Watching, waiting for reform

Simon Coveney has been busy brokering reform of EU agri policy in recent weeks. Farming editor Stephen Cadogan looks at how it will impact here in Ireland

AGRICULTURE Minister Simon Coveney didn’t undersell his achievement in brokering reform of the EU’s seven-year agriculture policy. “It’s the most important sector in Europe, the agri and food industry,” he said.

It’s an apt assessment coming from Ireland, where primary agriculture has become by far the biggest small to medium-enterprise for new bank borrowing. It averages €37m per month, about one third of all new SME lending, compared to €23m lent to the wholesale/retail sector. That indicates farmer confidence despite setbacks like the fodder crisis, and Coveney’s next battle after the policy reform in Brussels will be to keep that Irish agri-momentum positive, by adjusting the mix of options agreed at EU level into a national programme acceptable to farmers and to the industry which processes their produce.

At the start of the reform, in 2011, income cuts of 50% for some of our most productive farmers were on the table, which could have hit agri-expansion here on the head, along with much increased environmental requirements.

Twenty months later, only EU environmental groups seem downright unhappy with the 2014-2020 Common Agricultural Policy which has emerged.

Coveney wouldn’t be claiming it “secures sustainable development of the sector up to 2020 and beyond” unless he is confident it will do the business back home in Ireland.

But he will have to find a way to soften the blow for some of the top farmers here of a possible 35% cut (by 2019) in their share of the annual €1.2bn single farm payment (SFP).

Most Irish farmers are kept afloat financially by this direct payment, funded 100% by EU taxpayers.

Paid since 2005 based on farmers’ annual output of 12 years ago, it averages €265 per hectare, varying from zero for an unlucky few to more than €1,000 for about 220 farmers nationally.

All that changes from 2015, with the CAP reform requiring member states to pay at least 60% of the national or regional average payment per hectare to all farmers, by 2019.

Just those few lines of the CAP reform (which is so complex that 2015 is the earliest it can be completely applied) will see 50,000 Irish farmers losing 12% on average of their SFP, so that more than 60,000 of their colleagues can gain 35% on average.

Coveney needn’t worry about the 60,000 who gain — nor about the farmers aged under 40 who will benefit from a five-year mandatory SFP top-up of 25%, and farm start-up grants of up to €70,000. But the young farmer top-up will be skimmed off other farmers’ payments, along with a payment reserve, together totalling 5%. There’s an extra 5% cut due to overall EU budget cutting.

Due to all the cuts, tens of thousands of family farms will lose financially, and some will be challenged to stay viable, according to IFA president John Bryan. He said a full analysis of the implications and options available under the agreement will have to be carried out before final implementation at national level. He wants Coveney to ensure active farmers with existing low payments are prioritised for increased payment.

He says the minister can also encourage continued investment in agriculture through rural development measures for vulnerable sectors and regions. But that would require a lot of national funding to match EU funding.

Coveney may have to opt for a controversial move — exercising the CAP reform option of a maximum level of payment. By introducing a €650 per hectare maximum SFP, he could keep the vast majority of farmers reasonably happy at the expense of the best paid few thousand.

He can also use a redistributive payment, taking up to 30% of Ireland’s €1.2bn SFP for redistribution to all farmers’ first 30 hectares.

Coupling payments is also in his toolkit (all payments in Ireland are uncoupled from the farmer’s scale of production) — in fact, it may be necessary, to help the poorly paid suckler farmers who provide raw material vital for our beef industry. But only €96m per year of payments in Ireland can be coupled. Increased aid to disadvantaged areas may be targeted at priority farmers.

All such measures can be used to protect Irish farm output and food exports — as can the Irish definition of active farmer, which gives some scope to divert payments away from less productive farmers — which Coveney has already done here at home, by setting new livestock per hectare levels for farmers in disadvantaged areas to qualify for subsidies.

He says the €103m per year SFP redistribution from haves to have-nots is only about one third the original flat-rate proposal which was aimed at paying every farmer in Europe the same per hectare.

And “greening” has worked out satisfactorily for farmers here. This means linking 30% of payments to sustainable farming practices. It will have no effect on the many Irish farms which are at least 75% grass, and the measures for crop farmers also seem workable.

The national challenge for the agriculture minister comes back to sharing EU farmer payments out more equally, while not undermining the business of higher paid farmers (many of whom may be depending on big payments to pay back loans for farm expansion). How he achieves that in Ireland will be thrashed out in public debate over the coming months.

Taoiseach Enda Kenny made Coveney’s path even clearer yesterday, by overseeing political agreement on the EU’s overall seven-year budget — another grand finale for the Irish Presidency of the Council of the EU. The detail of that €960bn agreement includes how much money member states can swap back and forth from farmer payments to rural preservation and development projects. There could be more scope there for Coveney to keep expansionary farmers happy.

Over the coming year, how it works out for every Irish farmer will become clear. Very clear, in fact, because the small print of the reform includes making all CAP aid details available as public information.

Up to Nov 2010, you could go on the Department of Agriculture’s website to check payments to all farmers. That transparency returns as part of the 2014-2020 CAP reform.

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