IRELAND’S SHARE of Europe’s agricultural budget came under threat last night as the European Commission sought a cap on direct payments and moved to redirect funds to countries in eastern Europe.
In a seven-year budget proposal, the Commission also sought to make 30 per cent of direct farm payments conditional on the compulsory adoption of “green” practices. In addition, it wants to eliminate the index-linking of the payments farmers receive for rural development.
The proposal foresees that the overall level of spending under the Common Agricultural Policy would be held steady at current levels, meaning their real value would diminish as the plan proceeds.
The publication of the Commission’s budget proposal for 2014-2020 sets the scene for difficult talks with member states, which may well continue until Ireland takes over the EU’s rotating presidency in 2013.
Major contributor countries such as Germany, Britain, France, Finland and the Netherlands have already sought to freeze the union’s budget.
However, the proposal unveiled last night would increase the totality of EU payments by 5 per cent to €972.2 billion in the seven-year period. A further €58 billion is included for contingencies and inter-governmental projects.
The plan also proposes an EU financial transactions tax and a new EU value-add-tax payment.
Such measures are designed to decrease the union’s reliance on direct contributions from member states but they are likely to face resistance.
The plan includes a 46 per cent rise to €80.2 billion in the research and innovation budget overseen by Irish commissioner Máire Geoghegan-Quinn. “I’ve earmarked €4.5 billion for agri-food research,” she said. “That will boost Irish agriculture and food production and make the rural economy greener and more competitive, as well as helping Irish farmers grow export markets.”
However, major elements of the agricultural plan are viewed with scepticism in Irish Government and farm circles.
While Dublin is wedded to a system that ties direct payments to farmers to their average annual production in the years between 2000 and 2002, the Commission wants to restrict the “disproportionate” benefit to large farmers.
Key to its proposal is a cap on the level of direct payments “by limiting the basic layer of direct income support that large agricultural holdings may receive”. This would take into account the economies of scale of larger structures and the direct employment they generate.
“The Commission proposes that the savings be recycled into the budgetary allocation for rural development and retained within the national envelopes of the member states in which they originate.”
The Government’s first response to the budget initiative was muted, although a spokeswoman said it would have important medium- to long-term implications for Ireland’s economic and sectoral interests.
“Ireland is committed to maintaining a strong and effective CAP which will support a vigorous consumer-focused agricultural production base in Europe.”
While the direct payments farmers receive under the CAP have never been index-linked, payments in the rural development strand of the budget are tied to inflation at present. The Commission’s proposal would break that link, reducing the value farmers derive from the scheme.
Irish farmers currently receive a total of €1.7 billion annually from Brussels, EUR381 million of which comes from the rural development strand.
The new budget round reflects the Commission’s stated commitment to a west-to-east shift in the weight of CAP payments.
“The levels of direct support per hectare will be progressively adjusted ... in order to ensure a more equal distribution of direct payments,” the Commission said.
The Commission said it was proposing the “greening” of the CAP to ensure the EU delivered its environmental and climate objectives. The proposal said “30 per cent of direct support will be made conditional” on such policies.
“This means that all farmers must engage in environmentally supportive practices which will be defined in legislation and which will be verifiable.
