Farm Ireland
Independent.ie

Wednesday 18 October 2017

Will coupled payments help our finances?

Darragh McCullough

Darragh McCullough

One of the popular myths doing the rounds in farming at the moment is that the suckler herd is in decline.

In fact, the opposite is the case.

Since beef prices started their 30pc rise over the last two-and-a-half years, the suckler herd has followed suit.

So why is a coupled payment being touted to 'save' the suckler herd?

At this stage in the CAP reform debate, a coupled payment of something close to 7pc of the country's farm payment pot is a real possibility.

That equates to about €84m. If sheep farmers get €10/ewe, it would take about €24m of the total. That leaves €60m for the 1,116,587 suckler cows that calved here last year, or about €54/cow. In fact, with the last Department data showing a further increase in numbers during the first five months of 2013, this amount is likely to be closer to €50/cow if it comes in.

But would farmers really be better off if this payment was put in place?

With the typical payment for a suckler farmer at €400/ha, a 7pc slice of this to fund the coupled payment equates to €28/ha or a €1,120 cut for a 40ha farm.

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After taking account of the €50/cow coupled payment for 50 cows, this farmer would be €1,380 better off.

REDUCTIONS

You would think that an organisation that is mainly made up of suckler farmers would be in favour of this.

But the ICSA is convinced that the introduction of a coupled suckler payment now will ultimately lead to a reduction in cattle prices across the board.

In the first week of 2011, when beef prices were still rumbling along at €3.40/kg, the ICSA's general secretary, Eddie Punch, predicted that beef prices would break the €4/kg before the end of 2011. His prediction was based on the fact that suckler cow numbers had slipped to less than 1m in 2010, and the supply-demand dynamic would work in farmers' favour. How right he was.

Mr Punch argues that introducing a coupled payment for suckler cows at this stage will lock in numbers at 1.15m cows, which in turn will put pressure on prices again.

He believes that an extra €50/cow is "Mickey Mouse" money in the face of a potential price collapse. Of course it would be a welcome addition if it was 'new' money being added to the Irish farm subsidy pot. But, when it's all coming out of the existing amount, it is a different ball-game, he says.

In addition, Mr Punch believes that the main Irish lobby behind a coupled payment is being steered by the meat factories. More cows mean more throughput and greater downward pressure on price.

It is a compelling argument against a concept that rarely gets the analysis it deserves.

Irish Independent

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