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Thursday 13 December 2018

Richard Hackett - 'Automatic CAP payments need to cease; they don't add up any more'

 

Trevor Fleming from Castlemartyr, Co. Cork ploughing with his 1948 Mc Cormick tractor at Ballyfeard Ploughing Match, Co. Cork. Photo: Michael Mac Sweeney/Provision
Trevor Fleming from Castlemartyr, Co. Cork ploughing with his 1948 Mc Cormick tractor at Ballyfeard Ploughing Match, Co. Cork. Photo: Michael Mac Sweeney/Provision

Richard Hackett

With the winter sowing season now well and truly behind us, thoughts at this time of year move to more long-term issues.

Perhaps one of the biggest issues is the upcoming change to the Common Agricultural Policy (CAP). In the early 1990s when the CAP moved from market-based supports to directly supporting farmers, the big fear was that direct support of producers was a doomed concept.

The citizens of the then EEC would baulk at the idea of paying a sector of society for essentially carrying out their work. Twenty-five years on and broadly speaking, this has not materialised.

Citizens of the EU view the investment they make in agricultural supports as being value for money. In the medium term at least, payments from the CAP are secure.

In many ways that's the bad news. The reason for this is that the move to direct producer supports has had more insidious unintentional effects that will have to be faced down at some stage.

Far too many of the problems that agriculture faces are rooted in the area-based payment system. Issues such as land abandonment, scrub encroachment, declining soil fertility, blocked drainage systems, and the proliferation of rushes, are obvious results of the move to minimum agricultural activity.

The low viability of suckler cow enterprises, the huge numbers of people in their 70s, 80s and 90s still calling themselves farmers, and the low level of young people taking up farming as a career, all demonstrate a system that is based on a 'what we have we hold' approach.

Dig a little further and farm safety and farmer wellbeing are also casualties of a system that has fossilised farm structures that are unable to invest or to manoeuvre themselves to face the needs of a more modern society.

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A lot of the comments surrounding the basic payment system would lead one to believe that they are the only income source generated from farming.

This is not and should not be the case. Any farm operating at any level of efficiency should generate a gross income of which the basic payment should make up 15-20pc at most.

True, the basic payment makes up a much higher proportion of on-farm net incomes.

The basic idea is that the production costs are covered from sales of produce with a bit left over, and the basic payment is the guaranteed income for the farmer.

Issues arise, however, when significant investment is required on a farm; liming, drainage, shed repair etc.

People can be get wary of large investments that won't immediately generate higher income. So the farm deteriorates, productivity drops, the little bit left over from production diminishes and less money is available for investment. Yet the basic payment keeps rolling in, oblivious to the state of the land from which its being generated. This becomes the sole focus.

The problem is this system has become normalised. People expect not to make money from beef production, yet they continue with beef.

People forget that vast tracts of land in the north-west Midlands that are now clogged up with rushes and flaggers was excellent grazing land a generation ago. People expect that if a development is worthwhile or would be of benefit to a farm, a grant should be made available for it.

Number 1 issue

Provision of food to feed a population is the number one issue that faces every leader or governing body, from the leader of the small group of hunter-gatherers 20,000 years ago to the head of the largest modern country today. The people have to be fed every day.

The problem is that when we generate 2pc too much food, the price collapses and puts food producers out of business; 2pc too little food and there is rioting in the streets. All modern societies get over this problem by supporting food producers' incomes, so that they endeavour to produce too much food rather than too little, but they remain in business. This was one of the fundamental reasons why the EEC was set up in the first place.

If we are to have a vibrant, safe and productive agricultural industry, the CAP has to be fundamentally changed. Averaging out payments made a generation ago and compelling minimal agricultural activity to draw down these payments has gone past its sell-by date.

Entitlements as a concept have to go. Some other mechanism to reward farmers for producing food at below the full cost of production has to be found.

The transition may be painful, but in the end the prize on offer will be well worth it.

Richard Hackett is an agronomist based in north Co Dublin and is a member of the ITCA and ACA

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