The Common Agriculture Policy, or CAP as it is known, is the €1.2bn annual scheme that underpins Irish agriculture. It is an EU-wide policy and was the first common policy of the common market, established in 1962 among the then six members.

Many older readers will still recall food rationing which lasted well into the 1950s and at a time when food is abundant at least in the developed world, it is no harm to reflect that the core principle that undermines the CAP since its establishment in 1962 is food security for Europe.

The CAP has evolved over the six decades of its existence.

Originally, it supported farm prices through market intervention, purchasing any surplus produce at times of market weakness and selling back when markets were undersupplied.

By the late 1980s markets for beef, dairy and wine were seriously oversupplied putting a huge strain on the EU budget.

Under Irish European Commissioner for Agriculture and Rural Development Ray Mc Sharry, the first major CAP reform was a replacement of market support with direct farmer support, with payments made to farmers for their produce.

The second major reform was in 2005 with a move from payments to farmers for their produce to an uncoupled land or area-based payment system and this has been evolving since and will go further again in the next era, 2021 to 2027.

CAP follows the seven-year budget or multi-annual financial framework of the EU.

The current period will end in 2020 which means it will be business as usual for farmers for next year’s payment and the ambition is that the budget will be agreed in time to commence the new CAP in 2021.

It is by no means certain that this will be achieved in which case the existing CAP will be rolled over, but there is a question if the budget will remain consistent after the UK departure from the EU.

2021-2027

The themes for the next CAP were published by the European Commissioner for Agriculture Phil Hogan this time last year.

The overall ambitions of the policy are broadly accepted but the key issue is that in strict monetary terms there will be less money available with the budget set at €365bn, a monetary reduction of 5%.

The proposals will also put an upper limit of €100,000 on payments per farm unit and a sliding scale of reductions starting at €60,000.

In Ireland’s case, this will have minimal impact with just 0.1% of farmers receiving in excess of €100,000.

Distribution of savings

Any savings from having an upper limit will be available for redistribution and young farmer top ups and startups are a priority policy for the next CAP.

Savings from redistribution in the next CAP will amount to about €10.5m or €85 for each of the 123,000 current claimants if spread equally among them.

Even if it was all held for a young farmer fund, further money would have to be found if meaningful assistance was to be provided and the thinking is that direct payments could be top-sliced to boost any young farmer fund.

Environment

It is inevitable that the next CAP will have the strongest environmental focus to date. At present, farmers have the option of having their greening or environmental payment attached to the core direct payment in the BPS.

Next time round, the two will be separate with the direct payment separated from an environmental payment for which farmers will have to apply and demonstrate visible additional environmental work to get the payment.

Even to claim the basic direct Pillar I payment, farmers will have to be able to demonstrate a level of environmental compliance to qualify at all.

Countryside management-type schemes will be very much part of the next CAP. It is just a question of how much of the budget is allocated to them.

Convergence and genuine farmer

The real debate on the shape of a CAP does not properly begin until the budget is in place but there are two issues that will dominate thinking in Ireland.

Perhaps the most difficult is the question of convergence – that is the movement away from payments on a historical production basis to an entirely area- or land-based model.

The current proposal is that by 2027, 85% of payments will be area- or land-based but there is a view that this should move to 100%. This produces winners and losers.

The losers are farmers who had high output from a relatively small area of ground historically whereas the winners would be farmers with a large area of land no matter what quality or how little it produced in the past.

Opinions on this will be divided depending on personal circumstance.

The other big question will be, what is a genuine farmer? This is something we probably can judge by lifestyle but it is difficult to put into words.

One possibility is that a person will have to demonstrate that the majority of income is obtained from farming.

However, how would this work for say a 15-cow, part-time suckler farmer who is a teacher or skilled tradesman with a better income from his non-farming activity is the question.

Ireland has plenty of very good farmers with 15 cows or less, the backbone of the rural part-time farming economy.

Made in Dublin

The EU has decided that next time round it will be national governments that are responsible for shaping and delivering the CAP.

This allows member states some flexibility within an overall EU framework and it is good in that it allows the Irish farm lobby more influence than ever.

The problem, of course, is achieving consensus among farm organisations on what works best overall and inevitably there will be winners and unhappy losers.