The plan by the Department of Agriculture to cap the suckler herd under the next CAP has rightly angered farmers. Proposing such a crude measure either points to a complete lack of vision and innovation within the Department or a desire to simply develop policy that will tick a box in Brussels rather than deliver for Irish farmers. As part of the CAP consultation process, farm organisations have the opportunity to shift the direction of travel. But they must come forward with coherent and deliverable policy positions that make clear their vision for the sector.

Attempts to turn the future of agricultural policy into a popularity contest must be avoided. Discussing the impact of various policy measures on the basis of how many farmers will win or lose is a step in this direction. Policy measures should be assessed on the basis on which they support farm families through development of an economic and environmentally sustainable sector.

Responsibility

While the scale of this challenge should not be underestimated, the responsibility on farm leaders to lead at this critical juncture should not be shirked. Doing so will require them to commit to an honest conversation – particularly with suckler farmers. It is a sector that, despite best efforts to effectively allow it wither on the vine, has proved to be hugely resilient. This has been to the frustration of those that saw a decline in suckler cow numbers facilitating growth in dairy cow numbers. It has resulted in friction between the two sectors with attention focusing on numbers of cows within the respective national herds. It is a debate that does little to support farm incomes.

An honest conversation acknowledges that our dairy industry is probably one of the only industries where we are globally competitive. Preventing a new generation of farmers from entering the sector would amount to policy failure both at Government and industry level.

Critical role

In the case of suckling, it acknowledges the critical role the sector plays in generating economic activity throughout rural Ireland and managing more marginal land for environmental gain. But the economic model is different. Across the world, suckler beef production is only viable if underpinned by one or a combination of the following: access to large tracts of poor quality and cheap land; availability of growth hormones; or direct financial supports. Ireland is no different and without cheap land and growth hormones, our suckler herd has been developed and sustained on the back of direct income supports through the CAP.

As Pat O’Toole detailed in last week’s edition and again this week, the level of income support provided to the suckler and beef sector over the past 18 years has collapsed and will continue to do so as we work our way through the next reform. The extent of the cuts on the cards and indeed the overhanging market threat of Brexit presents an extremely challenging economic outlook for those remaining in the sector.

Quotas could be traded, allowing farmers buy quota from those seeking to exit production and/or change enterprise

It will only be reversed through a major re-targeting of supports through Pillar 2, a commitment to deliver the €1.5bn carbon fund and ring-fencing a significant proportion of the €1bn Brexit Adjustment Reserve (BAR) fund for the suckler and beef sector. But calls for these supports at the scale which they will be needed will likely to fall on deaf ears unless there is a clear incentive for Government and other sectors to support such a move.

The suckler cap contained within the draft strategic plan gives a clear indication as to the policy objective within Department of Agriculture – to limit the national herd. Applying a cap across all farmers is a crude way of achieving this.

But, is it possible to develop policy that delivers on the Department’s objective while increasing the economic viability of suckler farmers? The option of introducing a national suckler cow quota is worth exploring. Introducing a quota is very different to imposing a cap. Yes, it manages future growth of the national herd but it still provides flexibility at individual farm level. Quotas could be traded, allowing individual farmers buy quota from those seeking to exit production and/or change enterprise. This would allow these farmers to maintain or even increase numbers in line with future farm developments.

Introducing a quota also creates a tangible asset that farmers seeking to retire or exit the sector can liquidate. For example, farmers retiring should have the option of selling their quota tax-free. Furthermore, a quota would not prevent new entrants into the sector as a national reserve could be established to facilitate these farmers.

Payments

Of course, the introduction of a quota would have to be aligned to a commitment from Government to create a national financial envelope that would see farmers participating in a quota-linked scheme receive a significant payment. The IFA has this week called for a payment of €300 per cow to be introduced, which would require a commitment to establish a national envelope of €300m per annum. It is a package on this scale that would be required if the sector is to be adequately compensated for the shift in Pillar 1 payments. Consideration should be given to ring-fencing funding within the BAR and carbon fund to allow such a scheme extend beyond the five-year life of the next CAP.

Finally, another major difference between a cap and a quota is that if the Government policy moved to reducing the national suckler herd, it could come into the market and buy the quota off farmers that were prepared to sell at the price being offered. The outcome of a properly designed quota-linked scheme would be to provide direct financial support to suckler farmers to the tune of €300m per annum, allow those that want to expand to continue to do so, give those farmers that want to exit an asset that they can liquidate with added tax incentives and create a reserve for young farmers. It would also be aligned to Government policy making deliver more likely.

It is clearly one policy direction that is worth debating. We look forward to others emerging as farm organisations submit documents in the week ahead that can deliver a vibrant suckler sector rather than allow it slowly wither on the vine.

  • For more on how a potential quota model could work, tune in to this Friday’s Farm Tech Talk