Agricultural policy threatens viability of sector

Patrick J Phelan

August 13 2013 04:03 AM

My last article on the failure to fully exploit our land's agricultural potential generated a considerable number of comments.

A subsequent piece by Dr Richard Hackett questioning the robustness of the tillage sector to withstand price volatility begs the question as to the viability of the tillage sector if Single Farm Payments are to be reduced.

The National Farm Survey 2012 showed that direct payments comprised 66pc of income on tillage farms and 118pc on cattle farms.

The survey indicated that 37pc of farms were economically viable; a further 30pc of farms were viable due to off-farm employment and the remaining 33pc were not economically viable.

That is our baseline as we gear up to meet the objectives of Harvest 2020.

CAP reform in 1993 phased out intervention to give direct support to livestock and arable farmers to compensate them for the lack of price support.

The requirement under the Arable Scheme for set aside land is a clear illustration of agricultural policy in conflict with production efficiency.

Land taken out of production had to be land that had produced tillage crops in the past and which remain suitable for arable crop production.

The replacement of the Livestock and Arable Aid schemes in 2005 with the Single Farm Payment Scheme was another incentive blow to the agricultural production.

Farmers could now "stack" entitlements – in other words farm less land and draw down similar rates of payments as under the previous schemes.

Better still they did not have to produce crops or rear livestock- they simply had to keep land in good agricultural condition.

Despite this policy, commercial farmers continued to drive production and adopt new technologies or reduced/ceased production and continued to receive direct payments.

Great credit is due to the cattle farmer who continues to produce despite the fact that cattle sales do not meet production costs.

He is certainly taking his responsibility seriously and contributing to the national economy and producing food for a world where many people are starving.

ECONOMY

It is also important to acknowledge his contribution to the local economy – he employs labour, engages contractors, purchases farm machinery and equipment, provides farmyard facilities and maintains his land to a high standard.

Should another farmer who has scaled down production, contributes little to animal and crop production targets and little to the local community be supported to the same extent by public funds?

Does land ownership convey an automatic right to EU support without a significant response by the recipient to production or even environmental targets?

All recipients of direct payments must comply with 18 Statutory Management Requirements (SMRs) and keep land in good agricultural and environmental condition. To what extent does compliance with those conditions actually impact on the farmer who is at a low/zero level of production?

The SMRs put all productive farmers at a competitive (cost) disadvantage when it comes to selling their product on the world market.

Tillage farmers have to compete with genetically modified (GM) products not only on world markets but also on the home market. GM varieties produce higher yield at lower cost.

Given the current EU standards we are not allowed to grow GM produce but we do import GM produce and Irish farmers must compete with it.

Is the more intensive producer not entitled to a greater rate of direct payment when he is prepared to meet the EU standards?

What would the environmental consequence be of a policy which does not incentivise production on good quality land?

DESTRUCTION

Will it result in destruction of habitats or ecosystems elsewhere to cater for a world population currently at 7.1 billion and predicted to be at 8 billion by 2024 and 10 billion by 2062?

Finally, back to underutilised land in this country.

Every county has land which is not being farmed to its full potential, while in the same counties there are farmers who would love to get access to it.

The lands are needed by a dairy industry which is waiting to expand once quotas go; by potential sugar beet growers waiting for a factory; by young farmers trying to get a "start"; by established farmers who need to expand to maintain their businesses and indeed by tillage farmers who have traditionally made land out of anything they could lay their hands on.

Patrick J Phelan is a member of ACA and ITCA and may be contacted at pj.phelan@itca.ie