Farm Ireland
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Monday 11 December 2017

How reforms to CAP might alter your SFP

Farming Independent offers most accurate predictions yet

Darragh McCullough

Darragh McCullough

Figures released by the Department of Agriculture in the last week have allowed us to generate the most accurate predictions yet on the effect of the latest CAP reforms on farmers' Single Farm Payments (SFP).

While the projections are based on 2010 data, the 2.6pc decrease in the overall budget has been factored in, along with the additional 0.5pc decrease in the budget between now and 2019.

It should be borne in mind that the calculations take no account of the effect of the various options open to the Department still, or of inflation during the coming years.

The calculations are amended and deductions made for a national reserve, a crisis fund and the young farmers' fund, which all impact on the overall budget in different ways:

1. The national reserve only comes out of the part of the direct payments' pot that is not allocated to greening. In other words, it is calculated on the basis of 70pc of the €1.216bn budget in 2015. This is not a new measure. It is designed to cater for the force majeure cases that crop up almost every year. During the last CAP, the national reserve was also deducted from farm payments, at a rate of 2pc of the total. In addition, it was only deducted one year out of seven. The Minister for Agriculture has the discretion to deduct up to 3pc for this fund. But, Department officials have no reason to believe the draw will be any bigger than the last time and therefore expect it to be closer to 2pc than 3pc.

2. The crisis fund is another fund that is designed to create a reserve within the EU to cater for unexpected farming disasters such as the E.coli outbreak that resulted in thousands of tonnes of tomatoes and cucumbers being dumped in Germany and Spain in 2011. It could also be used to help out farmers stricken by weather disasters. It will amount to a 1pc deduction from the total each year, including next year, 2014.

3. The young farmers' fund is the last deduction, although the Department will argue that all these deductions are actually staying within the farming community. It can be up to 2pc a year, but experienced personnel with the Department estimate that it will not add up to much more than a 1pc deduction from the total each year. It kicks in from 2015.

By taking more realistic estimates of the actual deductions from the overall amount each year between now and 2019, many of the projected payments have increased compared to previous forecasts. The minimum payment is higher at €160/ha. Those on the highest SFPs will not be cut by as much as was initially expected but the reductions will still be significant. For example, payments that are currently over €1,000/ha will fall by 28pc under approximation to €830/ha.

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The group that stands to gain most of the money being transferred from high to low payments are those in the €20-150/ha bracket. They get almost 75pc of the €103m being transferred from those on above the national average of €252/ha. The group that shoulders most of this transfer are farmers on payments of €300-550/ha. The 6-18pc cut on this group yields €68.6m through approximation.

Irish Independent