The Minister for Agriculture and Food, Mr Walsh, has said he is still "deeply worried" about the impact on the State of Common Agricultural Policy reforms.
His comments follow the publication of a report predicting that decoupling - the proposed breaking of the link between direct payments and production - would bring about a decline in the numbers of cows and ewes, and a drop in cereal outputs. The report was compiled by the Food and Agricultural Policy Research Institute, a partnership between Teagasc and a consortium of Irish universities with the University of Missouri.
It predicts a drop of 4.6 per cent in the number of people employed in food processing, and a further 5 per cent drop in the number of people working on farms and food processing, by 2010.
However, because the report predicts that agricultural income will actually rise by 11 per cent by 2010, it indicates that there will be a positive impact on the economy as a whole, of about 0.8 per cent.
Another positive factor would be the lowering of greenhouse gases due to the reduction in animals being farmed. This would result in a net decline in emissions of 13 per cent, which would mean that agriculture would more than achieve the reductions agreed to in international treaties.
The report said the Irish beef herd would drop to 740,000 animals by 2010. This 30 per cent cut was expected to reduce beef production by 12 per cent, and would result in a decline in beef exports.
However, by 2010, with most of the beef being produced here going to EU markets, cattle prices would rise by 8 per cent.
The Irish ewe population would be cut by 12 per cent, as would production.
But prices would rise after an initial decline, and would be up by 20 per cent by 2010.
Decoupling, said the report, would have a less dramatic impact on cereals, but Irish barley production would decline by 4 per cent by 2010.
Overall, Irish agricultural income would drop by up to 5 per cent, and the input expenditure would also drop by 12 per cent.
However, as subsidies would remain largely unchanged, agricultural income by 2010 would rise by 11 per cent overall.
Commenting on the report, the Minister said he was still deeply worried about the disproportionate impact on Irish farming operations of decoupling direct payments from production.
"The report found that in beef, the EU suckler cow herd would decline by 18 per cent, but it would decline by 30 per cent here," he said.
"The same is true in the sheep area, where the Irish decline in numbers of ewes will be nearly twice the decline expected in the EU generally.
"I have always maintained that there must be a vibrant rural economy to keep rural areas alive and I have not changed my mind on this.
"The impact of cutting production, particularly in disadvantaged areas in the west, could cause severe damage there," he added.
Mr Billy Timmins, Fine Gael's spokesman on agriculture and food, said that if Commissioner Franz Fischler's plans for decoupling went ahead, Irish farmers would suffer a severe and sharp shock over the next couple of years.
The Irish Farmers' Association president, Mr John Dillon, said the entire resources of the Government must be mobilised to resist the dismantling of the CAP for beef. He said the cuts in the Irish beef herd would simply make way for imports from third countries, which was a major flaw in the Fischler plan.
The Irish Cattle and Sheep Farmers' Association said the Minister should acknowledge that decoupling was in the very best interest of Irish farmers, and would increase income.