Farmers who don't like the CAP reform proposals should not protest by voting No in the Nice referendum, writes Joe Walsh
Agreement was reached on the last major reform of the CAP - Agenda 2000 - at the Berlin European Council in March 1999.
That agreement, which was highly beneficial to Ireland, provided for reviews of a number of sectors and of the budgetary situation to be carried out in 2002 and 2003. These reviews have now been combined in the Mid-Term Review which the Commission published yesterday.
The first thing to be said is that, in my view, there should be no fundamental changes in the CAP before 2006 when the Agenda 2000 Agreement is due to be replaced. The preservation of the benefits to Ireland of Agenda 2000 will be my overriding objective in the forthcoming negotiations.
Among the justifications cited for the proposals is the need to orient production to the market and to food safety and quality requirements, to provide more funds for rural development, to integrate production and the environment more closely and to simplify the administration of aid schemes.
The proposals are not designed to reduce the cost of extending the CAP to the new member-states. The proposals in fact do not alter the overall cost of the CAP significantly.
The Mid-Term Review proposals focus on three main areas:
- individual commodities,
- decoupling and
- modulation.
The only proposal in relation to individual commodities, which will affect Irish agriculture materially, relates to cereals. Here, the Commission proposes to reduce the intervention price by 5 per cent and, by way of compensation, to increase direct payments by €18 a hectare. It is also proposed to abolish the monthly increment system.
The decoupling proposals involve changing the nature of direct payments from a payment for each unit of production (i.e. by the animal or by the tonne) to a payment for each hectare of land.
Crucially, decoupling would not involve any loss of direct payments for the individual farmer as it is proposed to pay each individual the average of what he/she received in a recent period of years (after adjustment for the still-being-implemented Agenda 2000 increases in these payments).
There are a number of benefits from such a system.
First, food safety and quality will be enhanced. Second, decoupling would safeguard direct payments from threat in the current World Trade Organisation negotiations. Third, because it involves a single payment each year, bureaucracy (for the Department as well as for farmers) is reduced to a minimum.
Fourth, farmers can buy and sell stock as they please without worrying about the premium status of the animal or retention periods and fifth, farmers will not be bound by density or extensification limits - they can, provided the environment is respected, farm as much or as little as they like.
Now we come to the downside. The removal of the premium for each production unit may remove the incentive to produce for many farmers. A fall in production would be the outcome, with negative implications for the processing sector.
Of course, any significant fall in production will lead to upward pressure on prices so those farmers who continue to produce will gain.
The modulation proposals involve a reduction of direct payments of 20 per cent over seven years with the first €5,000 of each farmer's direct payments being exempt.
The modulated monies would be allocated to a new range of rural development measures which will include incentives to farmers to improve food quality and assistance to farmers to meet food safety, environmental, animal welfare and occupational safety standards.
The modulated monies could therefore be redirected back to farmers through these new measures and through existing agri-environmental measures like REPS. However, it is not clear at this stage how the modulated monies would be shared out among the member-states.
Not all direct payments will be affected. Even after allowing for further increases in direct payments which are planned up to 2007, the amount being modulated in Ireland after seven years will be €136 million.
These are only initial proposals and proposals in very general terms at that. Much more detail and clarification is required before a thorough assessment can be carried out. This detail and clarification will emerge over the coming weeks and months as officials and ministers examine and discuss the proposals in their capitals and in Brussels.
Negotiations will then begin in earnest. The final decisions will be taken by the Council of Ministers sometime next year.
It is important to bear in mind the way the council operates. Like any group of people who meet frequently, the ministers listen to and try to understand each other's problems.
They go to great lengths to find solutions that are satisfactory all round. Only if these attempts ultimately fail is the issue decided by a vote.
Notwithstanding this civilised way of doing business, there will be some who think that the best way to change these proposals is to register a protest by voting No in the Nice referendum. If I thought that way, I would have no hesitation in saying so.
All my ministerial career has been in the agriculture area. I am completely dedicated to the defence of Ireland's agricultural interests and I have more than a little experience at that task.
The way to ensure that I as minister will have the strongest negotiating hand in the months ahead is to vote Yes to the Nice Treaty. To reject Nice is to reject what all other existing member-states and the applicant States want.
If I had a veto on the admission of new members to my local GAA or golf club and if I used that veto to refuse admission to people who wanted to be members and whom all the other existing members wanted to admit, then it is natural that I would not be too popular and that I would lose my influence.
I don't want this to happen to the Irish negotiating team as it enters into these important negotiations.
It would be particularly ironic if, in a mistaken attempt to protect our agricultural interests, Irish farmers were to exclude from the EU a group of countries who are in the main even more dependent on agriculture than Ireland is and who therefore would provide precisely the kind of allies we should welcome.
To conclude, these proposals involve fundamental change. While the proposals contain a number of positive features, I will oppose adamantly any changes that diminish the benefits of the Agenda 2000 Agreement. The Irish agricultural and food industries have my absolute commitment in this regard.
Joe Walsh is the Minister for Agriculture and Food