Milking cap... But is it fairer?

As CAP talks edge ahead, the picture looks less ambitious and changes in who gets what, and how much they get, will be less radical than envisaged, writes Europe Correspondent Ann Cahill

THE battle for the EU’s €300bn agriculture budget is drawing to a close. However, the shape of the final deal is now fairly obvious, and the original, ambitious reform of the contentious Common Agriculture Policy has been largely tamed by member states and vested interests.

It is easier to see now who the likely winners and losers are in this marathon battle between member states, between those who believe in subsidising agriculture and those who do not, between different types of farming, younger versus older farmers, and between farmers with large and small holdings.

Nobody has got as much as they would like, but those who would like to keep the funding as it is are having to give way to an extent, while those who traditionally benefited less will get a little more.

Efforts to distribute the money more evenly between various groups, and to insist that, to qualify for full funding you must take care of the natural environment and/or farm organically, were behind the initial proposal from the European Commission made three years ago.

However, two thirds of the way through the negotiations, the picture looks a lot less ambitious and the result of who gets what, and how much they get, will be much less changed than under the original plans.

Newer member states with low incomes lost out when they joined the EU nine years ago, partly because of the huge cost of giving them the same subsidies as the older members, supported by the argument that they could not absorb so much money and that it would completely distort their markets, making near millionaires out of their farmers overnight.

They pushed for a different way of distributing the money this time around, but their ambitions were knocked on the head before the real negotiations even began when, after Christmas, EU leaders set out the limits of the budget and how it could be redistributed.

Money for so-called greening offered people in picturesque, environmentally important areas — but with less farming potential — an additional reason to claim EU funds. This, too, has been “green-washed”, in the words of environmentalists disgusted at what they see as a lack of foresight about the future of the planet.

Efforts to ensure farmers benefited equally from a flat-rate national average payment got the thumbs down from the European Parliament and the compromise devised by the Irish presidency to further limit what is known as convergence, and bind it around with what is known as approximation, further limits its effect.

However, the deal arrived at by member states between themselves is a negotiating position, partly formed by the fact that they know what both the commission and the European Parliament is looking for — and knowing that a deal lies somewhere in between the different figures.

So far, the figures have evolved a lot. According to Valentin Zahrnt of the European Centre for international Political Economy, under all scenarios — higher environmental concern and redistribution, or less of these — the share going to the 12 newer member states remains at around 25%, leaving just over 75% for the ‘old’ 15.

The changes between the countries in these two groups varies considerably, with the most ambitious changes emphasising environmental protection, costing Ireland, the Netherlands, Belgium, and Greece around a third of their current receipts. Spain would have received about 50% more, while Finland and Sweden would also have gained.

Under what is now currently on the table, Ireland stands to lose about 8% — less than Greece, Belgium, Netherlands, and Denmark — but the big winners are Finland and Sweden, albeit from a low base. Germany and France, between them accounting for 28% of the spend, lose between 6%. Among the newer member states, the winners under all scenarios will be Latvia and Estonia.

Of course, a divide also exists within member states, as anybody looking at the list of recipients of CAP payments will see. Because of what TCD professor Alan Matthews calls the “somewhat arbitrary” nature of payments, all kinds of enterprises and landowners qualified for funds.

Everyone points to the British royal family getting big sums every year, while airports, golf clubs, and other enterprises that just happen to have land as part of their property also qualify. In Ireland, the biggest beneficiaries are food processing companies, including multinationals that use dried milk for baby formula for instance.

In an effort to control this, the amount of EU money any one enterprise can get in future would be capped at between €150,000 and €300,000 — something strongly supported by France and Ireland and opposed by Britain, Sweden, Germany, and others with large farms.

Independent MEP Marian Harkin has been pointing out for some time that farmers with less productive land should be given a fair share of what is going. She succeeded in getting the European Parliament to support her call for up to 15% of the national envelope to be available for coupled payments.

“This will give countries such as Ireland maximum flexibility in distributing CAP payments fairly,” said Ms Harkin.

Linking the money to what farmers have and produce would be a lifeline for suckler cow and sheep farmers that have suffered by changes in subsidies, she said.

However, the ministers are pushing for just 7% to 12% to be coupled — but this could well increase in the coming negotiations with the parliament.

This coupling, however, was phased out, mostly under the 2003 reform and reintroducing it could spell trouble, for instance, in the negotiations with the US on a free-trade agreement or with the World Trade Organisation, as it is considered to be trade distorting.

There is also a move towards a flat-rate payment, with the commission wanting all countries paying out the same per hectare in 2019, with a minimum starting point of 40% in the first year of transition. The Irish presidency wants to slow this down, introducing it at national or regional level, but starting at just 10% by 2015.

Ms Harkin says counties such as Donegal fared badly in the distribution of the single farm payment in the past, with an average of €179 a hectare, the lowest in the country, while others received over €1,000 per hectare.

Under the council’s plan, those receiving the higher sums would lose up to 20% — they would lose up to half if the European Parliament’s proposals are accepted finally.

Ms Harkin points out that this is not just an east-west issue in Ireland. “In Cork, for instance, over 3,600 farmers are getting less than €200 a hectare, while just 1,300 are getting more than €500 a hectare,” she said.

Prof Matthews agrees that the split in Ireland is complex when comparing farmers west of the Shannon with those in the rest of the country. “Those in the west should benefit under the council’s deal, but there are so many other issues that come into play; you will find winners and losers across the spectrum — in Mayo as well as Wexford,” he said.

One of the big developments, however, from the proposals on the table so far is that if they survive, member states will have a lot of flexibility in how, and how much, money goes to farmers over the life of this new budget up to 2020.