Editorial: co-financing and courage needed to make bad CAP fit

Another week and another set of crunch CAP reform negotiations. Today (Thursday), the three EU institutions, the European Parliament, Commission and Council, will once again convene in Brussels in a bid to try to get agreement on a reform that was originally published back in 2018. Barry Cassidy goes into detail in this week's edition.

When negotiations collapsed in May, agreement looked to have been reached on many of the substantive policy issues. The refinement of legal text and clarity around the implementation of various measures appeared to be the only remaining roadblocks. Most expect that these technical issues will be addressed and agreed upon in advance of EU agriculture ministers’ meeting in Luxembourg at the start of next week.

Ministers may engage in some further horse-trading in an attempt to sugar-coat the message in advance of returning to member states. However, it is highly unlikely that a deal will not be struck if the three EU institutions present an agreed position.

Therefore, regardless of whatever last-minute tweaks or flexibilities are secured, the reality is that we should see one of the most destructive CAP reforms being concluded in the days ahead – a reform that has the potential to undermine the economic viability of tillage, suckler and sheep farms while also failing to recognise the environmental dividend being delivered by those on marginal land.

Deep divide

As Adam Woods details this week, it has resulted in a deep divide among farmers with those on either side of the debate making legitimate points.

The outcome was inevitable since last summer when the political decision was taken to raid direct income supports to farmers to fund increased environmental ambition rather than provide additional supports. Unfortunately, at this time, Ireland’s voice around the negotiating table was largely silent due to prolonged talks around the formation of Government followed by a merry-go-round of agriculture ministers.

If maximum pressure is to be applied, it will require farm organisations to be proactive rather than reactive in policy development

The question now is how we make the best of a bad situation. The development of Ireland’s national CAP strategic plan presents an opportunity to create a more balanced outcome. In the development of this plan, which Government must submit to the EU for approval by the end of the year, there is scope to design national schemes with the potential to direct significant levels of financial supports to farmers in a way that delivers on our economic and environmental ambitions for the various sectors.

Alongside the €300m per annum likely to be allocated to eco schemes, a commitment by Government to provide the maximum level of co-financing for pillar 2 payments would deliver a further funding pot in the region of €700m per annum. Added to this, there is commitment within Government to deliver a further €1.5bn in carbon tax revenue for agri-environment schemes. Furthermore, as we report this week, the EU confirmed last week that Ireland would receive €1bn from the Brexit Adjustment Reserve (BAR) fund, which should be predominantly ring-fenced for agriculture and in particular our beef and sheep sectors, given their unique exposure to the globalisation of the British food market.

Therefore, although the convergence debate in Brussels is currently dominating the agenda, farmers’ attention will quickly turn to how Minister for Agriculture Charlie McConalogue, through the design of the national CAP strategic plan, will deploy support payments that, with all revenue streams combined, could be worth in excess of €1.3bn per annum to farmers.

Farm organisations

The development of this plan is where the attention of farm organisations must now be focused. Lessons should be learned from the mistakes of the past where lack of clear policy positions saw them largely ineffective in influencing the direction of the CAP debate at EU level. Farmers cannot afford for the same mistake to be made at national level.

In the coming months, coherent farmer-led policy positions will be required to ensure Ireland’s strategic plan goes some way to making a bad CAP fit for Irish farming. Doing so will require ambition and fresh thinking when it comes to the design of schemes and how money is targeted towards various sectors in a way that addresses the economic and environmental challenges.

If maximum pressure is to be applied to the minister and Government, it will require farm organisations to be proactive rather than reactive in policy development. The responsibility for creating a vision for the future and developing schemes that will determine the financial stability of many farms cannot be divested to civil servants with no skin in the game.

Despite the flaws at EU level, the delivery of Government commitments combined with courage, ambition and vision by all stakeholders provides scope to create and deploy a revenue pot that will help sustain farm incomes and enhance the sector’s environmental credentials.

Details of the likely contents in the final consultation document for the review of the nitrates programme signal a ramping up of existing environmental policy.

The fact that fertiliser use is going to be policed in the same way as pesticides will bring an extra layer of bureaucracy for farmers.

Differentiating cows based on their nitrogen excretion rates will mean higher-yielding herds will hit the stocking rate cap sooner.

Bringing forward the closed period for spreading slurry will cause great difficulty for farmers on heavy soils in high rainfall areas and mandatory planting of cover crops on tillage land will add extra cost and time.

Farmers have always adapted to change and if these proposals end up in law, then farmers will adapt to them too. Not all of the proposals are negative and some will be welcomed as a means of weeding out rogue practice.

However, a recent Teagasc report on nitrogen use pointed to a 5% drop in dairy farm profit from a 10% drop in nitrogen usage. Policymakers continually point to clover as being a wonder plant that will solve the nitrogen issue. Yet, the success of clover at research level is hit and miss, never mind at farm level.

Research on clover establishment and management is continually under-resourced.

The cost of building materials has increased by over 50% in the last year and there is continued uncertainty over the future of TAMS grants, making the cost of extra slurry storage prohibitive.

While measures to improve water quality are welcome, allowing farmers to take an income hit without sufficient financial or agronomic support is simply not fair.