CAP reforms to cost Irish farmers €300m, says IFA

Reforms agreed for the much-criticised Common Agricultural Policy (CAP) by the European Commission will cost Irish farmers €300 million a year, according to the Irish Farmers Association.

The IFA president, Mr John Dillon, described the reforms agreed in Brussels today as "a breach of faith with farmers".

He dismissed claims by EU Agriculture Commissioner Mr Franz Fischler that the reform plan would be positive for Irish farmers. Mr Dillon said there were "strong reasons why the proposals would leave Irish farmers worse off and more vulnerable to future erosion of the CAP".

AT A GLANCE Expenditure to remain at €40 billion Remove link between production and subsidy Impose direct aid ceiling of €300,000 Direct aid to be dependent on observing environmental and food safety laws Direct aid to be gradually cut by 20 per cent in favour of rural development Introduce farm subsidy inspection system

Mr Dillon said there was no guarantee the savings from the 20 per cent cut in CAP Direct Payments would stay within the member state. "Ireland will lose out as the proposals shift payments away from traditional livestock production."

Speaking immediately after the CAP reforms were published, the Minister for Agriculture, Mr Walsh, said while he had no difficulty with a review a "fundamental reform was another thing". He said he was intent on protecting direct payments to Ireland which were worth €2 billion annually.

Last week the Taoiseach, Mr Ahern said he was committed to the protection of the benefits for Irish farmers agreed under the 1999 Berlin Agreement - which was due to run for seven years.

This morning, the European Commission approved radical proposals to reform the Common Agricultural Policy (CAP), including an end to production-related subsidies, a mainstay of the current system.

Ireland, along with France, is the staunchest defender of the present system of farm subsidies and the Government will resist any move that threatens it.

The European Union's farm policy, worth €40 billion ($39.31 billion) a year, is coming under mounting pressure as the 15-nation bloc prepares to admit up to 10 new members and enter a new round of talks aimed at breaking down global trade barriers.

In response, Mr Fischler has drawn up plans to impose tough environmental, animal welfare and food safety standards on farmers. There will be less money available for market subsidies but more spent on rural development.

"There will be some savings but it's mainly a question of spending money in a more rational way without incurring more costs," Mr Fischler said in an interview on German television.

The most radical element is an end to production-related subsidies, a mainstay of the current CAP. Farmers would get a single payment from Brussels based on money received in the past - regardless of whether they continue production on the same scale.

Mr Fischler believes this will streamline the CAP, making it easier to apply to the millions of farmers in an enlarged EU and give the bloc the moral high ground in trade negotiations.

There will also be a major shift in funds towards rural development. Direct aid to farmers would be trimmed by three percent a year for the next seven years and the money spent on rural measures. Aid to larger farms would be capped at €300,000 per year.

The guaranteed cereals prices would be cut by five per cent, reducing the amount the EU is forced to pay in export subsidies, which bridge the gap between high internal prices and a lower world market.

The reform plans are likely to face a rough ride from countries like France, the traditional defender of the CAP.

The defenders of the CAP also point to the recent farm bill in the United States, which boosted spending on domestic farm subsidies and was widely criticised by US trading partners as having a potentially destabilising effect on world trade.

Additional Reporting: AFP