An IFA return to talks is possible, says John Dillon, but the Government must agree to reverse two Budget cutbacks beforehand
Irish agriculture is facing huge changes and many of the most important of these are emerging in the context of the crucial EU and WTO negotiations this year. Indeed, the changes will take place much earlier than 2011 as suggested by the Taoiseach in recent weeks, and more likely will start in 2006.
The negotiations on a new world trade round are already advanced and recently the chairman of the WTO agriculture negotiations, Mr Stewart Harbinson, presented an alarming set of proposals. These include a 50-60 per cent cut in EU import tariffs, elimination of export subsidies, and a 50 per cent cut in CAP direct payments.
The two main food-exporting regions of the world, the US and the Cairns group of countries, have launched a major attack on the CAP and already the EU appears prepared to hand over a large slice of the European food market to the US and South America.
With indecent haste last July, in advance of the WTO negotiations, the Commissioner for Agriculture, Franz Fischler, proposed another reform of the CAP, the third in a decade.
This CAP reform goes much further than the earlier MacSharry and Agenda 2000 reforms. Clearly the Commission anticipates a negative outcome from the WTO. The proposal involves "decoupling" of direct payments from production, as an easy way of winding down farm production within the EU to make way for increased imports. It involves "degressivity" which is euro-speak for cutting farm supports. And taken together with the WTO agenda, it means the very cornerstone of the CAP would be dismantled by the end of the decade. Remember that the role of CAP price supports and market management was to provide reasonable incomes to farmers and stable prices to consumers.
The implications for farm families and the economy are clear. Total farm income will fall and the level of production will fall. Agriculture will be able to support fewer farmers at acceptable living standards.
The economy will lose in the region of €1 billion in export earnings, costing jobs in the food industry and leading to rural decline. Many more farmers will be dependent on off-farm jobs. Those who survive in full-time farming will require increased scale and increased investment, including investment to meet the ever-increasing environmental demands. The Government has a duty to address this change in agriculture, including measures to promote competitiveness and diversification.
Clearly the IFA would like to work closely with the Government on a "change agenda" for Irish agriculture. But firstly I must remind the Taoiseach where we are coming from. Average farm income is about €15,000, and even for the two-thirds of farmers who are full-time, their average income is only about €19,000.
The Taoiseach has said he regretted that the farm organisations did not consider it possible to recommend the proposed Partnership Agreement, including a section on agricultural issues. My view is the IFA has not left social partnership but that we were pushed out when the Government negotiators said they could go no further than the general paper on the table, that no Budget cuts could be reversed and they had no additional resources.
As the ICTU and IBEC pillars are taking up to March 26th to ratify the proposed agreement, I still see an opportunity over the next few weeks to conclude an agreement on agriculture. But just as the public service unions are being paid 25 per cent of the benchmarking agreement up-front as a statement of good intent by the Government, the farming pillar cannot advance the negotiations until we receive a commitment from Government to reverse two of the most abrasive recent Budget decisions - on the doubling of disease levies and the abolition of roll-over relief on land purchased under CPOs.
The change agenda I am proposing includes a number of key elements. This includes a workable agreement on the implementation of the nitrates directive, a substantially improved REPS scheme and a more comprehensive scheme for on-farm investment. Second, we require renegotiation of the Special Areas of Conservation scheme, including proper consultation with the individual farmers affected and realistic stocking levels for farmers with commonage land.
We require a commitment that in the crucial mid-term review of the National Development Plan taking place this year, the original budgetary commitments relating to agriculture and rural development will be respected and that there will be a serious effort made to meet the targets on REPS, early retirement and forestry.
We need a commitment that if we were to sign up for partnership, the Government would not, directly or by stealth, impose further spending cuts or increased charges. Already we hear rumours that cuts on higher education grant entitlements to farm families are being planned, by introducing an "asset test" into the assessment of income. This would be totally unfair; the farm is only the means of producing an income.
In conclusion, I am saying to the Taoiseach: I would prefer to be working closely with the Government within the framework of social partnership in addressing the change agenda arising from the challenges of WTO, CAP reform III and EU enlargement. But the agreement must be based on firm commitments backed by financial resources, not vague aspirations.
The proposed programme as it now stands is essentially a pay deal for unions and employers, and a very expensive one because of benchmarking. I regret that in the several weeks of negotiations with the farming pillar, not one euro was put on the table, even to redress the cuts. I hope the Government will reassess the lack of balance in the proposed partnership agreement. With four weeks to go to the signing of the agreement, there is goodwill and commitment on our part to continue our supportive role as full social partners.
John Dillon is president of the Irish Farmers' Association