Saturday 22 October 2016

CAP revelations shouldn't distract from fundamental issue

Alan Renwick

Published 01/06/2015 | 02:30

Simon Coveney
Simon Coveney

It is clear the distribution of the millions of euro in EU funding from Brussels does not match the objectives for the Common Agricultural Policy (CAP).

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Whilst the significant amounts of taxpayers' money ending up in the hands of well-known businesses and the rights and wrongs of publishing individual payments continue to make the headlines, the publication of data on CAP payments does raise some rather more fundamental questions.

These include the amount of support that should be directed at the farm sector and how it should be distributed.

Irish farmers and rural enterprises receive about €1.8 bn from the CAP, with the top 10pc of recipients getting around 37pc of this.

How we react to these figures depends largely on our often subjective view as to what is equitable or fair.

Whilst accepting that perceptions of fairness will differ from individual to individual, if the objectives for the payments were known, it would be possible to evaluate the distribution of payments to see whether or not they at least matched these objectives.

The problem is that it is not entirely clear what the payments are actually for. For example, it is has been argued at various times and by various groups that the payments are to support: productive agriculture; farmers; the protection and enhancement of our rural environment; the incomes of a disadvantaged group in society and; the wider rural economy.

It is clear that achievement of each of these objectives would lead to a different distribution of payments. If for example, the aim of the CAP is to support productive agriculture then it may be reasonable that the largest producers, who are likely to have invested most in their business, receive most money.

On the other hand, if the aim were to simply support farmers then it may be reasonable to argue that each farmer should receive the same payment.

Whilst there is disagreement over the potential objectives for the CAP, it is clear that the distribution of payments as reported by Department of Agriculture does not match closely with any of them.

It should be noted that the decisions made in the 2014 CAP reform will change this distribution. For example, the decision to cap, if you'll excuse the pun, payments of over €150,000 in Ireland, will curb excessively high payments.

Although welcomed, the fact it is estimated to impact on only around 50 businesses means that it is more of a populist move rather than a serious attempt to alter distribution of payments.

In addition, the move to an area based system rather than one based on historic payment levels does have the potential to lead to significant redistribution and levelling out of payments.

However, the new distribution is still unlikely to look like one that matches any possible rationale for the CAP.

Alan Renwick is Professor of Agriculture and Food Economics at UCD

Irish Independent

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