With negotiations intensifying at EU level, the IFA this week set out seven key objectives on CAP reform. These objectives will shape the association’s lobbying focus in the weeks and months ahead.

Barry Cassidy goes into detail on this, while Pat O’Toole interviews IFA president Tim Cullinan.

Calling on Minister for Agriculture Charlie McConalogue to defend the European Council’s initial position of limiting convergence of payments to 75% is unlikely to please many farmers. Those who lose out from further convergence will see it as a step too far while those set to gain will see it as restricting the extent to which their payment rate will increase.

At an individual farm level, both are legitimate positions. But it is important that blame is focused in the right direction.

Convergence is simply a politically acceptable term for taking money from one group of farmers and giving it to another.

We should be clear on why it is necessary – because of a lack of political will among EU leaders to ensure the CAP budget increases in line with added demands being placed on farmers.

It shows the next CAP will deliver minimal gain to those on low-value entitlements while those on higher value entitlements would see payment rates fall by 30-40%

Last summer, the EU’s Farm to Fork Strategy presented a utopian pathway to a less efficient but environmentally enhanced production model that would maintain food affordability and protect farm incomes. Yet just two months later EU leaders voted to cut the CAP budget by 12.5% in real terms.

As a result, farm organisations are left trying to negotiate what is a no-win CAP for any group of farmers. This is clearly spelled out by a new modelling analysis from the Department of Agriculture, detailed here.

It shows the next CAP will deliver minimal gain to those on low-value entitlements while those on higher value entitlements would see payment rates fall by 30-40%.

This week, James Moran highlights how land that is naturally disadvantaged for food production has a high nature value. Unfortunately, CAP does not have a budget to adequately reward both farmers who are optimising the food production capacity of their farms and those who are maximising the environmental dividend.

The increased environmental ambition of the next CAP should have been supported through the creation of a third, environmental-focused pillar and financed through EU Just Transition funding.

The IFA has rightly turned its attention towards the role of national Government in protecting farm incomes against a CAP that will ultimately fall short for all farmers

But instead politicians and policymakers were allowed to take the easy option and raid direct income supports to farmers by ring-fencing funding within Pillar I for eco-schemes – without giving any commitment to ensuring that this hit to farmers’ income would be offset by higher food prices.

Even if the IFA is successful in achieving its objective of ensuring farmers get back out what they put into these eco-schemes, there will still be a hit to farm incomes – particularly if such schemes are built around an income forgone or cost incurred model as outlined in last week’s Irish Farmers Journal.

Against such a difficult backdrop, the IFA has rightly turned its attention towards the role of national Government in protecting farm incomes against a CAP that will ultimately fall short for all farmers.

At national level, the IFA CAP objectives focus on both the co-financing of Pillar II payments and the commitment within the programme for government to introduce a new €1.5bn agri-environmental scheme funded through carbon tax revenue over the next 10 years.

Farmers need to speak with one voice in reflecting the extent to which a CAP that demands more and more while giving less support is failing all farmers, regardless of enterprise or land type

Getting a commitment from Government to maximise the level of national co-financing permitted under Pillar II will be essential to deliver on the IFA’s ambition of introducing targeted schemes for low-income sectors – including a payment of €300 per cow and €30 per ewe along with a new tillage sector scheme. This co-financing commitment must be secured in addition to ring-fencing the €1.5bn in funding for a new agri-environmental scheme.

Both are issues that the IFA is going to target in the weeks and months ahead. But it should not be alone. Farmers need to speak with one voice in reflecting the extent to which a CAP that demands more and more while giving less support is failing all farmers, regardless of enterprise or land type.

Allowing negotiations around a no-win CAP to divide farmers will only play into the hands of politicians and policymakers, both in Brussels and at home. Farmers united have some chance, particularly at a national level, of limiting the financial impact.

But if farmers are divided into specific interest groups, they will be easily conquered.

This week’s cartoon

The real costs of food production

Adam Woods this week details the financial performance of our Tullamore Suckler and Sheep demonstration farm.

Our commitment is to provide our readers with complete transparency around all the figures including charges for land rent, labour and bank charges. While the farm business retains direct production-based supports, it does not have a Basic Payment. In this environment, the farm generated a loss of €70,000 in 2020 after labour, land, bank charges and depreciation were included at a combined cost of just under €130,000.

While it is easy to dismiss the model as not being reflective of the typical system, the figures show the true costs of food production to EU standards and the expectation that the land asset will be provided free of charge. If a more typical system of owned land and labour is assumed along with an average basic payment, the return from the farm would be €70,000 or €880/ha net profit. The importance of the CAP to the drystock sector is illustrated by the fact that even on a highly technical efficient farm, 66% of net profit is linked to support payments.

You can watch back our webinar discussing financial performance on the farm here.

Meeting the challenges posed by farming strategies

This week’s focus is on sustainability with an emphasis on meeting some of the challenges set out in the strategies and roadmaps for agriculture, including the reduction of fertiliser and pesticide use.

A major flaw in many of these strategies is that they pay little heed to farmers’ incomes.

Farmers are faced with the challenge of maintaining income with less inputs, a difficult task.

We visit one farm which has dramatically cut its use of fertilisers and pesticides.

Their methods are not for everyone, but will provide food for thought.

Unfair trading practices legislation a small first step

As Phelim O’Neill explains this week, the news that the EU unfair trading practices legislation will come into effect in Irish law from 1 July will have negligible benefit for farmers.

It is designed more for later in the supply chain and will give protection to a small processor trading with a much more powerful customer.

The French way for legislating on minimum price for agricultural produce is also explored and this would have a direct impact on farmers.

Limited benefit

However, its benefit in an Irish context would be very limited as it is specific only for produce sold in the domestic market.

Even if it is accepted by the EU, it wouldn’t be of much practical benefit to Irish farmers, who have 90% of their production sold in export markets.

If farmer production efficiency is curtailed by EU rules, there is a responsibility on those making the rules to ensure a mechanism is found to protect the market value of the product within the EU so that the additional costs can be recovered.