Twenty-three out of the 28 EU members in 2017 will pay up to €1.7bn on 19.3m head of cattle, which is an average of €88 per head. These payments are made under the voluntary coupled support (VCS) scheme where countries can opt to use a percentage of their annual ceiling for direct payments as a VCS. Normally this is limited to 8+2% of the annual national ceiling available for direct payments though this can be increased to 13+2% under certain conditions but any further increase is subject to Commission approval for very specific conditions.

Most countries have coupled payments

Only five countries including Ireland have opted out of the VCS for beef. Of these, only Ireland and Germany are substantial beef producers. The remaining countries are Cyprus, Luxembourg and Estonia. The VCS varies in how it is used with some countries, having multiple measures for payment and different payments for rates within countries for defined geographical areas.

One such example is Scotland, which is the only region of the UK to avail of the scheme. Overall, Scottish beef producers receive on average €105 for beef-bred calf. However, this rate varies from €99 per head on the Scottish mainland compared with €159 paid on the 41,528 calves that come from the offshore islands in Scotland.

Big differences in amounts paid

Overall there are 50 different schemes spread across the twenty-three member states that are using VCS to support beef production. Finland, with nine different schemes spread across just over 260,000 cattle, has the most. These are made up by a combination of regional and payments on cows as well as a fattening premium and a dairy cow heifer premium.

Average rates in member states vary from a low of €36 per head in Austria to €330 per head on the 35,000 cattle that are eligible in Romania. When the payment of €1.7bn is averaged across the 19.3m cattle it works out at €88 per head. In terms of where the €1.7bn is spent in the EU, France is by far the largest single recipient, taking €645m of this, spread across 4.2m cattle, averaging at €155 per head. In absolute money, Spain is the next largest user of this fund on €227.8m though with this spread across almost 5m head it means that Spain has one of the lower average payments per animal at €46.

Do coupled payments depress farm gate prices?

One of the big arguments against coupled subsidy is that the market will pay farmers less because they know there is a subsidy in place. Using EU price reporting comparing Irish R3 steer prices which don’t receive a coupled payment against R3 young bull prices in countries that provide coupled payments, there is little evidence that this is the case.

Comparing prices in Ireland’s main export markets in the eurozone for the week ending 3 March, French R3 young bull prices were just 3c/kg lower than Ireland’s €3.88/kg for R3 steers, while the Netherlands was significantly lower at €3.55/kg for R3 young bulls. Elsewhere, prices were higher. The overall UK price has been consistently ahead of the Irish price and, within the UK, Scotland, the one area with a coupled payment, has the highest price at £3.70/kg, the equivalent of €4.16kg. In Sweden, where there is a coupled payment averaging €85 per head, the reported price for R3 young bulls was €4.39/kg, while Italy reported €4.08/kg and Spain reported €3.91/kg.

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