states which share our unique combination of fairly high farmer dependence on EU subsidies, for a food industry which generates much more valuable exports and job creation than the average EU member state.


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