CAP: a better deal for livestock farmers?

A key thread of the reform was decoupling subsidies from production, so livestock farmers got a subsidy linked to farm hectares. The idea was that efficient farmers would thrive and be rewarded for supplying the market, rather than being encouraged to rely on subsidies that flowed if they had a lot of output, but could not sell it.

But as Irish Cattle and Sheep Farmers’ Association (ICSA) president Gabriel Gilmartin has pointed out, the downside of such subsidies is that unsuccessful farmers get them too – and this can be a disincentive to improve their work. He said: “There is too much emphasis on levelling the field and not enough on helping those who want to help themselves.”​ This is because under the agreement, farmers are guaranteed subsidies that are at least 60% of the average paid to all farms in a country or region (member states can choose).

And while better than paying a pure flat rate, based on landholding size (and not output), he said: “The concept of a minimum of 60% for all hectares regardless of farming activity is still a flawed reform.”​

Better deal for farmers​

Nonetheless, the final deal is better than the original European Commission 2011 CAP reform proposal, according to Gilmartin. “An average cut of 12% on top of 2% [set aside] for young farmers, 3% for [a] national reserve, along with linear cuts and crisis fund cuts are too severe for many farmers, but the original proposal for a flat rate would have meant cuts of 30-50% for many active farmers,”​ he explained.

Roger Waite, the European Commission agriculture spokesperson, told Globameatnews.com​ that under the deal, livestock farmers in the 15 mainly Western European countries that were members of the EU before 2004 stand to lose some money, as their subsidies will not be based so much on previous output. “Those who were very intensive in the past will get less,”​ Waite explained.

But he argued that there were also other opportunities for livestock farmers in the new measures: “There will be money for investment and innovation and more rules to help farmers come together in producer organisations and negotiate a better price,”​ he said.

Producer organisations​

Meanwhile, CAP reform will make money available for setting-up producer organisations in the meat sector, which can then negotiate a better price for their members when dealing with suppliers.

Waite believes these organisations will then also help livestock farmers decide together where there is a new market opportunity and focus on it.

However, not all will change radically. EU countries have been given a large margin to make their own decisions regarding how the hectare-based direct payments schemes are established. “There has been lots and lots of flexibility awarded,”​ Waite stressed.

For instance, EU countries can still give payments to livestock farmers if they consider the production would come to a halt without those payments. This will be the case mostly for disadvantaged regions (such as livestock-based mountain areas), according to Waite, who are not competitive and could not keep production just following market rules. Moreover, livestock farmers in mountain areas might get a marketing boost, with the European Commission preparing to propose the introduction of a “mountain farming”​ label later this year.

Intensive negotiations​

The CAP reform package was completed after two-and-a-half years of intensive argument between all interested parties. Speaking in Brussels after the deal was secured, agriculture Commissioner Dacian Cioloş predicted the deal would strengthen farmers’ position in the food chain while at the same time making the CAP more efficient and transparent. “It’s the first time in many years that we are changing the distribution of resources in the CAP and this will take account of the EU’s reality in today’s agriculture,”​ the Commissioner claimed, adding “the CAP has entered a new phase”.​

But Christian Pees, president of the EU farmers’ organisation Cogec, complained: “With farmers faced with support cuts of over 30% in some places, I seriously regret the EU didn’t grasp the chance to strengthen farmers’ economic position.”​ This was an important ambition, he said, given that food demand would rise by 70% by 2050.

There was no denying, though, that direct payments are to be distributed in a fairer way between member states, between regions and between farmers, putting an end to “historical references”.

Meanwhile, the Commission is currently looking at EU competition law to see if, and where, it might be modified to allow closer working between producers’ organisations (POs) and their members.
 
All being well the package will get formal approval from the European Parliament in September. Interim arrangements will carry the existing CAP through 2014 before the full reform kicks in by 2015.