Éamon Ó Cuív (Galway West, Fianna Fail) | Oireachtas source

From my practical experience of dealing with farmers for a long time, it defies logic to say that a fixed payment that a farmer receives in any event has the same effect on what a farmer does as a payment directly coupled to production. I would give the example of sheepfarmers who live in hill areas where they have no choice but to engage in sheepfarming. When I moved to the west, initially a grant was given for a lamb and a further grant was given when the lamb went to the factory. The focus of farmers was to produce as many lambs as possible and they were focused on lambing rates. They also wanted to get lambs to the factory because they got a further grant, an extensification grant as it was called at the time. When that was replaced with a ewe premium, farmers adapted fairly fast and decided that the lamb was not important, that it was only by-product and that the main money was is in ewes. Even if a ewe lost a lamb, the big idea was to have as many ewes as possible on the hill and we know how spectacularly successful they were because they managed to over-graze every hill in the west. With or without destocking, now that farmers realise that if they have a ewe to the hectare they will get their payment and unfortunately, given that the price of the final product is a abysmal there is not the drive to have high numbers of ewes because it does not pay farmers.

If we consider the sucker cow or beef premium, it seems there is a huge difference in the way farmers do their calculations. I do not agree with the president of the IFA that farmers are stupid in that they are happy to go along with losing money year after year and that the more cows they keep the more money they will lose. The farmers with whom I deal are much more canny than that. Is there any scientific evidence on this area or have any studies been done? When the beef premium or suckler cow premium is paid on the basis of the number of stock, there is a great incentive to increase one's stock as long as the farm can carry them and that would involve an extra bag of feed in the winter to keep the extra stock. If supplementary feed was less than the premium plus one's sales price, it made sense to keep up one's stock. If a farmer is going to get a grant or nearly 100% of it in any event, although there is not any significant suckler cow scheme in place at the moment, it seems he would lose money on every extra cow he would keep. There are not too many farmers who will swing at that game over the long term. The question is how much of a directly linked subsidy there should be. To ensure the system is profitable, one has to figure out, on average, how much of a subsidy should be linked directly to production to tip the balance in favour of production being profitable - an extra cow giving a farmer an extra bob whereby it would once again be profitable to farm more intensively.

Having been involved in the industry and having ran a business at one stage, I know there a point is reached at which if one produces more one would make less money because overtime rates and so on would tip in. In the case of farming if one loses on the basic stock and if farmers produce more, the stock will become much dearer because there will be less grass and they will have to be fed more meal. It does not seem that anybody in their senses would go that route. Farmers who engage in intensive farming are those who calculate, and develop their farms and keep the accounts. It seems counterintuititive that they would purposely intensify their farms to lose more money. Therefore, it is crucial that suckler cow farming - leaving the fixed income and the fixed costs aside - taking account of variable income versus variable costs, is profitable, otherwise there is no incentive for anybody with any wit or intelligence to increase their production. That is reason I asked if sensitivity studies have been done. I have asked Professor Renwick a question and I believe I should get an answer to it.