EU agriculture policy reform:Implications for Irish agriculture

Mairead McGuinness MEPClonmel,

Co. Tipperary.

March 8, 2012

Content of presentation

• EU Budget 2014-2020

• Proposal for reform of Direct Payments

• Rural Development

• Market Measures

• Key areas of concern for Ireland

• Process/timing

Budget

•Multiannual Financial Framework (MFF)

•Difficult negotiations

•Agriculture budget set at 2013 levels-proposal

•Economic crisis backdrop

•Agriculture 40% EU Budget, 0.5% EU GDP

Budget 2

• Ireland: €1.8 billion from CAP budget

• Direct Payments: €1.3 billion

• Rural Development: €350 million

Budget 3

• Additional funding for agriculture under research and innovation budget, food safety, food for deprived persons

• European Globalisation Adjustment Fund

• Crisis reserve in agriculture sector

Redistribution of Direct Payments

• Fairness between Member States

• Closing the gap: Commission proposal to bring Member States below 90% of the EU average payment one third of the way to 90%

• By reducing funds to Member States above 100% of EU average

Redistribution of DP - Closing one third of the gap between current level and 90% of EU

average by 2020

0

100

200

300

400

500

600

700

800

EUR/ha

DP new distribution (EUR/ha)** DP status-quo (EUR/ha)*EU-27 average (EUR/ha) 90% of EU-27 average (EUR/ha)

Source: European Commission

Redistribution within Member States

• Move to flat rate payment/ha by 2019

• Member States at different starting points

• 8 Member States with historic based payments

• Convergence

812 383 783 1401

2961

6568

14965

28504

15641 15253

13928

11924

9590

3874

0

5000

10000

15000

20000

25000

30000

from€20 <€50

from€50 <€100

from€100 <€150

from€150 <€200

from€200 <€250

from€250 <€300

from€300 <€400

from€400 <€500

from€500 <€600

from€600 <€700

from€700 <€800

from€800 <€900

from€900 <€1,000

€ 1,000+

Distribution of SFP payment per hectare in IrelandNumber of Farmers

Source: Department of Agriculture

Per Hectare Payment

COUNTY FARMERS AMOUNT PAID AVERAGE PAYMENT PER COUNTY

CARLOW 1,622 €25,107,834.28 €15,479.55

CAVAN 4,722 €35,907,064.33 €7,604.21

CLARE 6,015 €48,399,815.92 €8,046.52

CORK 12,725 €169,099,714.81 €13,288.78

DONEGAL 7,894 €48,357,574.53 €6,125.86

DUBLIN 618 €9,198,332.84 €14,884.04

GALWAY 11,771 €80,254,970.11 €6,818.02

KERRY 7,565 €59,156,334.39 €7,819.74

KILDARE 1,998 €31,968,253.40 €16,000.12

KILKENNY 3,409 €56,161,311.13 €16,474.42

LAOIS 2,891 €41,178,085.34 €14,243.54

LEITRIM 3,333 €17,564,384.92 €5,269.84

LIMERICK 5,077 €52,831,303.84 €10,406.00

LONGFORD 2,338 €20,075,675.78 €8,586.69

LOUTH 1,477 €20,115,667.82 €13,619.27

MAYO 11,224 €60,331,376.10 €5,375.21

MEATH 3,672 €56,488,776.17 €15,383.65

MONAGHAN 3,920 €31,081,026.47 €7,928.83

OFFALY 2,990 €36,928,270.87 €12,350.59

ROSCOMMON 5,605 €40,918,155.00 €7,300.30

SLIGO 3,887 €23,056,679.91 €5,931.74

TIPPERARY 6,815 €101,716,195.67 €14,925.34

WATERFORD 2,380 €39,443,004.31 €16,572.69

WESTMEATH 2,907 €34,187,326.09 €11,760.35

WEXFORD 3,974 €61,908,491.77 €15,578.38

WICKLOW 2,037 €28,088,781.40 €13,789.29

TOTAL 122,866 €1,229,524,407.20 €10,007.035

DIRECT PAYMENTS BY COUNTY 2011

Direct Payments post-2013

• Current entitlements abolished December 2013

• New entitlements established in 2014 based on hectares farmed in 2014 - linked to 2011 application

• Value established by complex formula

New entitlements

• National envelope- Greening 30%- Young farmers 2%- Recoupling 5%- Areas of natural constraints 5% - National reserve 3%- Small farmer scheme- Basic payment

Convergence

• Flat-rate payment per hectare by 2019

• Greening payment

• Further 40% flattening

• Massive redistribution between farmers

• Impact on production

Greening of CAP• 30% of budget

• 3 greening criteria:- Crop diversification – 3 crops, min. 5%,

max. 70%- Maintenance of permanent grassland - Ecological focus areas = 7% eligible area

i.e. field margins, hedges, trees, fallow land, buffer strips, landscape features

• Extra bureaucracy

Active Farmer Definition

• Defined at EU level: Court of Auditors

• Does not apply where Direct Payments are less than €5,000

• No payment where: • Direct Payment makes up 5% of total

receipts in most recent fiscal year• Do not carry out minimum activity

Capping of Direct Payments

• Maximum Single Farm Payment - €300,000

• Amounts reduced as follows:– 20 % between €150,000 and up to €200,000– 40 % between €200,000 and up to €250,000– 70 % between €250,000 and up to €300,000– 100 % for amounts in excess of €300,000– salaries paid are subtracted when establishing

the threshold payment

• Excludes greening payment

Rural Development

• Six EU-wide priorities:– knowledge transfer and innovation– enhancing competitiveness– food chain organisation and risk

management – focus on ecosystems– resource efficiency and climate friendly

agriculture– promoting social inclusion and economic

development in rural areas

Rural Development projects

• European Innovation Partnership (EIP)

• Farm Advisory Services

• Young farmers: – Start-up grants– Training and advisory services

• Business start-up for small farmers

• Risk management: animal disease mutual fund, weather and crop insurance.

Funding• Co-financing:

– Training & advisory services– 50% in regions for most payments (85% - outermost

regions)

• Higher co-financing rate - up to 80% for: – Training, advisory services, knowledge transfer and

information actions– Start-up for young farmer and producer groups– LEADER

• Up to 100% co-financing for innovative actions - financed with funds from capping in Pillar I

• Minimum of 5% to be spent on LEADER

• Minimum of 25% for climate change mitigation and adaption and land management measures

Market Measures• Measures as a safety net

• New safeguard clause for all sectors - enables Commission to take emergency measures

• Crisis reserve fund (existing outside the CAP)

• Sugar regime expires September 2015

• Milk quota abolition

• Recognition of Producer Organisations and inter-branch organisations extended to all sectors

Irish position

• Maintain share of CAP Budget

• Timeframe for convergence

• Flexibility

• Greening

• Active farmers

• Market measures

Approximation

• Based on Commission approach to redistribution between Member States

• Irish model: maximum gain of 25%, maximum loss of 15%

– highest gains for those on lowest payments

– highest losses for those on highest payments

Negotiating Process• Co-decision

• Timeframe – Council and Parliament digesting proposals

• Response by summer

• Agriculture Committee of EP vote on position in autumn

• Negotiations with Council early 2013 – Irish Presidency

“Long term prospects for agriculture will not improve if farmers cannot reverse the steadily decreasing trend in their share of the value added generated by the food supply chain. Indeed, the share of agriculture in the food supply chain has decreased from 29% in 2000 to 24% in 2005, while over the same period the share of the food industry, wholesale and the distribution sector have all increased”

Source: European Commission Communication on the CAP

Thank You.