Tuesday 27 September 2016

Taxpayers' cash going to sheikh proves system stinks

Published 19/09/2016 | 02:30

Dubai's ruler Sheikh Mohammed bin Rashid al-Maktoum Picture: Reuters
Dubai's ruler Sheikh Mohammed bin Rashid al-Maktoum Picture: Reuters

Handing over €150,000 of taxpayers' money every year to one of the richest sheikhs in the world is yet another example of how bonkers the EU's farm subsidy system has become.

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The EU's Common Agricultural Policy (CAP) was designed to stem the flow of people, and small farmers in particular, from peripheral rural areas into the cities of Europe. In the process, the EU hoped to create a more equal society, and also ensure that it would never be beholden on any other region of the world for its food.

Some 50 years later, we've ended up with a mess where some of the world's wealthiest people are the biggest beneficiaries of a farm fund that costs European taxpayers €55bn a year to maintain.

When Sheikh Maktoum first invested in land in Ireland over 30 years ago, he never envisaged that he'd become one of the country's biggest beneficiaries of farm subsidies. The story can be traced back to the 1990s when beef was piling up in cold storage all over Europe as farmers chased their 'double punch' bullocks, their suckler cow payments and slaughter premiums. It all amounted to hundreds of pounds per animal, and turned into a racket where stock was produced solely to collect the subsidies, regardless of whether there was customer for it. The same thing was happening in almost every European farm sector, with over-production leading to those butter mountains and wine lakes.

The mandarins in Brussels decided something had to change, and started to move the subsidy regime away from headage payments to a rate for every acre of land that somebody farms. The politicians came up with a formula that based the payment per acre on whatever headage payments the farmer had been claiming up to that point.

That's why all of the country's biggest beef barons have massive Single Farm Payments. Their huge feedlots were hoovering up millions in slaughter premia, and these payments were simply converted into a handout that was tied to the land that the barons owned.

That caused its own problems when farmers realised that some of their neighbours were getting payments of up to €800/ac, when the average farmer was only getting €100/ac. Some farmers operating on the hills in the west were getting as little as €20/ac. More were getting nothing at all.

So the Brussels boys came up with another plan - to 'flatten' all the payments so that everybody gets the same, regardless of what you were farming or how much you were claiming. And that's how the sheikhs of this world ended up with six-figure farm payments, courtesy of the European taxpayer.

Some estimates suggest that 80pc of the EU's farm payments go to just 20pc of the farmers - the big ones.

And so much for food security. The EU now relies on ecologically sensitive parts of the world, such as Brazil, for up to 75pc of its proteins for animal feed.

Defenders of the CAP will claim that it creates food that is safer and produced in a more environmentally sustainable way than anywhere else on the planet. I would argue that there are plenty of examples of sustainable, healthy food production systems all over the world that survive without a subsidy regime. New Zealand is the classic example, with their dairy sector providing a blueprint for most Irish farmers, despite having done away with subsidies 30 years ago.

There's no doubt that the €1.2bn that comes into Ireland annually in farm subsidies is badly needed on the vast majority of farms. But the system stinks, and is a massive waste of taxpayers' money.

Irish Independent

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