Farmers could face big cuts in farm payments from 2008 if EU states back a new reform package proposed by the European Commission.
Big farmers would be among the main losers from a plan, which reduces support for those getting more than €100,000 in EU funding a year put forward yesterday by the EU agriculture commissioner, Mariann Fischer Boel.
But the proposals would also hit farmers receiving just over €5,000 a year who could find that up to 13 per cent of this would be diverted to rural development schemes in what is known as "modulation".
The other element in the "Cap Health Check", that threaten farmers' incomes is a proposed move away from payments based on historical receipts to one based on land ownership and more modulation.
The commission now wants to divert 13 per cent of payments to tackle issues such as climate change and managing water. Currently only 5 per cent of payments over €5,000 are diverted to rural development funds.
Rural development funds can be used for a variety of purposes, such as increasing the competitiveness of farmers, improving the environment or the quality of rural life.
But crucially these payments are often not made directly to farmers and must be co-financed by member states.
Irish Farmers' Association president Pádraig Walshe said the commission's modulation proposal would reduce farm income in Ireland by €100 million a year and would hit beef farmers who rely on it. This was rejected by the commissioner.
"I presume for Ireland it would be clear that you would look at the possibilities of how to maintain beef production on the green island," the commissioner said.
Mr Walshe said the move to payments based on land ownership would penalise farmers in the poorest areas and benefit "hobby farmers" and stud farms.
Ms Boel said it was not be sustainable to maintain a situation whereby some farmers benefited from much larger payments than their neighbours, who owned roughly the same amount of land.
"Modulation doesn't mean taking away money from agriculture rather it redirects money," she said.
Reaction from the other farm organisations was equally negative with the Irish Creamery Milk Suppliers Association calling the proposals "ill conceived as well as most likely unlawful".
The president of ICMSA, Jackie Cahill, said the proposals unquestionably mark further disengagement by the EU from a supply management and market support system as well as representing the introduction of an even greater environmental burden on farmers.
The Irish Cattle and Sheep Farmers' Association president, Malcolm Thompson, said that under no circumstances could the ICSA accept any further cuts in the single farm payment.
"If the EU is serious about rural development, it needs to make adequate provision to fund it, but they must remember that the viability of mainstream agriculture is still the critical issue underpinning vibrant rural communities," he said.
The Minister for Agriculture and Food, Mary Coughlan, said she would establish a consultative committee to advise her on the proposals which she said gave the ideal opportunity to reduce the administrative burden on farmers by simplifying the requirements for the single farm payment.
She said the commissioner had often stated these proposals were not intended to fundamentally change the Cap and she agreed with that point.
Fine Gael's agriculture spokesman, Michael Creed, said the package presented an opportunity to take stock of food security in the EU as much of the union's food production had effectively been outsourced to the detriment of Irish and European farmers.
The proposals can only become law when approved by the majority of the council of agriculture ministers.