CAP, Brexit and the future

I sometimes feel that I have lived through both the pregnancy and early life of the Common Agricultural Policy (CAP), at least vicariously. This is because, as a teenager, I spent a lot of time with my father, the late Joe Bruton, who was chair of the livestock committee of the National Farmers Association in the 1960s.

At the lunch table and on our travels together, his conversation was full of references to the iniquity of the pre-CAP arrangements for the sale of Irish beef and live cattle on the UK market. These arrangements consisted of deficiency payments (subsidies), which allowed British farmers to undercut their Irish competitors on the British market.

When the possibility of Ireland and Britain joining the Common Market arose in the early 1960s, there was great excitement in our house because there was a prospect that this unfair competition would stop.

The market would then be governed by common rules, applied equally to all, which would ban the sort of discrimination involved in the UK deficiency payments system.

My father was also keen on the opening up of the horizons of Irish farming to encompass the whole of western Europe and he visited many farms on the continent and hosted reciprocal visits to our farm from there.

One of the facilities he was proud to show off were the open air cattle wintering arrangements. This is something that would not be allowed nowadays, because of the risk of rain-induced run-off that would bring dung into nearby watercourses.

In a way, this change typifies the changes that have occurred in the CAP in its 50 years of existence.

Evolution of the CAP

In the early period, the focus was almost exclusively on the production of safe and nutritious food and the preservation of farming systems that could guarantee that, in bad as well as in good years.

Nowadays, the CAP has taken on a range of new goals, including the protection of the environment, wildlife, biodiversity, water quality and even the aesthetic appearance of the countryside.

Reading through the latest CAP Strategic Plan for Ireland for 2023 to 2027, and the Commission’s exacting observations on it, I was struck by the complexity of the expectations it has of what farmers will have to do.

I was also struck by the fact that there are so many objectives set now that contradictions and even conflicts between these expectations become almost inevitable.

These contradictions and conflicts can be glossed over in well-drafted official documents written in Kildare Street or the Berlaymont, but they cannot be avoided at farm level. The conflict resolution has to be performed by the farmer and he/she is open to financial penalties if he does not get it right.

This sort of tension between conflicting objectives is, in a sense, unavoidable and is not confined to farming policy.

We see it in business too, where firms are increasingly expected to report publicly on how they are meeting, often loosely drafted, environmental, social and governance targets (known as ESG), while trying to achieve a bottom line profit. It remains to be seen whether publicly quoted companies will, like farmers, actually be subject to financial penalties if they fail to achieve their ESG goals.

Bureaucracy in farming

Essentially, farming life seems to me to have become much more complicated and bureaucratic than it was at the time of the birth of the CAP. But then the current cohort of farmers is much better educated than its predecessors of 50 years ago and can handle complexity and recordkeeping more easily, with the aid of information technology.

As if this was not enough, Irish farmers now also have to deal with the radical uncertainty caused by Brexit, the Russian invasion of Ukraine and doubts about access to raw materials like fertilisers.

Given that some of our fertiliser supplies come from Russia, a country under severe international sanctions, it is no wonder that there is a lot of anxiety in rural Ireland as we celebrate the 60th anniversary of the CAP.

The war and the inflation crisis will eventually end, but the effects will remain.

Oil prices have doubled so far. In the early 1970s they tripled, and by 1980 they had increased tenfold. That is not likely to recur this time because there is a more diverse range of oil suppliers available. Some consumer goods retailers are overstocked and may have to reduce prices to clear these stocks.

If Ukraine becomes a full member of the EU it will compete with Ireland for CAP funds. The EU will then need more money. It now has the power to borrow, which is a help, but debts have to be serviced. So I expect some form of EU-level tax, apart from the Common External Tariff receipts, will eventually be needed.

Getting unanimity on that among 27 or 32 EU member states will be next to impossible, so a change in the EU treaties may be needed to guarantee a reliable flow of funds for the CAP and the other vital EU level investment and spending programmes.

Guarantees will be demanded of Ukraine, and other candidates for EU membership, that may be hard for them to meet

But Ukraine’s path to full membership will be neither quick nor easy.

The EU has endured major problems with some countries, notably Hungary, in ensuring that they remain proper democracies, based on the rule of law and the absence of systemic corruption.

Guarantees will be demanded of Ukraine, and other candidates for EU membership, that may be hard for them to meet. We do not want another Hungary in the EU. On the other hand, whether it is a full member or not, the EU will have to spend big sums helping Ukraine reconstruct itself and this may draw funds away from the CAP.

Inflation temporary, Brexit permanent

As I said earlier, the war and inflation problems are severe but they are likely to be temporary. Brexit, I fear, will be permanent. I do not see other EU countries wanting the UK back in the EU in the foreseeable future, even if it decided (unlikely, but not impossible) to reverse its 2016 decision.

The immediate Brexit risk is a trade war flowing from a UK unilateral decision to cease to honour the terms of its withdrawal agreement from the EU, which includes the Northern Ireland Protocol. For example, this would destroy the dairy sector in Northern Ireland and undermine the milk processing industry on the southern side of the border as well.

On the EU side, the enforcement of any trade sanctions and customs controls on the UK on this island would be the responsibility of the Irish Government (on behalf of the EU).

The price of not doing so would be exclusion from the EU Single Market, which would destroy some of our export industries, notably pharmaceuticals and food processing. The damage to Britain itself will be even greater.

It amazes me that the politicians in the House of Commons, who are afraid to oppose the unilateral UK action to abrogate the Protocol, do not see the consequences of their passivity. Career seems more important than country for many of them.