In the run-up to EEC membership in 1973 we were acutely conscious that, on practically every indicator, Ireland lagged behind Britain and the existing six member states of West Germany, France, Italy and the three Benelux countries.
We were also conscious that, together with Denmark, we did not pursue our application in the mid-1960s after General de Gaulle vetoed the British application to join the common market, as it was then referred to, on the basis that they would prove to be an unreliable and potentially disruptive member.
We recognised that membership without access to the British market was not a tenable proposition.
Later, the French relented and after a referendum in 1972, following successful British negotiations, Ireland joined on 1 January 1973.
Our first Commissioner was the Minister for Foreign Affairs, or External Relations as it was called then, Dr Paddy Hillery who had been the long-standing Fianna Fáil TD for Clare.
He had headed up Ireland’s entry negotiating team that set the terms of Ireland’s entry to the European Economic Community (EEC), which covered a range of areas such as women not having to give up their public sector and other private sector jobs on marriage.
For agriculture, the main change was the transfer of Exchequer support for agriculture from Dublin to Brussels. One of the pre-entry changes was the abolition of the multi-tier price system for creamery milk.
Anticipation and frustration
It’s hard – at this remove – to appreciate the sense of anticipation among farmers at the prospect held out by EEC membership.
Instead of a low-priced protected British market and a world market effectively used as a dumping ground by the most competitive producers on the planet, we were joining a rich insulated market with a deficit in every major product of interest to Ireland.
In addition, prices were roughly 50% higher than Irish ones and we were to reach full EEC price levels after five transitional steps over the years 1973 to 1978.
But, as ever, events intervened in what was meant to be the smooth ascent to full EEC prices.
1973 saw a worldwide rise in beef prices. Import duties on beef entering the EEC were abolished.
Cattle prices rose by 60% in 1973 but following the rise in oil prices and the subsequent recession, duties were re-imposed. This coincided with a wet summer in 1974 so with low forage stocks and high cattle numbers, the scene was set for a cattle crisis that still lives in the collective memory.
The EEC made an enormous effort to avert the crisis from becoming even worse by initiating a huge programme of intervention buying of beef but factory capacity was unable to cope with the deluge of cattle offered for slaughter in the face of visibly inadequate fodder supplies.
Store prices collapsed and calves were unsaleable.
Farm incomes increased though tempered by high inflation
However, the crisis was short-lived and from 1975, the steps toward full EEC prices resumed.
Farm incomes increased though tempered by high inflation. Mark Clinton was minister for agriculture during 1973 to 1977 and was regarded as one of the most effective the country had seen. His pro-farmer stance, as well as his knowledge of agriculture, made him popular among farmers.
Back then, individual member states had their own currencies and Ireland used sterling.
Currency adjustments
However, different rates of inflation in the member states played havoc with the concept of common prices and Germany insisted that there be an inflation adjustment mechanism for agricultural trade.
The so-called green currency phenomenon was born. At a memorable meeting of agriculture ministers, Mark Clinton insisted that, as Ireland was a different country to Britain and even though we shared a common currency with Britain, it was entitled to a separate “green currency”.
As a result, Irish farmers were protected from the inflationary damage and incomes rose strongly, while UK farm incomes suffered badly.
The system eventually waned with the start of the European monetary system and its eventual successor – the euro – finally came into being in 1999.
With full membership conditions and prices achieved by Ireland in 1978, the farming future seemed assured.
Under the new policy to come in next January 2023 we are seeing more discretion being given to the member states
Market supports were in place for the main Irish commodities of milk, beef and cereals.
Sugar production was guaranteed by a quota system and protection against cheaper third-country imports, but the agreement to have unrestricted access to the important French market had to wait for Jim Gibbons (1977 to December 1979), succeeded by Ray MacSharry until June 1981.
The move to mountains and lakes
By 1980, the self-sufficiency lines had crossed. The combination of prices set to assure supplies to consumers and advances in technology, especially in cereals, meant that surpluses began to appear, initially in milk.
But as the early 1980s progressed, with the support policies based on guaranteed prices associated with intervention purchases of surplus production and payments to make exports competitive on world markets, the costs of the CAP became more visible.
Various mechanisms were used to control output. Initially, this was a co-responsibility levy to help pay for disposal of surplus products while quietly abandoning support prices set by the costs of production, the so-called objective method.
All this was, however, just tinkering around the edges and, in 1983, the nettle was finally grasped with the proposal to set a limit on milk production.
Individual quotas were allocated to producers and while Ireland secured a special allowance of 12% over its 1983 output, the imposition of the quota shackled Ireland’s most competitive sector for a full generation.
Price pressures on farmers throughout the 1980s were relentless with a succession of agricultural commissioners attempting to come to grips with mounting beef and cereal intervention stocks.
Change in policy
It was clear that something had to give in the face of rising costs and international criticism.
The nettle was finally grasped by the first Irish European Commissioner for Agriculture Ray MacSharry. The Sligo man had been a tough but dramatically effective Minister for Finance in Dublin. Taking over as agriculture commissioner in 1989, he studied and consulted. His solution was revolutionary.
Guaranteed support prices were cut dramatically by 30% in the case of beef and cereals. Compensation was to be paid to producers based on the number of steers, suckler cows, ewes and acres in cereals. There were numerical limits in the case of bullocks but not in the case of sucklers.
Each producer was entitled to claim on 90 bullocks under 10 months and 90 at between 10 and 22 months, while crops were allowed to be grown on “eligible“ land if it had been demonstrably ploughed in previous years.
The paperwork was – to put it at its mildest – formidable with regulations around the sale and leasing of dairy quotas, as well as annual lists of cattle claiming payment according to strict stocking rate conditions. Extra payments were given for lower-stocked herds.
Commissioner MacSharry’s proposals initially met with a storm of protest but he had done his homework and had especially compared the cereal regime, with its setaside scheme to control output, with how the same concept worked in the United States.
He was convinced it could be operated administratively by the individual member states and he was proven correct.
There were anomalies in the new regime with heifer producers not eligible for any premium payment and sheep producers received less than cattle farmers but, in many ways, the main effect was to transfer a large proportion of the 10- and 22-month premium payments on to calf and weanling prices.
Cattle finishers saw significant reductions in income though specialist bull producers benefited from the higher payment put in place to better reflect the young bull production systems on the continent.
From an Irish suckler cow perspective, the new system came in at a good time as there had been an intensive drive to increase suckler numbers throughout the 1980s following the introduction of milk quotas which put a halt to all dairy expansion.
However, there emerged a complex system of official and voluntary systems limiting how much quota could be bought by individuals.
The premium system, with its rigid recording of ages and numbers on the livestock side, and tillage and setaside confined to eligible land, continued throughout MacSharry’s term.
MacSharry was succeeded by René Steichen before the highly intelligent former Austrian Minister for Agriculture, Franz Fischler, became Commissioner in 1995.
He recognised the rigidities in the system and in a dramatic announcement, he set the concept of the base years ,“the consequences of which are still with us”.
Memories that stick
The main architect of the CAP was undoubtedly the former Dutch Minister for Agriculture, Sicco Mansholt. He had been agriculture commissioner from 1958 until 1972.
Italian Carlo Scarascia-Mugnozza served for one year and was followed by another Dutch man, Pierre Lardinois, between 1973 and 1977.
While the foundation stone of the CAP was common prices across Europe, it became apparent that farmers on difficult land or operating in very high rainfall or drought-prone areas have higher costs of production than their better-placed colleagues. \ David Ruffles
During the early drive for European self-sufficiency in food, the Dutch devised a policy that hugely encouraged intensive livestock production especially pigs and dairy.
With the knowledge gained from their former colonies in the Dutch East Indies, they knew the feed value of manioc or tapioca.
It is a starchy material high in carbohydrate but low in protein.
This was to be admitted into the Community without any of the normal import duties that apply to the European-produced wheat, maize and barley.
Soya
Soya was the main protein source and this too was produced outside Europe and no import duties applied.
So the Dutch had duty-free energy and protein but were producing products that were fully protected against imports from outside the Community – no wonder production boomed in Holland.
By the time the milk quota was imposed, the Dutch had a quota per utilisable hectare which was nine times that of Ireland.
Its pig density was also far higher and by 2016 its total livestock density had reached 3.8 livestock units per hectare, four and a half times the EU average (Eurostat). This stocking density was to lead to environmental problems but that is another story.
I remember at a Green Week in Berlin interviewing Dr Mansholt and he declared that European agricultural prices would never be at world prices because South America would be able to produce cheaper than Europe.
European farmers would, he said, have to be paid prices that reflected European costs.
It was up to the European social welfare system to ensure that the poorest European consumers could afford food produced in Europe.
Dr Mansholt was the author of the Mansholt Plan, which effectively wanted to dramatically increase the scale and productivity of the average European farm, so grants were tailored to farms with the potential to be “fully viable”.
While the concept was broadly accepted, the plan was never fully implemented by the member states.
Disadvantaged area payments
One of the major early innovations in the operation of the CAP was the introduction of disadvantaged areas payments.
The announcement, made by Commissioner Lardinois on a visit to Dublin, marked a fundamental shift in the European view on what a common price for farm output should be.
While the foundation stone of the CAP was common prices across Europe, it became apparent that farmers on difficult land or operating in very high rainfall or drought-prone areas have higher costs of production than their better-placed colleagues.
On his first official visit as Commissioner for Agriculture, Dutchman Pierre Lardinois launched the concept of a special disadvantage area payment for farmers.
Though it was not termed that at the time, this was the beginning of the Pillar II concept where member states would submit a proposal for approval by the Commission and, if approved, the resources necessary would be contributed by both the member state and European funds.
This concept is still very much part of the CAP and, if anything, under the new policy to come in next January 2023 we are seeing more discretion being given to the member states.
As we enter a new stage of the development of the CAP one of the most fundamental transformations has been the relationship between European and world market prices.
Essentially, for the main product groups – dairy, beef and cereals – there is little difference.
The outstanding example is New Zealand milk prices which used be about half European levels but are now on a par, while the network of intervention supports and export refunds have effectively been abolished.
For the future, the concept of ever freer trade in food and agricultural goods that seemed so inevitable just a few months ago is, as the Ukrainian war wages, being questioned with the original concept of food security being increasingly raised.
France, in particular, has become increasingly vocal about European food sovereignty while, on the other hand, agriculture is being continuously asked to be more environmentally conscious and climate aware.
As ever in challenging times, food and farming are at the centre of high-level political policy discussions.
We are undoubtedly at a time of major reassessment – whether fundamental changes will be implemented remains to be seen.
In the run-up to EEC membership in 1973 we were acutely conscious that, on practically every indicator, Ireland lagged behind Britain and the existing six member states of West Germany, France, Italy and the three Benelux countries.
We were also conscious that, together with Denmark, we did not pursue our application in the mid-1960s after General de Gaulle vetoed the British application to join the common market, as it was then referred to, on the basis that they would prove to be an unreliable and potentially disruptive member.
We recognised that membership without access to the British market was not a tenable proposition.
Later, the French relented and after a referendum in 1972, following successful British negotiations, Ireland joined on 1 January 1973.
Our first Commissioner was the Minister for Foreign Affairs, or External Relations as it was called then, Dr Paddy Hillery who had been the long-standing Fianna Fáil TD for Clare.
He had headed up Ireland’s entry negotiating team that set the terms of Ireland’s entry to the European Economic Community (EEC), which covered a range of areas such as women not having to give up their public sector and other private sector jobs on marriage.
For agriculture, the main change was the transfer of Exchequer support for agriculture from Dublin to Brussels. One of the pre-entry changes was the abolition of the multi-tier price system for creamery milk.
Anticipation and frustration
It’s hard – at this remove – to appreciate the sense of anticipation among farmers at the prospect held out by EEC membership.
Instead of a low-priced protected British market and a world market effectively used as a dumping ground by the most competitive producers on the planet, we were joining a rich insulated market with a deficit in every major product of interest to Ireland.
In addition, prices were roughly 50% higher than Irish ones and we were to reach full EEC price levels after five transitional steps over the years 1973 to 1978.
But, as ever, events intervened in what was meant to be the smooth ascent to full EEC prices.
1973 saw a worldwide rise in beef prices. Import duties on beef entering the EEC were abolished.
Cattle prices rose by 60% in 1973 but following the rise in oil prices and the subsequent recession, duties were re-imposed. This coincided with a wet summer in 1974 so with low forage stocks and high cattle numbers, the scene was set for a cattle crisis that still lives in the collective memory.
The EEC made an enormous effort to avert the crisis from becoming even worse by initiating a huge programme of intervention buying of beef but factory capacity was unable to cope with the deluge of cattle offered for slaughter in the face of visibly inadequate fodder supplies.
Store prices collapsed and calves were unsaleable.
Farm incomes increased though tempered by high inflation
However, the crisis was short-lived and from 1975, the steps toward full EEC prices resumed.
Farm incomes increased though tempered by high inflation. Mark Clinton was minister for agriculture during 1973 to 1977 and was regarded as one of the most effective the country had seen. His pro-farmer stance, as well as his knowledge of agriculture, made him popular among farmers.
Back then, individual member states had their own currencies and Ireland used sterling.
Currency adjustments
However, different rates of inflation in the member states played havoc with the concept of common prices and Germany insisted that there be an inflation adjustment mechanism for agricultural trade.
The so-called green currency phenomenon was born. At a memorable meeting of agriculture ministers, Mark Clinton insisted that, as Ireland was a different country to Britain and even though we shared a common currency with Britain, it was entitled to a separate “green currency”.
As a result, Irish farmers were protected from the inflationary damage and incomes rose strongly, while UK farm incomes suffered badly.
The system eventually waned with the start of the European monetary system and its eventual successor – the euro – finally came into being in 1999.
With full membership conditions and prices achieved by Ireland in 1978, the farming future seemed assured.
Under the new policy to come in next January 2023 we are seeing more discretion being given to the member states
Market supports were in place for the main Irish commodities of milk, beef and cereals.
Sugar production was guaranteed by a quota system and protection against cheaper third-country imports, but the agreement to have unrestricted access to the important French market had to wait for Jim Gibbons (1977 to December 1979), succeeded by Ray MacSharry until June 1981.
The move to mountains and lakes
By 1980, the self-sufficiency lines had crossed. The combination of prices set to assure supplies to consumers and advances in technology, especially in cereals, meant that surpluses began to appear, initially in milk.
But as the early 1980s progressed, with the support policies based on guaranteed prices associated with intervention purchases of surplus production and payments to make exports competitive on world markets, the costs of the CAP became more visible.
Various mechanisms were used to control output. Initially, this was a co-responsibility levy to help pay for disposal of surplus products while quietly abandoning support prices set by the costs of production, the so-called objective method.
All this was, however, just tinkering around the edges and, in 1983, the nettle was finally grasped with the proposal to set a limit on milk production.
Individual quotas were allocated to producers and while Ireland secured a special allowance of 12% over its 1983 output, the imposition of the quota shackled Ireland’s most competitive sector for a full generation.
Price pressures on farmers throughout the 1980s were relentless with a succession of agricultural commissioners attempting to come to grips with mounting beef and cereal intervention stocks.
Change in policy
It was clear that something had to give in the face of rising costs and international criticism.
The nettle was finally grasped by the first Irish European Commissioner for Agriculture Ray MacSharry. The Sligo man had been a tough but dramatically effective Minister for Finance in Dublin. Taking over as agriculture commissioner in 1989, he studied and consulted. His solution was revolutionary.
Guaranteed support prices were cut dramatically by 30% in the case of beef and cereals. Compensation was to be paid to producers based on the number of steers, suckler cows, ewes and acres in cereals. There were numerical limits in the case of bullocks but not in the case of sucklers.
Each producer was entitled to claim on 90 bullocks under 10 months and 90 at between 10 and 22 months, while crops were allowed to be grown on “eligible“ land if it had been demonstrably ploughed in previous years.
The paperwork was – to put it at its mildest – formidable with regulations around the sale and leasing of dairy quotas, as well as annual lists of cattle claiming payment according to strict stocking rate conditions. Extra payments were given for lower-stocked herds.
Commissioner MacSharry’s proposals initially met with a storm of protest but he had done his homework and had especially compared the cereal regime, with its setaside scheme to control output, with how the same concept worked in the United States.
He was convinced it could be operated administratively by the individual member states and he was proven correct.
There were anomalies in the new regime with heifer producers not eligible for any premium payment and sheep producers received less than cattle farmers but, in many ways, the main effect was to transfer a large proportion of the 10- and 22-month premium payments on to calf and weanling prices.
Cattle finishers saw significant reductions in income though specialist bull producers benefited from the higher payment put in place to better reflect the young bull production systems on the continent.
From an Irish suckler cow perspective, the new system came in at a good time as there had been an intensive drive to increase suckler numbers throughout the 1980s following the introduction of milk quotas which put a halt to all dairy expansion.
However, there emerged a complex system of official and voluntary systems limiting how much quota could be bought by individuals.
The premium system, with its rigid recording of ages and numbers on the livestock side, and tillage and setaside confined to eligible land, continued throughout MacSharry’s term.
MacSharry was succeeded by René Steichen before the highly intelligent former Austrian Minister for Agriculture, Franz Fischler, became Commissioner in 1995.
He recognised the rigidities in the system and in a dramatic announcement, he set the concept of the base years ,“the consequences of which are still with us”.
Memories that stick
The main architect of the CAP was undoubtedly the former Dutch Minister for Agriculture, Sicco Mansholt. He had been agriculture commissioner from 1958 until 1972.
Italian Carlo Scarascia-Mugnozza served for one year and was followed by another Dutch man, Pierre Lardinois, between 1973 and 1977.
While the foundation stone of the CAP was common prices across Europe, it became apparent that farmers on difficult land or operating in very high rainfall or drought-prone areas have higher costs of production than their better-placed colleagues. \ David Ruffles
During the early drive for European self-sufficiency in food, the Dutch devised a policy that hugely encouraged intensive livestock production especially pigs and dairy.
With the knowledge gained from their former colonies in the Dutch East Indies, they knew the feed value of manioc or tapioca.
It is a starchy material high in carbohydrate but low in protein.
This was to be admitted into the Community without any of the normal import duties that apply to the European-produced wheat, maize and barley.
Soya
Soya was the main protein source and this too was produced outside Europe and no import duties applied.
So the Dutch had duty-free energy and protein but were producing products that were fully protected against imports from outside the Community – no wonder production boomed in Holland.
By the time the milk quota was imposed, the Dutch had a quota per utilisable hectare which was nine times that of Ireland.
Its pig density was also far higher and by 2016 its total livestock density had reached 3.8 livestock units per hectare, four and a half times the EU average (Eurostat). This stocking density was to lead to environmental problems but that is another story.
I remember at a Green Week in Berlin interviewing Dr Mansholt and he declared that European agricultural prices would never be at world prices because South America would be able to produce cheaper than Europe.
European farmers would, he said, have to be paid prices that reflected European costs.
It was up to the European social welfare system to ensure that the poorest European consumers could afford food produced in Europe.
Dr Mansholt was the author of the Mansholt Plan, which effectively wanted to dramatically increase the scale and productivity of the average European farm, so grants were tailored to farms with the potential to be “fully viable”.
While the concept was broadly accepted, the plan was never fully implemented by the member states.
Disadvantaged area payments
One of the major early innovations in the operation of the CAP was the introduction of disadvantaged areas payments.
The announcement, made by Commissioner Lardinois on a visit to Dublin, marked a fundamental shift in the European view on what a common price for farm output should be.
While the foundation stone of the CAP was common prices across Europe, it became apparent that farmers on difficult land or operating in very high rainfall or drought-prone areas have higher costs of production than their better-placed colleagues.
On his first official visit as Commissioner for Agriculture, Dutchman Pierre Lardinois launched the concept of a special disadvantage area payment for farmers.
Though it was not termed that at the time, this was the beginning of the Pillar II concept where member states would submit a proposal for approval by the Commission and, if approved, the resources necessary would be contributed by both the member state and European funds.
This concept is still very much part of the CAP and, if anything, under the new policy to come in next January 2023 we are seeing more discretion being given to the member states.
As we enter a new stage of the development of the CAP one of the most fundamental transformations has been the relationship between European and world market prices.
Essentially, for the main product groups – dairy, beef and cereals – there is little difference.
The outstanding example is New Zealand milk prices which used be about half European levels but are now on a par, while the network of intervention supports and export refunds have effectively been abolished.
For the future, the concept of ever freer trade in food and agricultural goods that seemed so inevitable just a few months ago is, as the Ukrainian war wages, being questioned with the original concept of food security being increasingly raised.
France, in particular, has become increasingly vocal about European food sovereignty while, on the other hand, agriculture is being continuously asked to be more environmentally conscious and climate aware.
As ever in challenging times, food and farming are at the centre of high-level political policy discussions.
We are undoubtedly at a time of major reassessment – whether fundamental changes will be implemented remains to be seen.
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