Phil Hogan: Protecting our farmers’ vital direct payments is a priority for the EU
The potential impact of Brexit on the Irish economy, particularly on the Irish agri-food sector, has been discussed and debated the length and breadth of the country for the last year and a half and it will continue up to and beyond March 29 next, when the UK leaves the European Union.
For Irish farmers, one of the key concerns relates to the impact that Brexit might have on the EU budget and, especially, on the Common Agricultural Policy (CAP) budget post-2020.
The European Commission’s ‘Reflection Paper on the Future of EU Finances’, published last June, acknowledged the “gap in EU finances from the United Kingdom’s withdrawal and from the financing needs of new priorities” and concluded that “hard choices will have to be made”.
The commission’s contribution to the Informal Leaders’ Meeting on February 23 noted that “the withdrawal of the United Kingdom from the union will mean the loss of a significant contributor to the financing of the union’s policies and programmes”.
In a speech I gave to more than 700 farmers in Kilkenny two weeks ago, I said that “in the absence of more money from member states, there will be a cut to the CAP budget, and there’s no point trying to sugar-coat that fact”.
Remember, the European Commission cannot run a financial deficit. So, against the backdrop of Brexit and the €12bn hole it is blowing in the overall European budget – as well as other priorities such as security, migration and defence that have grown in prominence in recent years – the CAP budget is being cut by less than 5pc. I regard this as a very fair outcome for Irish farmers, particularly given the challenging circumstances in which the budget has been framed.
Moreover, it vindicates the argument I have been making that the CAP needs to be adequately funded to support farmers and the wider agri-food sector, which supports millions of farmers throughout the EU and which is Ireland’s largest indigenous sector. Of course, if member states agree to contribute more money, this cut will be reduced.
Everywhere I go throughout Europe and every time I meet Irish farmers and farm leaders, I am constantly reminded of the vital importance of direct payments as essential income support.
I have listened very carefully to these messages and have, therefore, decided to prioritise the protection of direct payments in the new budget. As a result, direct payments will not fall by more than 4pc in any member state.
In fact, the proportion of the overall CAP budget accounted for by direct payments will now increase slightly to around 72pc of the budget (from 70pc presently).
Moreover, we are proposing a cap of payments at €60,000 per farmer. The savings generated from this capping can be redistributed to smaller farmers. This should serve to further mitigate the impact on the incomes of the small and medium-sized farms, which are the heartbeat of rural Ireland.
Rural development is also a very important part of the CAP. Reflecting that rural development is a shared endeavour, funded by both the EU and at a national level, our proposal is to achieve savings at EU level by asking the Irish Government and the other member states to increase their contribution to rural development. This will allow public support to rural development to remain largely unchanged and ensure that farmers who are working the land in areas of natural constraint (ANCs) will not receive any reduction in this support.
This budget was prepared on the basis that there would be no increase in member states’ contributions to the EU budget. However, member states can still decide to contribute more, and both the Budget Commissioner Günther Oettinger and I have been calling for them to do so.
A number of EU leaders, including Taoiseach Leo Varadkar, have supported this call and it could yet well be the case that the European Council will agree to increase the size of the budget, with potentially positive consequences for the CAP budget and the support for Irish farmers.
This budget has been about choices, and the European Commission has chosen to maintain a strong and well-funded Common Agricultural Policy.
We have also chosen to prioritise the protection of direct payments, recognising their vital contribution to farm incomes and, through capping, we have chosen to focus on small and medium-sized farmers. In the coming weeks, the commission will publish its legislative proposals for the next CAP, which will include a specific set of measures to support young farmers.
This is a fair budget, which will ensure EU support of €365bn for millions of European farmers, including tens of thousands in Ireland.
Phil Hogan is EU Commissioner for
Agriculture and Rural Development
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