Farm Ireland

Saturday 24 February 2018

Comment: Gloves off as farming budget under threat of being cut

EU Budget Commissioner Günther Oettinger. Photo: AFP/Getty Images
EU Budget Commissioner Günther Oettinger. Photo: AFP/Getty Images
Louise Hogan

Louise Hogan

The gloves are now clearly off as the scrap for a share of the slimmed-down EU budget gets under way.

The Common Agricultural Policy (CAP) used to underpin farming and food security in the EU was always going to be in the firing line as it accounts for some 40pc of the EU budget. It was an obvious target at a time when security problems and migration issues are never far from the agenda.

Yet the figures paint a stark picture when it comes to Irish agriculture - as farming continues to be highly dependent on direct payments from Brussels.

The latest statistics from agricultural body Teagasc show the average direct payment per farm was nearly €18,000 in 2016. This accounted for three-quarters of farm income on average and almost 100pc of income on the average cattle and sheep farms. The average family farm income last year was just €24,060, with some cattle farms earning just half of that.

Teagasc economist Kevin Hanrahan has already warned payments could fall by as much as 10pc as the UK has been the second largest contributor to the European budget. The annual contribution of the UK has varied but typically stands at around €10bn-€11bn.

Recent figures have estimated that current CAP funding of €58bn could suffer a 7pc-9pc reduction, or a fall of €4bn-€5bn, in the aftermath of Brexit. The current CAP runs until 2019 and delivers €1.5bn in payments each year to Irish farmers.

EU Budget Commissioner Günther Oettinger has indicated he is not in favour of "sweeping cuts", but the reflection paper does advocate "hard choices" have to be made. One of the measures being put forward as a possible solution or scenario does suggest "reduced direct payments". However, the EU has not yet indicated which measure, or series of measures, it favours.

Yet calls are growing for countries to consider contributing more to the budget, with the Irish Cattle and Sheep Farmers' Association (ICSA) saying the Government must increase efforts to protect the CAP funding. It argues the value of the EU budget has already been undermined by the European Central Bank's policy of printing money or quantitative easing that has sent the price of fertilisers, chemicals and diesel spiralling upwards. In effect, farmers are already being dealt a double whammy as they were already feeling the pinch from Brexit due to sterling volatility.

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The Irish Farmers' Association has also argued an increased CAP budget is key to delivering on the EU's environmental and social goals, while the Irish Creamery Milk Suppliers Association has been equally vociferous in defending it.

MEP Mairead McGuinness has said all countries will have to discuss whether they are willing to give more to the budget, with more spending key to ensuring a stronger EU in the post-Brexit era. Shoring up the hole to maintain the EU budget would require upping member state contributions from 1pc to 1.1pc. MEP Marian Harkin feels food security is as relevant as it ever was and must be highlighted to maintain the budget.

Are countries going to be willing to stump up the extra cash to ensure the food security of the bloc? That remains to be seen.

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