EU agriculture policy reform: Implications for Irish agriculture and land values
Mairead McGuinness MEP Society of Chartered Surveyors Agriculture Conference November 8, 2013
Content of presentation • EU Budget 2014-2020 • Reform of Direct Payments, Rural Development and Market Measures • Dept of Agriculture CAP consultation on how to implement the policy reforms • Transitional measures for 2014 • Implementation of new reforms on 1 January 2015 • Impacts
EU Budget • Multiannual Financial Framework (MFF) 2014-2020 - €959.988 billion overall •Agriculture budget reduced slightly •Economic crisis - austerity •Agriculture 39% of EU Budget
CAP Budget - Ireland
•Direct Payments: €1.217 billion per annum
•Rural Development: €313 million per annum
DIRECT PAYMENTS BY COUNTY 2011 COUNTY
FARMERS
AMOUNT PAID
AVERAGE PAYMENT PER COUNTY
CARLOW
1,622
€25,107,834.28
€15,479.55
CAVAN
4,722
€35,907,064.33
€7,604.21
CLARE
6,015
€48,399,815.92
€8,046.52
CORK
12,725
€169,099,714.81
€13,288.78
DONEGAL
7,894
€48,357,574.53
€6,125.86
DUBLIN
618
€9,198,332.84
€14,884.04
GALWAY
11,771
€80,254,970.11
€6,818.02
KERRY
7,565
€59,156,334.39
€7,819.74
KILDARE
1,998
€31,968,253.40
€16,000.12
KILKENNY
3,409
€56,161,311.13
€16,474.42
LAOIS
2,891
€41,178,085.34
€14,243.54
LEITRIM
3,333
€17,564,384.92
€5,269.84
LIMERICK
5,077
€52,831,303.84
€10,406.00
LONGFORD
2,338
€20,075,675.78
€8,586.69
LOUTH
1,477
€20,115,667.82
€13,619.27
MAYO
11,224
€60,331,376.10
€5,375.21
MEATH
3,672
€56,488,776.17
€15,383.65
MONAGHAN
3,920
€31,081,026.47
€7,928.83
OFFALY
2,990
€36,928,270.87
€12,350.59
ROSCOMMON
5,605
€40,918,155.00
€7,300.30
SLIGO
3,887
€23,056,679.91
€5,931.74
TIPPERARY
6,815
€101,716,195.67
€14,925.34
WATERFORD
2,380
€39,443,004.31
€16,572.69
WESTMEATH
2,907
€34,187,326.09
€11,760.35
WEXFORD
3,974
€61,908,491.77
€15,578.38
WICKLOW
2,037
€28,088,781.40
€13,789.29
TOTAL
122,866
€1,229,524,407.20
€10,007.035
Negotiating Process • Co-decision • Commission proposals Oct 2011 • EP and Council positions early 2013 - COMAGRI vote January - Plenary vote March • Council position - March Irish Presidency
Negotiating Process • 45 trilogue meetings over a 6 week period • Political agreement reached - 25 June • Final agreement 24 September • Final vote on CAP -November • Final vote on MFFNovember
Reform of Direct Payments • Reallocation between Member States • Between farmers within Member States • 30% greening payment for the delivery of public goods • Up to 2% young farmers • 3% national reserve
Distribution of SFP per hectare in Ireland Number of farmers
Source: Department of Agriculture
Distribution of SFP per hectare in Ireland Per Hectare payment
No. of farmers
€1,000 or Greater from €900 to less than €1,000 from €800 to less than €900 from €700 to less than €800 from €600 to less than €700 from €500 to less than €600 from €400 to less than €500 from €300 to less than €400 from €250 to less than €300 from €200 to less than €250 from €150 to less than €200 from €100 to less than €150 from €50 to less than €100 from €20 to less than €50 Less than €20
812 383 783 1,401 2,961 6,568 14,965 28,504 15,641 15,253 13,928 11,924 9,590 3,874 1,851 128,438
Source: Department of Agriculture
Active Farmer •EU list of entities excluded from receiving payments, unless they can prove agriculture is a significant part of their business: airports, railway services, waterworks, real estate services, permanent sport and recreational grounds •Member States to set minimum activity level
New CAP • Move away from historic-based payments to land-linked payments • Member States at different starting points flexibilities will take account of this • Currently 10 Member States with fully historic-based payments • 2 Member States with flat rate payments/ha
Options for Member States • MS may introduce a flat rate payment/ha nationally or regionally • MS can partially move to a flat rate, giving farmers on less than 90% of the national average an increase • MS must ensure that all farmers at a minimum reach 60% of the national/regional average payment by 2019 • MS may limit losses to a maximum of 30%
Options for Member States • Variable greening: 30% of a farmer’s individual payment, rather than a flat rate • Redistributive payment: -top up on the first hectares -up to 30% of the national ceiling -paid on the first 30 hectares or the national average farm size • Coupled support: 8% (+ 2% protein crops) • Areas of natural constraints: 5% • Small farmers scheme
Reference year • 2014 is the reference year for payments • Reference year for land: MS can base the number of entitlements allocated on either the number of eligible hectares in 2015 or in 2013 (if it is less than 2015) • Farmers with a SFP in 2013 automatically qualify • Farmers without entitlements may be allocated payments in 2015 if they can prove they were actively farming in 2013
Dept. consultation •Should Ireland increase all entitlements, with an Initial Unit Value of less than 100% of the National Average, by at least one third of the difference by 2019, or should 90% of the National Average be used as the threshold? •Should entitlements be increased by more than one third of the difference between the Initial Unit Value and either 90% or 100% of the National Average? •At what level should the minimum payment under the Basic Payment Scheme be fixed?
Dept. consultation • Should Ireland apply a ‘maximum reduction’ by 2019 of 30% of Initial Unit Value (2015) for those farmers whose payments will decrease over the period of the scheme? • What methodology should be used when applying reductions to those over the BPS national average, e.g. in addition to a reducing scale of payments, should Ireland apply a maximum payment per hectare? • Should Ireland use the value of entitlements definitively transferred to the farmer in 2014 or the value of payment, before reductions and exclusions, paid to the farmer in 2014 to calculate the Initial Unit Value of entitlements in 2015?
Greening of CAP • 30% of a farmers payment • 3 greening measures: - Crop diversification – 2 crops on arable land over 10ha, 3 crops over 30ha - Maintenance of permanent grassland - Ecological Focus Areas = 5% of arable area over 15ha, e.g. field margins, hedges, trees, fallow land, landscape features, buffer strips. 5% will increase to 7% in 2017 • Equivalency - environmentally beneficial practices already in place would be considered to replace the 3 basic greening measures
Limiting payments •Payments cap at €150,000 •Minimum 5% reduction •Employment and salary costs can be deducted before calculation made •Ireland likely to limit payments at €150,000
Rural Development • Six EU-wide priorities: – knowledge transfer and innovation – enhancing competitiveness – food chain organisation and risk management – focus on ecosystems – resource efficiency and climate friendly agriculture – promoting social inclusion and economic development in rural areas
Rural Development projects • European Innovation Partnership (EIP) • Farm Advisory Services • Young farmers: start-up grants, training and advisory services • Business start-up for small farmers • Risk management: animal disease mutual fund, weather and crop insurance
Funding • Co-financing: general rate of up to 53% • Higher co-financing rate - up to 75% - for measures contributing to environment, and climate change mitigation and adaptation • Minimum of 5% to be spent on LEADER • Minimum of 30% on agri-environment measures
Market Measures • Measures as a safety net • New safeguard clause for all sectors - enables Commission to take emergency measures • Crisis reserve fund (existing outside the CAP) • Sugar quotas to be abolished in September 2017 • Milk quota abolition in 2015 • Recognition of Producer Organisations and interbranch organisations extended to all sectors
“Long term prospects for agriculture will not improve if farmers cannot reverse the steadily decreasing trend in their share of the value added generated by the food supply chain. Indeed, the share of agriculture in the food supply chain has decreased from 29% in 2000 to 24% in 2005, while over the same period the share of the food industry, wholesale and the distribution sector have all increased� Source: European Commission Communication on the CAP
Thank You.