EU not keeping up with COVID-19

As the COVID-19 pandemic continues to wreak havoc around the world, most countries are struggling to keep pace with developments. The European Union appears almost irrelevant as member states fight to get the public health issue under control. While public health is a matter for individual countries, charting a path of recovery from the impending economic crisis should be led decisively by the EU.

So far it hasn’t been encouraging, with last week’s compromise deal to generate a €500bn response fund only agreed after serious division between what are described as the frugal north European countries and already heavily indebted Mediterranean countries. Farming hasn’t gotten a mention for financial support in spite of the income crisis that has either arrived or is getting close.

Contrast this with the United States. President Trump is widely criticised but his administration has put in place a $2tn war chest with $23bn earmarked for agriculture and a further $15.5bn for food stamps, which act as an indirect support to farmers by creating demand for produce that consumers could not afford otherwise. Of course, there is a difference in that the US is a single nation with a federal government and a single currency. Despite the fact that the EU is a slightly larger economy in GDP terms, the dollar is consistently the strongest currency in the world, especially at times of crisis. The US political structure allows fast decision-making and while they may have been slow and unprepared to deal with the public health issues around COVID-19, they put the stimulus package for recovery through within days.

With beef factory quotes at a 10-year low this week and milk prices also falling, there is clearly a need to intervene

The political structure of the EU simply doesn’t allow for fast decision-making and its early decision to relax state aid rules and allow individual member governments do more is essentially an acceptance of this.

In Ireland, the Government has received plaudits for its handling of the public health side of COVID-19. However, in the week that the IMF forecast a hit to the Irish economy of 6.8%, the Minister for Agriculture needs to take action now to support our largest indigenous industry. The relaxation of state aid rules means that up to €100,000 can be paid by national governments to individual farmers and up to €800,000 to farm businesses.

With beef factory quotes at a 10-year low this week and milk prices also falling, there is clearly a need to intervene. The EU has also granted flexibility to countries on spending rural development money and while the Irish Exchequer is being battered by the cost of COVID-19, the country has regained a strong credit rating and can borrow on favourable terms.

Irish farmers are at a disadvantage in that ministers are keeping seats warm as they await the formation of a new government. But the speed of the collapse in beef prices in particular demands an immediate response – in the same way as a structure was put in place for employees and businesses that have had to stop work.

There are too many grey areas at present around the €350 unemployment payment. These require clarification immediately to ensure that farmers who cannot sell stock either due to a price collapse or mart restrictions can avail of it fully.

Having sought further clarity, the IFA is encouraging farmers who have seen a collapse in their trading income due to COVID-19 to consider applying for the scheme.

Previously we highlighted the need to encourage farmers to hold cattle on grass rather than going to the factory. Farmers who do so should also be able to avail of this scheme.

There also appears to be a reluctance to engage at industry level on the introduction of a state-backed export credit insurance scheme. The scheme would support business in the development of new and existing markets.

One of the early quotes that made headlines around COVID-19 came from Dr Michael Ryan, WHO director, saying that “speed trumped perfection”. That applies to what the Irish Government needs to do for farmers and any arrangement can be put aside later if the EU gets a common policy in place.

For farmers to take the brunt of the very recent milk market disruption so soon in the milk production year seems unfair.

We know all good businesses would have forward-sold a good portion of the relatively small volume of March production long before COVID-19 restrictions had an impact.

Co-ops also need to reflect on other parts of the business rather than take the easy option to let the primary producer take the hit that is affecting global trade.

Closer to home, there are big questions to answer why some co-ops are almost 3c/litre off the Ornua equivalent index for the same month. That 3c/litre gap is the equivalent of €150 per cow.

Farmers deserve to know where their money is being spent. Well and good if it’s going towards long-term investment in the business. However, board members and management need to be clear with farmers and call out inefficiencies.

Farmers have invested heavily to create the product – not just this spring but also in terms of capital infrastructure.

Finally, on the down slope of milk prices the deficiencies of setting milk price retrospectively are exposed. It leaves farm families vulnerable. Feed, fertiliser, etc, has been purchased. It’s not good enough. Co-ops should start investigating a solution.

This week we include our annual Crop Protection magazine. Never before has it been published during such global uncertainty, with over half of the world’s population in some form of lockdown due to COVID-19.

This force of nature stops for no one and doesn’t discriminate. This is nature in action, a constantly evolving battle between the organisms that inhabit this world. In agriculture, we’re very used to this reality, and tillage farmers face this battle every season.

This season we see the loss of chlorothalonil, diquat and CIPC. But this will be followed by several other key chemistries later this decade. Their loss comes in the midst of a growing threat of resistance in Irish fields and limited alterative control options.

The challenge is great. But if the EU Green Deal really intends to take this a step further with additional reductions in pesticide use on farms without embracing environmentally friendly modern technologies, then all we achieve is an open goal.

Perhaps when this COVID-19 crisis has ended, we’ll have a renewed appreciation for the tools required to face biological threats.

It is not all bad news as new chemistry in development for much of the last decade has found its way to Irish farms. But never has it been more important to understand and adopt integrated pest management to protect these new tools from the relentlessness of resistance evolution.

I’d like to thank all of our contributors to this year’s publication, and for their continued work in the sector.

As the formation of a new government begins to take shape, it is important that the challenges facing farmers and the agricultural sector are recognised in any programme for government.

In whatever form it takes, the next government will shape the future of agriculture for decades.

Of course, the immediate challenge is dealing with the fallout from COVID-19. But the Brexit train continues to come down the tracks and as yet the UK government has not signalled any desire to extend the transition period.

Meanwhile, at EU level, severe cuts to the CAP budget remain on the agenda, as does a farm-to-farm strategy that has the potential to limit farm output.

Farmers will be expecting Fine Gael’s pre-election commitment to make up the shortfall in the CAP budget with Exchequer funding to feature in the programme for government.