A Teagasc submission to the Department of Agriculture on the next CAP has warned that the farm sectors most reliant on direct payments for farm family income are those most at risk of the CAP cuts looming amid EU funding levels for farm schemes.

Teagasc cited 2024 farm income figures by sector that put the proportion of farm incomes made up by direct payments as averaging 129% on suckler farms and 102% on sheep farms, as evidence of the importance of scheme payments to farm incomes for many Irish farmers.

“With CAP-funded direct payments on many farms accounting for more than 100% of family farm income, a euro reduction in direct payments other things equal is likely to lead to more than a euro loss in family farm income,” Teagasc stated.

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The submission says that the redistribution tools contained in the current CAP reform, such as convergence and front-loading, saw more National Farm Survey farms lose direct income supports than had gained direct income from the new schemes, although the losses sustained were “generally modest”. The farms included in the survey are those with over €8,000 in economic output.

The impact on individual farms “will depend at least to some degree” on farm size, due to the planned redistribution of larger payments to those farming smaller areas.

The leeway that the proposals provide to national governments to decide the allocation of ring-fenced budgetary resources across different possible schemes “will also likely create different constellations of winners and losers”, depending on which schemes are prioritised, Teagasc said.

Overall funding cut

The Teagasc assessment of proposed cuts to the overall EU funding dedicated to farm payments heaps pressure on Government to ramp up the Exchequer funding it will put into the next CAP, or to push for a major U-turn on Brussels’ plans to radically rethink EU funding priorities.

Reduction of €2.6m in funding

Teagasc has said that it could take the allocation to the CAP of every last euro of non-ringfenced EU funds Ireland is due to receive if current EU funding levels for farm schemes is to be maintained amid the budget decrease.

It stated that Ireland will face a €2.6bn reduction in the EU funds allocated to direct payments under the European Commission’s plans between 2028 and 2034. It said that “81% to 101%” of the budget allocation Ireland is to receive to cover non-farming programmes, such as rural development and regional cohesion, would be needed to fill a gap this large.

However, Teagasc has warned that “it appears unlikely that such transfers would be possible from the un-earmarked elements” of the EU budget allocation due to the requirements necessitating the funding of programmes and policies beyond the farming sector.