When farming changed forever: the MacSharry reforms and why they still matter

For people of my age and older, the name of Ray MacSharry and the impact he had on Irish and European farming is instantly familiar.

But a whole generation of farmers have little idea of the pivotal role of the 'Agenda 2000' in the evolution of how farming is managed and supported; someone born in 1980 was only in primary school when this played out.

To properly understand the current Common Agricultural Policy (CAP) reforms, you really need some awareness of this time.

So allow me to bring you back to 1989 and the transformation of both Europe and its CAP in the space of two years.

Ray MacSharry was appointed European Commissioner in early 1989. He had a formidable reputation as the Minister for Finance who had wrestled Ireland’s dysfunctional finances into line over the previous two years, earning the moniker 'Mac the Knife'.

MacSharry was a self-made man.

Having left school in his native Sligo with only a partial secondary education, he became a cattle dealer, then worked with a local meat processor.

He became a county councillor for Fianna Fáil in 1967 aged 29. Two years later, he was elected to the Dáil.

A strong supporter of Charlie Haughey’s leadership bid in 1979, he was appointed Minister for Agriculture.

He impressed in his term there and when Fianna Fáil returned to power in 1982, he became Minister for Finance and Tanaiste, but the Government fell after less than a year.

He was then embroiled in a phone-taping controversy and resigned from the front bench.

The 1984 European elections saw him stand as an MEP, but he was back at the heart of the Irish Government, again in finance, when Fianna Fáil were returned to power in 1987.

With such a background, he was a strong commissioner nominee, and landed the important agriculture portfolio.

The need for reform

When MacSharry joined the Commission, the EEC was 12 strong.

It was formed as a trading bloc originally between Germany, France, Italy, Belgium, Netherlands and Luxembourg in 1957, in the shadow of the Second World War, which had only ended 12 years previously.

To put that in context, the recently screened Reeling in the Years from 2010 that people said felt like 15 minutes ago was only a year closer to today than the surrender of Germany was to the creation of the EEC.

The devastation wrought by that conflict meant that food was scarce. Rationing was still happening across the channel in the UK. While rationing had ended in West Germany in 1950, and in France only months after the war, the determination to ensure a safe and secure food supply, to ensure people would never starve again, was at the heart of the European project from the very beginning.

The problem

Now, in 1989, the EEC had more than doubled in size, with 325 million people in the 12 member states - Spain, Portugal and Greece having joined during the 1980s.

Farm output soared through the 1970s and 1980s as husbandry and agronomy took advantage of new technology

And there was too much food. We had wine lakes and beef mountains. Market supports, designed to encourage production, had been in place for 30 years, and could be said to have worked too well.

Farm output soared through the 1970s and 1980s as husbandry and agronomy took advantage of new technology and learning.

Excess produce was bought by the EEC itself - intervention - and stored until market conditions suited its sale.

Giant warehouses stored product, ships sailed the seas loaded with food literally going around in circles.

Public dissatisfaction with this regime was heightened by the knowledge that people were starving worldwide, while Europe hoarded food to prop up prices.

In parallel, politically, market supports now fell foul of the General Agreement on Tariffs and Trade (GATT) agreement of 1988.

GATT was the forerunner to the World Trade Organisation (WTO). They were regarded as protectionist and trade-distorting.

We were moving from a regionalised economy of trading blocs, of which the EEC was one, to a global free trade economy.

The dairy sector had already been reformed through quotas, introduced in 1984. Sugar beet was also governed by a quota regime.

This left, for Ireland, the cattle, sheep and grain sectors in particular - we had no domestic wine lake.

The budget

CAP was gobbling up a huge proportion of the EU’s budget - about 75% by 1985.

Even as the share of the budget was falling through the second half of the 1980s, the overall spend was going up. So what was going on?

Well, inflation levels were high through the 1980s. Fiscal policy in Ireland and across Europe had brought control, inflation had dropped from the 14% of 1980 to manageable levels, but prices were steadily rising and the EEC budget, including the CAP budget, was rising too.

This is no longer the case, sadly.

So the budget in 1992 was almost €50bn, equating to about two-thirds of the overall EU budget.

It would rise in the early years of the regime, but would never be as generous on a per-farmer basis again. The EEC12 would swell to become the EU28 over the next 20 years.

The outcome

Negotiations concluded in 1992. Deep cuts to market supports were offset by new direct payments to farmers.

A range of new schemes applied to cattle. There was a suckler cow payment and two staged special beef premia for male cattle over 10 and 22 months of age.

A slaughter premium was also in place and, finally, an extensification premium, paid at two rates, depending on cattle stocking rates.

The sheep regime was much simpler, a premium paid on all ewes.

Farmers were unhappy with the amount of paperwork and hassle associated with the new regime

All grain crops were eligible to apply for a flat-rate per-hectare area aid payment, provided they were grown on eligible land - defined as land that had grown a crop between 1987 and 1991.

Compulsory set-aside was also introduced, where farmers would leave a part of their tillage area fallow for payment.

There were no payments directly to milk, beet or other root crops, potatoes or vegetables. Similarly, the pig and poultry sectors received no direct payments.

Reaction

Farmers were unhappy with the amount of paperwork and hassle associated with the new regime.

There were fears that commodity prices would collapse with lower market supports and the compensatory payments would fail to fill the gap.

Farmers went around measuring fields with land wheels and measuring tapes, as self-declaration of land parcel size was required. The Land Parcel Identification System (LPIS) wasn’t introduced until 1996.

It was an evolution of the model of supports for agriculture, but a significant amount of the budget was still spent on market supports.

In 1997, the Department of Agriculture reported that of the £1.467bn “national envelope”, £415m went on export refunds, with another £68m going to intervention payments.

Legacy

The MacSharry reforms were by far the most transformative reform of the CAP in the EU’s history - so far.

Some might argue the Fischler reforms of separation of payments from production have undermined the ability of farmers across Europe to argue that the very production of food is a primary public good and justifies support of production.

Almost 30 years on, that is still the central debating point of CAP reform, with the added requirement of farming to tackle its carbon footprint and its interaction with the environment.