So far, debate on the 2020 Common Agricultural Policy (CAP) has concentrated on securing an adequate budget. As it stands, the European Commission is proposing a 5% cut compared to current funding.
The IFA argues that when inflation is taken into account, the cut equates to 17% or €3,000 per farmer.
Whatever the argument about having CAP payments index-linked, there is no disputing that the proposed share of the EU budget allocated to agriculture will fall from the current level of almost 40% to less than 30%.
While the budget will be settled by the heads of state, farmers and the Department of Agriculture need to think about the shape of the next CAP.
The Commission is planning to give member states greater flexibility in terms of how schemes are designed. With greater flexibility comes the need for greater engagement at member state level. The Government and farm organisations will not be able to adopt a blame-it-on-Brussels approach to poorly designed schemes.
Having a clear strategy for the development of the sector is the first step in ensuring that the next CAP delivers – not just in supporting production but also in helping farmers adjust to environmental challenges.
A focus on economic sustainability does not need to come at the expense of environmental sustainability. In fact, one should complement the other. A core element has to be to provide support for farming systems and land management practices that protect and enhance biodiversity and the preservation of priority habitats and species. However, given the link between environmental and economic sustainability, targeted environmental schemes should be something all farmers can embrace.
Without a clear strategy, we risk allowing the next CAP to be shaped by policies that are popular rather than those aligned to the long-term development of the sector.
CAP cannot be outsourced to a citizens’ assembly, where policy is developed on what sounds best in focus groups
We saw glimpses of this in Brussels this week as the European Parliament’s agriculture committee voted on CAP reform proposals. With election manifestos being drafted ahead of May elections, it was no surprise that the capping and flattening of payments, along with the allocation of more funding towards environmental schemes, all received widespread support from MEPs – just weeks before they go on the election trail.
Debate informed with facts
One of the greatest defences we have against allowing the popular view to shape policy is to demand that the debate is informed with the facts. The Department and Teagasc have an important role to play in this regard.
CAP is both too complex and too important to family farm income to allow politicians and stakeholders make sweeping statements on policy reform in the absence of detailed analysis. It is an issue that cannot be outsourced to a citizens’ assembly, where policy is developed on what sounds best in focus groups as opposed to what is right for the long-term development of our largest indigenous sector.
European Commissioner for Agriculture Phil Hogan at the launch of CAP proposals.
Teagasc and the Department should carry out and make public a detailed analysis on the shift that has taken place in support payments over the past 10 years – not just across sectors but also looking at farm size, productivity and structure. Has the redistribution of payments delivered the expected outcome and what group of farmers will fund and benefit from further redistribution?
Active farmers
Meanwhile, in a situation where the value of supports in CAP is being eroded, introducing eligibility criteria and looking at what constitutes an active farmer will come more into focus. The definition of an active farmer is causing real headaches for policy-makers. This issue was created as a consequence of decoupling CAP payments from production. The logical solution to ensuring payments are directed at active farmers is to once again link them to production. It is an unlikely outcome given the Commission’s unwavering commitment to aligning CAP to WTO disciplines – this is despite numerous examples of countries now reshaping agricultural policy to suit national interests rather than WTO regulations.
Given its importance in shaping future policy direction, establishing a clear definition of what will constitute an active farmer is something the Department cannot ignore. Continuing to base payments on farming activity that took place almost two decades ago is clearly open for challenge.
However, at the same time, a move to total flattening of payments, where the farmer getting up to calve the cow, cut the grain or lamb the ewe has their payment reduced simply as a means of transferring that money to a landowner, irrespective of their contribution to agriculture or the wider food industry, would be a case of taking the easy option. Defining an active farmer is a thorny issue but one that will have to be tackled.
Environment: strong lobbying and robust science delivers
The report agreed by the Joint Oireachtas Committee on Climate Action last week represented a positive outcome for farmers. It struck a balance between recognising Ireland’s position as a carbon-efficient food producer while acknowledging the potential for further improvements within the sector.
Faced with a recommendation from the Citizens’ Assembly to impose a specific tax on farmers, the committee could have been steered down a very different pathway.
There is no doubt that the final outcome of the report reflects the power of adopting a fact-based lobbying approach supported by independent science.
The combined strength of Teagasc and the IFA in this regard should be acknowledged. With across-party support, the report will play a key role in shaping climate policy for future Governments. Minister for Communications, Climate Action and Environment Richard Bruton has acknowledged that the report will feed into his All Government Climate Plan, currently being developed.
Of course there can be no room for complacency and attention must now turn to developing a plan that supports farmers in implementing the Teagasc plan.
Dairy calf to beef: Glanbia and Kepak scheme should be welcomed
Glanbia CEO Jim Bergin, Minister for Agriculture Michael Creed and Kepak CEO at the launch of the Twenty20 Beef Club. \ Finbarr O'Rourke
Also this week, Adam Woods details the new dairy calf to beef scheme introduced by Glanbia and Kepak. It is a positive step and should be welcomed on the basis that it gives farmers increased price transparency and will help to improve the quality of calves.
It is clear that considerable effort has gone into tackling issues in the supply chain but ultimately success will be determined by whether profits are adequate at farm level to reflect the additional requirements.
Furthermore, Kepak suppliers will require reassurances that the premium prices on offer for the dairy-bred stock will be returned from the market rather than be reflected in the prices offered for commercial animals.
Meanwhile, we once again see Glanbia aligning schemes in a way that locks farmers in when buying inputs. It is essential that we have full transparency to ensure farmers continue to get value for money on key inputs. While a captive customer base should deliver cost savings to the farmer, there is always the risk that lack of competition makes business lazy and stifles innovation.
To safeguard against this, the co-op model should allow for an independent audit to be conducted annually to ensure farmers in these “locked-in schemes” are not being penalised and continue to get inputs at competitive prices before the inclusion of any scheme-linked dividend. It is difficult to see how a board of farmer directors could object to such a move.
Dairy: Ornua posts record profits for 2018 but trends are worrying
Ornua CEO John Jordan. \ Donal O' Leary
As Eoin Lowry reports, Ornua posted record profits in 2018. The success of Kerrygold is once again at the heart of it. For the first time, Ornua pulls out the value of the brand premium secured in the market by Kerrygold to Irish farmers. At €18m, Kerrygold is in the sweet spot of returning a premium while driving volume, now accounting for over one billion litres of Irish milk every year.
Exporting to over 110 countries, Ornua is ideally positioned to identify global trends. Of concern would be an apparent slowdown in demand growth for dairy products. Typically running at 2% per annum, the figure for 2018 is likely to be closer to 1%. Some of the drivers are temporary such as ongoing trade wars and Brexit.
However, dairy is a luxury protein and demand growth is linked closely to economic growth. With a slowdown in global growth, it is important the focus at farm level remains on business resilience in the event that we see supply outstripping demand.
So far, debate on the 2020 Common Agricultural Policy (CAP) has concentrated on securing an adequate budget. As it stands, the European Commission is proposing a 5% cut compared to current funding.
The IFA argues that when inflation is taken into account, the cut equates to 17% or €3,000 per farmer.
Whatever the argument about having CAP payments index-linked, there is no disputing that the proposed share of the EU budget allocated to agriculture will fall from the current level of almost 40% to less than 30%.
While the budget will be settled by the heads of state, farmers and the Department of Agriculture need to think about the shape of the next CAP.
The Commission is planning to give member states greater flexibility in terms of how schemes are designed. With greater flexibility comes the need for greater engagement at member state level. The Government and farm organisations will not be able to adopt a blame-it-on-Brussels approach to poorly designed schemes.
Having a clear strategy for the development of the sector is the first step in ensuring that the next CAP delivers – not just in supporting production but also in helping farmers adjust to environmental challenges.
A focus on economic sustainability does not need to come at the expense of environmental sustainability. In fact, one should complement the other. A core element has to be to provide support for farming systems and land management practices that protect and enhance biodiversity and the preservation of priority habitats and species. However, given the link between environmental and economic sustainability, targeted environmental schemes should be something all farmers can embrace.
Without a clear strategy, we risk allowing the next CAP to be shaped by policies that are popular rather than those aligned to the long-term development of the sector.
CAP cannot be outsourced to a citizens’ assembly, where policy is developed on what sounds best in focus groups
We saw glimpses of this in Brussels this week as the European Parliament’s agriculture committee voted on CAP reform proposals. With election manifestos being drafted ahead of May elections, it was no surprise that the capping and flattening of payments, along with the allocation of more funding towards environmental schemes, all received widespread support from MEPs – just weeks before they go on the election trail.
Debate informed with facts
One of the greatest defences we have against allowing the popular view to shape policy is to demand that the debate is informed with the facts. The Department and Teagasc have an important role to play in this regard.
CAP is both too complex and too important to family farm income to allow politicians and stakeholders make sweeping statements on policy reform in the absence of detailed analysis. It is an issue that cannot be outsourced to a citizens’ assembly, where policy is developed on what sounds best in focus groups as opposed to what is right for the long-term development of our largest indigenous sector.
European Commissioner for Agriculture Phil Hogan at the launch of CAP proposals.
Teagasc and the Department should carry out and make public a detailed analysis on the shift that has taken place in support payments over the past 10 years – not just across sectors but also looking at farm size, productivity and structure. Has the redistribution of payments delivered the expected outcome and what group of farmers will fund and benefit from further redistribution?
Active farmers
Meanwhile, in a situation where the value of supports in CAP is being eroded, introducing eligibility criteria and looking at what constitutes an active farmer will come more into focus. The definition of an active farmer is causing real headaches for policy-makers. This issue was created as a consequence of decoupling CAP payments from production. The logical solution to ensuring payments are directed at active farmers is to once again link them to production. It is an unlikely outcome given the Commission’s unwavering commitment to aligning CAP to WTO disciplines – this is despite numerous examples of countries now reshaping agricultural policy to suit national interests rather than WTO regulations.
Given its importance in shaping future policy direction, establishing a clear definition of what will constitute an active farmer is something the Department cannot ignore. Continuing to base payments on farming activity that took place almost two decades ago is clearly open for challenge.
However, at the same time, a move to total flattening of payments, where the farmer getting up to calve the cow, cut the grain or lamb the ewe has their payment reduced simply as a means of transferring that money to a landowner, irrespective of their contribution to agriculture or the wider food industry, would be a case of taking the easy option. Defining an active farmer is a thorny issue but one that will have to be tackled.
Environment: strong lobbying and robust science delivers
The report agreed by the Joint Oireachtas Committee on Climate Action last week represented a positive outcome for farmers. It struck a balance between recognising Ireland’s position as a carbon-efficient food producer while acknowledging the potential for further improvements within the sector.
Faced with a recommendation from the Citizens’ Assembly to impose a specific tax on farmers, the committee could have been steered down a very different pathway.
There is no doubt that the final outcome of the report reflects the power of adopting a fact-based lobbying approach supported by independent science.
The combined strength of Teagasc and the IFA in this regard should be acknowledged. With across-party support, the report will play a key role in shaping climate policy for future Governments. Minister for Communications, Climate Action and Environment Richard Bruton has acknowledged that the report will feed into his All Government Climate Plan, currently being developed.
Of course there can be no room for complacency and attention must now turn to developing a plan that supports farmers in implementing the Teagasc plan.
Dairy calf to beef: Glanbia and Kepak scheme should be welcomed
Glanbia CEO Jim Bergin, Minister for Agriculture Michael Creed and Kepak CEO at the launch of the Twenty20 Beef Club. \ Finbarr O'Rourke
Also this week, Adam Woods details the new dairy calf to beef scheme introduced by Glanbia and Kepak. It is a positive step and should be welcomed on the basis that it gives farmers increased price transparency and will help to improve the quality of calves.
It is clear that considerable effort has gone into tackling issues in the supply chain but ultimately success will be determined by whether profits are adequate at farm level to reflect the additional requirements.
Furthermore, Kepak suppliers will require reassurances that the premium prices on offer for the dairy-bred stock will be returned from the market rather than be reflected in the prices offered for commercial animals.
Meanwhile, we once again see Glanbia aligning schemes in a way that locks farmers in when buying inputs. It is essential that we have full transparency to ensure farmers continue to get value for money on key inputs. While a captive customer base should deliver cost savings to the farmer, there is always the risk that lack of competition makes business lazy and stifles innovation.
To safeguard against this, the co-op model should allow for an independent audit to be conducted annually to ensure farmers in these “locked-in schemes” are not being penalised and continue to get inputs at competitive prices before the inclusion of any scheme-linked dividend. It is difficult to see how a board of farmer directors could object to such a move.
Dairy: Ornua posts record profits for 2018 but trends are worrying
Ornua CEO John Jordan. \ Donal O' Leary
As Eoin Lowry reports, Ornua posted record profits in 2018. The success of Kerrygold is once again at the heart of it. For the first time, Ornua pulls out the value of the brand premium secured in the market by Kerrygold to Irish farmers. At €18m, Kerrygold is in the sweet spot of returning a premium while driving volume, now accounting for over one billion litres of Irish milk every year.
Exporting to over 110 countries, Ornua is ideally positioned to identify global trends. Of concern would be an apparent slowdown in demand growth for dairy products. Typically running at 2% per annum, the figure for 2018 is likely to be closer to 1%. Some of the drivers are temporary such as ongoing trade wars and Brexit.
However, dairy is a luxury protein and demand growth is linked closely to economic growth. With a slowdown in global growth, it is important the focus at farm level remains on business resilience in the event that we see supply outstripping demand.
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