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The European Commission will outline its post-2020 spending plans on 2 May and Commissioner for Agriculture Phil Hogan can have no doubt about what Irish farmers expect of him: an increased CAP budget.
The message was delivered to him in his home county of Kilkenny on Friday evening, as IFA president Joe Healy and 700 farmers packed into O’Loughlin Gaels GAA club.
As Odile Evans reports, any notion of a cut in the CAP budget was rejected out of hand.
Farmers have certainly set Hogan a tough task. The financial impact of Brexit is seen by some as a catalyst to significantly change how the EU budget is allocated and reduce the level of spending on farm supports. Against this, Hogan has defended the CAP budget on the basis that the role and duty of CAP is to support farm incomes, particularly those of small to medium sized farms.
Nevertheless, European Commissioner for Budget and Human Resources Günther Oettinger, who is charged with shaping the next EU budget, has been working hard to condition member states for a significant cut to the CAP budget. An experienced politician, Oettinger started at the upper end of the scale, exploring the impact of a 30% cut earlier in the spring. On Monday, however, he indicated a 6% cut was on the cards.
In his defence of the CAP budget, Hogan is not without firepower. The next Multi-annual Financial Framework (MFF) spending plan has been identified by EU leaders as an opportunity to recommit to the EU. Hogan has repeatedly highlighted the fact that any cut to the CAP budget in the wake of Brexit could be averted by member states increasing their contribution to the EU budget.
Next week will show us just how committed the remaining 27 member states are to the EU. Are they going to row back or step up to the mark?
As a percentage of gross national income (GNI), member states (excluding the UK) currently contribute 1.13% to the overall budget. Estimates suggest that increasing this to 1.25-1.3% would offset the Brexit impact. In the period 1993-1997, member states contributed 1.25% of GNI.
Next week will show us just how committed the remaining 27 member states are to the EU. Are they going to row back or step up to the mark? It would be difficult to see how reducing the level of support to 12.5m farmers would show a positive commitment to the European project.
In the debate around the future of the CAP budget, Hogan cannot allow his colleagues to lose sight of the fact that CAP has been and continues to be one of the most successful policy measures ever introduced in the EU.
For an investment equivalent to the cost of a cup of coffee per week, EU consumers have access to a secure supply of food, produced to the highest safety and environmental standards in the world, and at a price that is often below the cost of production. It is because of the CAP that many EU consumers now spend less than 10% of their household income on food – one of the lowest levels in any developed region.
It is little wonder that we see CAP accounting for over 100% of total income across many sectors. From an Irish perspective, this is especially evident on our beef, sheep and tillage farms. It has to be understood at political level that what may appear a modest cut in the budget in percentage terms can have a real impact on household incomes.
Of course, Commissioner Hogan can point beyond the farm gate when it comes to the importance of protecting the CAP budget. The economic dividend from supporting 12.5m farmers should be measured by the fact that the agri-food sector is the principal source of income for over 20% of the EU population, primarily located in rural towns and villages.
Since taking up the post, Hogan has proved himself a formidable politician and gained widespread respect within the college of commissioners. He has delivered on a number of fronts, most recently in securing support for proposals to ban unfair trading practices. On Friday, he demonstrated that he is in touch with the issues at farm level and has a deep understanding of his brief. However, it will be the commitment that he secures from his fellow commissioners in next week’s budget proposals that will be the measure of his success in the eyes of Irish and EU farmers.
The comments made by Jimmy Brett at the IFA’s meeting on the future of CAP in Kilkenny last Friday night struck a chord.
He was speaking about the importance of protecting the tillage sector in Ireland and exposed the fragility of the international feed supply chain and the threat this poses to the pig, poultry and ruminant sectors, which are now consuming over five million tonnes of feed per annum.
These threats are evident in the market at present, with freezing temperatures followed by flooding along the Mississippi causing severe disruption to the availability of protein crops such as corn gluten and distillers’ grains originating from the US midwest.
The risk for Ireland is that it relies on imports to supply a much higher proportion of its animal feed requirement compared to any other EU member state: 65% compared to 37% in the UK and just 26% in France.
With livestock numbers increasing and the tillage sector in steady decline, our exposure to international markets is only going to increase. From a security of supply and brand image perspective, allowing such a trend to continue is clearly not in the long-term interest of the livestock sector.
With the EU being roughly 35% deficient in its overall requirement for protein for animal feed, there is clearly a need – both at Irish and EU level – for targeted research into increasing the options for tillage farmers to respond to this deficit.
Can plant breeding technologies be used more efficiently to improve the usefulness of our current protein crops? Or can soya bean production be expanded in Europe to the same degree that we have seen taking place in Canada in recent years?
Meanwhile, we await with interest the results of research currently ongoing in Teagasc Oak Park to improve the suitability of native protein crops for Irish conditions, both in terms of disease resistance and the level of tannins which currently limit inclusion rates in diets.
Alongside this work, we should also be exploring the potential to ensile these crops for farm use. This would provide an alternative and earlier harvesting opportunity for beans in particular to extend their general appeal.
As Pat O’Toole reports, the IFA has escalated its campaign against vulture funds. There is no doubt we have seen increased activity with vulture funds moving in on farms as the season for land sales kicks into gear. The IFA farm business committee has adopted a sensible approach in standing by farmers who have engaged with financial institutions and are committed to implementing a credible solution – anything else would risk the campaign losing credibility.
There is clearly a need for legislation in this area. We cannot have banks effectively relinquishing their responsibility to their clients by off-loading loans to vulture funds.
It has always been the policy within the Irish Farmers Journal to refuse advertisements for family farms where we have been made aware that they are being sold against the will of farmers who have genuinely attempted to resolve any financial issues.
Lorcan Allen interviews former United States agriculture secretary Tom Vilsack this week. Now president of the US dairy export council, Vilsack outlines the lofty ambition of the US dairy industry to increase its export focus from 15% to 20% of production.
If achieved, this would see an extra five billion litres of milk coming on to global markets, almost the equivalent of Ireland’s total milk pool during the quota era.
The projections further reinforce the extent to which low maize prices have the capacity to fuel US dairy production. The Irish dairy industry cannot afford to ignore the potential impact of the US ambition on global markets – particularly the skimmed powder market.
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