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Monday 20 August 2018

Farm incomes facing potential €200m hit

Earnings could fall by up to 10pc as EU opts for performance-based approach on payments

Sarah Collins

Irish farm income could fall by €200m a year depending on the exact design of the future Common Agricultural Policy (CAP).

An EU Commission impact analysis accompanying last week’s CAP proposals put the drop in European farm incomes over the coming years at between 2pc and 10pc.

This equates in an Irish context to a drop of between €40m and €200m per annum given that the 2016 Teagasc National Farm Survey put overall annual income in the farm  sector at more than €2bn (85,000 farmers at an average income of €24,000 per year).

The EU assessment follows on from an IFA analysis which claimed  that last week’s CAP proposals will cost the Irish farm sector up to  €1bn or around €160m a year between 2021 and 2027.

The CAP proposals announced by Agriculture Commissioner Phil Hogan last Friday will see €365bn spent on European farming between 2021 and 2027.

This amounts to a 5pc cut in EU farm spending, which is in line with the announcement made by Budget Commissioner Günther Oettinger earlier this year.

However, critics say the overall budget cut will be far greater than the 5pc the Commission has estimated due to rising inflation and because the Commission has used 2020 as a comparison rather than the previous 2014-20 budget period.

This week it emerged that Ireland has teamed up with five other EU countries to resist the CAP cuts.

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Farm ministers and representatives of the Spanish, French, Irish,  Portuguese, Finnish and Greek governments met in Madrid last Thursday,  where they called for the maintenance of the CAP budget at its current  level.

Ireland and its five CAP allies will put their position to the Commission at the next agriculture ministers’  meeting in Luxembourg later this month.

Compliance

The new CAP proposals shift responsibility for designing and checking CAP plans to national governments.

It links all payments to compliance with a set of nine environmental,  social and economic objectives.

The farm policy of each Member State must be set out in a CAP Strategic Plan which has to be approved by the Commission.

Commenting in today’s Farming Independent on the CAP announcement, Professor Alan Matthews of Trinity College said the proposals marked a potentially dramatic  shift in the way EU farm policy is delivered. 

“The general objectives of the CAP remain much the same as today, but the way these objectives will be pursued will change dramatically, at least for the Member States and their paying agencies.

“This is summarised as a shift from a compliance-based to a performance-based approach,” Professor Matthews said.

However, he maintained that  measures around capping and front-loading of payments were essentially meaningless, although the demand from 75pc convergence will drive up CAP payments for farmers with lower entitlements.

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