Wednesday, March 20, 2013

The Irish position of the new CAP.

Roughly 40% of the annual EU budget is currently taken up by CAP, the well-known system of agricultural subsidies and programs that first came into force in 1962. The EU’s new budget for 2014-2020, the Multiannual Financial Framework (MFF), is currently under discussion. The Commission has proposed funding of almost €383 billion for CAP funding for this period, which is significantly less than the €410 billion allocated under the 2007-2013 MFF.
For Ireland, along with many other EU Member States, adequate EU CAP funding is crucial, as it provides an essential support for the agriculture sector in the respective economies. In Ireland, this sector provides an essential platform for our largest indigenous industry, the agri-food and drinks sector, which accounts for 18% of our total industrial output, employs approximately 150,000 people, and generates an annual output of about €24 billion. This sector also makes a significant contribution to our exports. For this reason, the Irish Government is trying in current MFF negotiations to protect CAP funding and keep it more in line with current levels.
Multiannual Financial Framework (MFF) Negotiations
It is important to note that CAP negotiations can only take place within the general context of MFF discussions, as the vast majority of payments awarded under Heading 2 of the MFF are, in practice, given to the agriculture sector and CAP funding. This is due to the fact that Heading 2 addresses the use of natural resources in sustainable growth. With this in mind, the recent special Summit of the European Council on the 22 and 23 November must be considered. The positions of the various Member States were found to be too far apart to allow a budget to be drafted that was an acceptable compromise to all 27 Member States. The MFF will be discussed again at the European Council in early February 2013, and will therefore have a key bearing on the prospects for agreement on CAP reform during the Irish Presidency.
No consensus position was reached at the special Summit largely because the current economic crisis has seen the positions of various Member States split into two camps: those proposing cuts to EU contributions, and against the EU cutting the rebates returned; and those opposing any cuts to cohesion and other funding, such as agricultural. Ireland is firmly in the latter group. In practice, most funding under Heading 2 is allocated to the CAP, under Pillars 1 and 2. Pillar 1 covers ‘Direct Payments and Market Supports’, and Pillar 2 covers ‘Rural Development’. This briefing will examine Ireland’s position under these separate headings.
Implications for Ireland
By this time next year, Ireland will have received more than 1.4% of the total EU budget (over €14 billion), for the 2007-2013 period. Of this, €12 billion will come under the CAP, including over €1 billion per annum in Direct Payments to farmers under Pillar 1, and roughly €348 million in rural development funds under Pillar 2. When the Commission budget blueprint was released in 2011, Ireland was of the view that it represented a good starting-point for negotiations. However, there was concern that the amount of money proposed in the blueprint for agriculture spending was the minimum amount that would be necessary. These concerns still hold.
The Irish Position on Pillar 1 (Direct Payments and Market Supports)
For Ireland, the key issues relating to Pillar 1 in the MFF and CAP reform are:
The size of the CAP budget
From the outset the amount of money proposed for agriculture spending was viewed as the minimum necessary. In this context, throughout these negotiations Ireland has continued to resist pressure from some Member States for further cuts in the agricultural budget.
How the EU will allocate the CAP funds between Member States
Ireland is generally happy with the method proposed for the distribution of direct payments between Member States. The Commission has not yet indicated how it will distribute rural development funds, and Ireland is arguing that it should get its fair share, based on past performance.
Commission blueprint proposals for connecting CAP funding to environmentally friendly practices in the agricultural sector
The Commission blueprint states that 30% of CAP funding should be tied to ‘greening’ efforts in the agricultural sector, and that it should be flat rate in nature. Ireland would have concerns about the accelerated move towards flat rates that this would involve, and instead of a separate payment would prefer the ‘greening’ element to be a percentage of each individual farmer’s overall direct payment. Ireland would also like to see changes made to the three individual ‘greening’ criteria (permanent grassland, crop diversification and ecological focus areas) so as to make them more operable across all Member States.
Distribution of payments within Member States (internal convergence)
The Commission’s proposal to move to flat national or regional rates by 2019 would cause very significant transfers of funding between Irish farmers. Ireland, supported by other Member States who would similarly be adversely affected by such a move, has called for a more measured approach based on the Commission’s own method for the distribution of direct payments between Member States. This would limit the losses suffered by individual farmers by moving only part, rather than all, of the way to the average payment per hectare over the period.
Definitions of an ‘active farmer’ and a ‘young farmer’
Ireland’s priority is to ensure the avoidance of payments to non-farmers in a way that does not create additional bureaucracy. Furthermore, Ireland holds that Member States should be allowed to identify objective criteria – for example, a minimum standard of agricultural education – in order to ensure that the young farmers’ scheme can be targeted at genuine young farmers. On small farmers, Ireland would prefer that this scheme is optional for Member States.
The Irish Position on Pillar 2 (Rural Development)
For Ireland, the key issues relating to Pillar 2 are:
  1. Apart from the overall funding for rural development mentioned earlier, the main concern arises in relation to the incorporation of rural development funding into what is known as the Common Strategic Framework, with other structural funds.
  1. Other issues such as the restriction of investment to farms of a certain size, the absence of a forestry premium for loss of income, the designation of areas of natural constraint and the potential effects of Pillar 1 greening payments on agri-environment payments are also of concern to Ireland.
Minister for Agriculture, Food and the Marine, Simon Coveney TD, has stressed that the full realization of Ireland’s agri-food potential hinges on the attainment of a well-funded CAP and a measured reform package that will continue to provide the basis for the sustainable development of the Irish agriculture sector. The next number of months will be crucial to the future of the Irish agricultural industry and negotiations on an agreement will most likely conclude during the Irish Presidency of the Council of the EU.

 - The Team at European Movement Ireland


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