CAP ensures quality food
Farming and the agri-food sector is Ireland’s largest indigenous productive sector, exporting food and drink worth over €11bn in 2016 and providing employment to over 300,000 people directly and indirectly.
It has been a key driver in Ireland’s economic recovery and is the backbone of economic activity across the rural economy.
The agricultural sector is more integrated into the EU than any other economic sector. It is the only major sector with a common policy, centrally funded from the EU budget, with a level of national co-financing from member states under the Rural Development Programme. At less than 0.35% of EU GDP, expenditure on the Common Agricultural Policy (CAP) represents good value for money.
Since its inception, the CAP has been of vital importance for producers and provides European consumers with a plentiful supply of high quality, sustainably produced food at affordable prices.
For Ireland, it has been the single greatest source of EU funding since we joined in 1973. In the intervening 45 years, the policy has evolved with the aim of achieving a balance between increasing market orientation and adapting to the emerging demands of society (environment, animal health and welfare).
The “European model of agriculture” is a social contract between farmers and the rest of society; whereby farmers produce high-quality safe food, renewable energy, and certain non-market services, ensuring high environmental protection, landscape management and animal health and welfare standards. In return, the CAP has provided support for the continuation of the unique family-farm scale of production in the EU.
Over the years, the CAP has undergone significant reforms, responding to the demands of European society and consumers. There is now recognition for the multiple roles of farmers, as food, fuel and energy producers, in addition to meeting environmental requirements and other public goods.
The current two-pillar structure of the CAP addresses complementary, but differing needs. Pillar I provides income support to farmers through direct payments. Pillar II provides targeted rural development measures, which meet a broad range of challenges in rural areas.
The CAP has changed fundamentally since the early 1990s, The budgetary pressure, as well as
changing requirements from farmers and from society stimulated calls for a reform from within the EU. The impact on world market prices and on agricultural production in developing countries provoked criticism from the rest of the world.
The accessions taking place in the 1990s, and the huge enlargement in 2004 when 10 states joined the EU all at once, put further pressure on the efficiency of the system. The CAP budget now had to be divided between almost twice as many farmers, as the number of full-time farmers increased from 6m to 11.5m between 2004 and 2007.
The core element of the reform process of the CAP has been the shift from product support to producer support. Rather than ensuring a fixed price for agricultural products (and hence supporting farmers’ income indirectly), the CAP today focuses on supporting farmers’ income directly.
In 2003, a major overhaul of the CAP was undertaken. The aim was to decouple the majority of all direct payments from production. That is, farmers were no longer to receive payments related to a specific type of production.
Meanwhile, the decoupled
direct payment ensures a basic income support for producers. The rest of the producers’ income is determined by the market. In order to maximise profits producers must respond to market signals, producing products that are demanded by consumers. Farmers are not required to produce on the land they receive support for. The payments are linked to adherence to environmental standards, and standards related to animal and plant health. This system is referred to as cross compliance.
Measures relating to structural adjustment of farming and the provision of public goods (eg, environmental benefits, biodiversity) by farming practices have been supported under the CAP for a long time. These measures are now an important element of CAP, referred to as rural development policy.
Rural development policy
The current rural development policy with its diverse range of flexible instruments is critically important in supporting targeted programmes that reflect the different needs and circumstances in member states.
Measures under the rural development programme seek to do the following:
■ Improve competitiveness at farm level, support innovation and diversification, and extend knowledge transfer;
■ Encourage restructuring of the agriculture sector;
■ Funds farming in Areas of Natural Constraint;
■ Protect the rural environment and landscape;
■ Assist farmers in meeting new challenges, including climate change mitigation, renewable energy, water management and biodiversity; and
■ Encourage enterprise development and employment in the rural economy.
Low farm income in many sectors is providing a challenge to the sustainability of farming and to attracting new entrants. The ambition for CAP post 2020 has to be an overall improvement in farm income levels, through direct support, targeted measures for investment and efficiency, a stronger position for farmers in the food supply chain.
A strong CAP budget post-2020 is critical for farm incomes, farm output and wider economic activity. The Commission has identified that since the last CAP reform, agricultural prices have fallen substantially and market uncertainty has increased, due in part to macroeconomic factors and geopolitical decisions, such as Brexit.
Overall, the new CAP must ensure a strong, economically viable and competitive agriculture for the benefit of farmers and consumers alike.
IFA president, Joe Healy, meeting EU chief negotiator, Michel Barnier, to discuss the issues for Irish farmers arising from Britain’s decision to leave the European Union.