Debate creeping forward on SFP while commodities boom

John Shirley

In the past week I was at two meetings at which the future of the Single Farm Payment (SFP) was a major issue. The first, a meeting of the South Leinster Region of the IFA, was addressed by the organisation's president, John Bryan. The second, the annual conference of the Agricultural Science Association (ASA), was addressed by Agriculture Minister Simon Coveney and Tassos Haniotis from the EU Commission.

Both Coveney and Bryan were at one in their belief that the SFP should continue to support active farming. Twenty per cent of farmers may be collecting 80pc of the SFP but these 20pc also produce 80pc of the food, said the farm minister. He argued that the SFP was there to offset the extra cost of producing food under the extra regulation and controls imposed by the EU. "It costs more to produce food within the EU, and therefore the SFP is eminently defendable. The EU now has an obligation to produce more food, so a flat rate SFP is not sustainable," added Coveney.

The core of the IFA policy is that the SFP cash must remain in the coffers of active farmers, but John Bryan was aghast at the leaked suggestion that 2014 could be another 'reference year' for determining future SFP rates to farmers.

EU spokesman Haniotis largely kept his powder dry on future SFP arrangements but, like the good Jesuit sticking to the monastery dictate, he did affirm the Commission's line on payment redistribution and also the inclusion of a green element in the SFP. Interestingly, he bemoaned how the land on which he walks his dog did not have a green cover last winter.

I suppose there is some consolation in that there is all-round agreement that the SFP should continue, post- 2013. The arguments are about allocation and distribution of a SFP rather than a phasing out. Across the globe, food security is now an issue. As a result the sentiment in the EU is more favourable to supporting the Community's farmers. Also there is a good chance that the review of the SFP will be finalised in the first half of 2013 when Ireland holds the EU presidency.

However, IFA general secretary Pat Smith did remind the South Leinster meeting of the concern and uncertainty hanging over the whole EU because of the euro crisis.

ASA conference speaker Joe Gill, of Bloxham Stockbrokers, warned that the recent surge in milk, corn and sugar prices was as much about commodity speculation as it was scarcity. He didn't believe that demand had changed sufficiently to drive prices to such levels.

"Financial traders hold 30pc of the world's cotton market as well," he said

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"Is there a danger that the agri sector will believe its own publicity?" asked the food analyst who warned that expansion in milk post-2015 must be on the basis of the industry being able to operate at low prices.

His vision is that Ireland would scale up to become the world's most efficient producer of high quality milk powder, but he stressed that this must not leave either the farmers or the processors carrying a big debt.

Sales of Jameson whiskey are flying, the ASA conference was told. Even in a recession, world sales grew 20pc last year, and sales trebled over the past decade, said a very upbeat Alex Ricard, ex-CEO of Irish Distillers. On the back of this success, production capacity for Jameson whiskey at Midleton, Co Cork, is to be doubled, said Mr Ricard.

The downside to this story is that Irish Distillers is owned by French company Pernod Ricard. Also, it is believed that most of the malt used to distil Jameson is imported. Another reservation shared by some is the belief that Paddy and Powers, brands also made by Irish Distillers, are even better whiskeys than Jameson.

"Is China an opportunity for the Irish dairy industry, or is the Irish dairy industry an opportunity for China?" asked Stuart Roberts of Anglo Beef Processors UK of his fellow ASA panel members.

Breiffini Kennedy, Asia manager with Bord Bia had described how the economic boom is spreading westwards within China and predicted that this will bring even more demand for milk and meat. However, New Zealand, with its 15pc tariff advantage, has cornered the Chinese market for milk powder. Ireland's best prospects in the Chinese market remain in offal and high value milk products. China is using its vast horde of cash to buy up land and food production capacity, especially across Africa and South America. Hence the rhetorical question from Mr Roberts. Ireland's family farm structure makes it difficult for the Chinese to get a food producing foothold in this country, but I am sure that we are under their microscope.

Meanwhile, China continues to mop up soya bean supplies from around the world absorbing 60pc of global supply.

Indo Farming

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