Farm Ireland

Thursday 26 April 2018

Devil is in the detail of Ciolos's controversial new SFP regime

John Shirley

This week the bulk of Irish farmers expect to receive the balance of their Single Farm Payment (SFP) for 2011. The current regime continues for 2012 and 2013. What's the future for this payment after 2013? That is the hard question that is being asked.

First I state the positive vibe. The EU, in all of its constituent parts, has accepted that a SFP should continue (almost indefinitely) and that the overall EU budget, and Ireland's share of this budget, should be sustained.

Following a recent period of consultation with the public and stakeholders, the EU Commission concluded that the CAP is good for food security, it is good for activity in remote areas and, if regulated, can be good for the environment and even influence climate change.

In fact, the consultation response was so positive that you would wonder why the current regime needs changing.

Is it only because the Agriculture Commissioner, Dacian Ciolos, wants to tilt the benefits towards his native Romania and Eastern Europe?

And to think that Ireland's Maire Geoghegan-Quinn could have held the Farm Commissioner post during this crucial reform period.

The major change in Commissioner Ciolos's proposals issued in October is the imposition of a flat-rate area-based scheme.

Given Ireland's expected envelope of €1.25bn is to be spread over 4.6m hectares, this gives an average payout at about €271/ha. As this is almost identical to the overall EU average payment, it should mean no cash loss to Ireland as a whole. There will be winners and losers. Some of our top drystock farmers face alarming cuts.

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It is proposed that the new regime will be phased in, starting in 2014 and completed by 2019. In spite of the massive opposition, Commissioner Ciolos is still pushing for 2014 as the reference year for establishing a farmer's base area on which he/she will receive payment from 2014 and beyond.

The other big issue in the Ciolos document is that there are new strings attached to future farm payments. The details on these have to be sorted but, as proposed, they could be a problem.

Under the proposals, the SFP will be divided into a number of elements. The main elements of relevance to Ireland are:

•Basic payment.

•Greening measures (30pc of national ceiling). Conditions for this have to be agreed.

•Reserve for young farmers (2pc of national ceiling).

•Voluntary reserve for disadvantaged areas under natural constraint (5pc of national ceiling).

•Voluntary coupled payment for vulnerable sectors (5-10pc of national ceiling). Ireland could shave off 10pc of the envelope to re-introduce a suckler cow premium and ewe premium of, say, €100/hd and €20/hd.

Speaking at a recent Teagasc beef meeting in Carlow, the IFA's beef committee chairman, Michael Doran, gave examples of how the proposals could impact on individual farmers who are currently on a SFP of €270/ha and €500/ha. I've added an example of a farmer on €100/ha on the same basis. See the tables (above).

This shows the farmer on a €270/ha holding nearly staying static, the farmer on €100/ha (for example a lowly stocked upland farmer) making a substantial gain, but a 100ha farmer on €500/ha facing a loss in SFP payments of €22,050 a year by 2019. Mr Doran said the IFA's position was that payments should be targeted at the active producer. Farm Minister Simon Coveney has expressed a similar view but how is he going to make this happen under the current proposals? Will he regionalise the payments? Will he recouple the suckler cow and ewe premium, which means taking 10pc off the top of the overall fund?

Once it gets down to the detail and the winning and losing farmers emerge, there will be political mayhem.

The minister will also have to tackle the 'greening' proposal which could stop farmers reseeding. Under the current proposal, tillage farmers with more than seven hectares must have a three-crop rotation and revert to a sort of set-aside. There is a lot to play for. Some of the final decisions may be made in the first half of 2013 when Ireland holds the EU presidency. If agreement is not reached in time, the current regime will be rolled over into 2014.

What happens if the euro collapses? Farm payments preceded the euro and are currently being paid in non-euro states such as the UK.

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