Farm Ireland

Thursday 22 March 2018

EU boss Ciolos rejects 'fig-leaf convergence' CAP proposals

Commissioner calls for Irish solidarity on reforms

Dacian Ciolos European Commissioner for Agriculture and Rural Development

I visited Ireland last week. Alongside Ireland East MEP Mairead McGuiness, I met many established farmers, to discuss the future of the CAP after 2014.

I also met some young farmers, concerned about how to encourage new blood to enter the business -- how to offer the right opportunities for this to happen.

As Commissioner for Agriculture, I know we can and will offer all kinds of incentives. But the key lever, as all farmers in Ireland know, is what we call direct payments, which make up around 80pc of the CAP -- itself still the Union's largest spending policy.

Most farms in Ireland and elsewhere in Europe largely depend on direct payments as a key part of their income.

This is public money well spent -- it secures our food security and represents fair pay for the public goods produced by farmers.

But to keep the system in the future, we must demonstrate to taxpayers and finance ministers that this money is both fairly spent and a good investment for our future.

Without the reforms I have proposed on behalf of the European Commission -- and which is attracting a fair deal of criticism in Ireland -- we will not be in a position to do so convincingly.

Today, in Ireland, all direct payments are 'decoupled' as we say in Brussels jargon. This means that it's not civil servants who decide what or how much farmers produce -- the farmers decide.

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This policy probably sounds odd to many readers, but in reality it's very effective -- it's the very best way we have to meet a triple objective: a more competitive farm sector, which can resist in the bad times when market returns are just not there, and which can no longer be accused in the poorest countries of the planet of distorting world prices.

This we have achieved. But here's the problem. If subsidies are not linked to levels of production, how do we work out how much to give each farmer?

Well, under the current system, the subsidy level is essentially based on how much these farmers produced 10 years ago. As a result, in one part of Ireland a farmer may receive €50/ha, while another might be getting over €600/ha.

I think we can all agree that this is a very big gap indeed, which essentially means that it's the present incumbents who do well out of the system.

Clearly, for the 2014-20 financial period, we can't continue to use these historical references. I can't explain it to taxpayers.

Would it be fair that a farm advantaged because it was well positioned in 2000-2002 would continue to be so for another 10 years? Obviously not.

In fact, I think that maintaining the system as it is not only unfair: It is not good for the economy and it doesn't attract the new full-time entrants into farming that we need.

Does this mean we should strip away all subsidies from those who have been able to build up their activity in large part thanks to the subsidy?

Of course not -- the last thing I, as European Commissioner for Agriculture, would seek is to damage our competitiveness. But I do think the time has come to very significantly reduce the differences in these per hectare payment rates. But let's be clear: Ireland will not lose in this change.

The money resulting from this internal switch will stay in Ireland, for Irish farmers.

Of course, these changes cannot happen overnight. Reducing subsidies is always difficult for those who face the losses and easier for those who benefit from the increases.

Which is why I am facing criticism from those in that first category in Ireland. But the fact is that it's the farms who have benefited most out of this system who have of course been in a position to invest in the best animals and equipment to become the most competitive. As a result, they are those who have already led the way in securing new opportunities in European and global markets. After this long hand up, to build their competitiveness, these farms should be well placed to adjust, and the time has come for us to switch some of that support to others -- so that Irish farm exports, which are already doing well, can grow further.

But if this is to work, the additional payment for farmers on low subsidies today must be significant enough to enable them to invest and strengthen their competitiveness.

Fig-leaf convergence would be catastrophic for the medium-term credibility of the CAP itself. It would be insufficient to attract new entrants with new ideas and fresh energy into the tough business of farming, where initial investment costs -- buying land, a herd, equipment -- are so high.

It would be a political and economic nonsense in a period of crisis when all our productive potential must be exploited to the full.

Ireland's climate and pastures place it in an exceptional position to grow its farming sector, which can be an engine for growth we certainly need.

Real change is not easy, no doubt about that. But that's not a reason not to do it. In these straitened times, we must make sure that we get the best and the fairest value out of every euro of taxpayer money.

This will be our strongest argument to defend the European agricultural budget in the difficult discussions that lie ahead.

If we want a future for our common agricultural policy, we must look to the future, not cling to the past.

I am convinced Irish farmers will once again show solidarity and that we will find a reasonable and pragmatic path to deliver more fairness without hampering the competitiveness of the Irish industry.

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