Mr. Dermot Kelleher:

I thank the Chairman and members for the opportunity to speak on CAP reform today. The breakdown of talks in Brussels is nothing unusual at this stage of a CAP reform; it is like a dance. They are supposed to be meeting until the last day. The sticking points are around convergence, the eco-scheme and the so-called CRISS, or front-loading. The trilogues are like the bonfire of the vanities, with grandiose ideas about the green deal, a fairer CAP, the farm to fork strategy and the biodiversity strategy. All of these could collapse on their first engagement with reality.

The reality is that the CAP budget is being steadily eroded by inflation. The cake is getting smaller. Farmers are being asked to do more for less. The CAP allows each member state the flexibility to design its own CAP programme but insists on boxing them into a model that does nothing to solve the big-ticket issues. We are still stuck with the contradiction of the 2013 reform, where convergence was meant to help farmers with the biggest income deficiencies but rose to the challenge by taking from the small suckler and sheep farmers with small payments per farm but above the average per hectare. As a result, negotiators at EU level are trying to reach a compromise that will leave nobody happy.

The reason for all this is that, more and more, CAP reform is a process whereby the views of everybody except the farmer are front and centre. EU negotiators are fighting over irrelevancies because they are totally detached from farmers on the ground. Covid has made the process even more detached from farmers and their representatives but this process has been in play for quite some time now. Looking at the eco-scheme battle, there is deadly combat over whether it is 20% or 30% of Pillar 1 when, in fact, nobody is asking how come we lost the old rural environmental protection scheme, REPS, which was a fantastic job for farmers that put real money into their pockets. Nobody who talks about a green deal has the faintest idea of the damage done by land eligibility penalties to farmers who were more biodiverse and environmentally friendly under the second last Minister.

If the EU wants a greener CAP, then reward the farmers who are less intensive and want to participate in a worthwhile agri-environment scheme. The ICSA has proposed that a scheme should have the potential to pay up to €15,000. We have outlined this in previous engagements with the committee, but has anyone been listening? This needs to be targeted at cattle, sheep and tillage farmers, most of whom are not viable or are barely viable. Otherwise, we are sending a signal that anybody who wants to farm must be a dairy farmer. In order for that to work, we need to make the eco-scheme in Pillar 1 relatively straightforward for less intensive farmers who do not require a nitrates derogation. The eco-scheme must not have too many conditions attached, or it will not be possible to pay for many of the actions we would like in a proper agri-environment scheme.

On convergence, the harsh reality is that the EU has shirked its responsibility to make the CAP fit for purpose. The Treaty of Rome aspirations have been thrown into the bin as the budget has been reduced over several reforms. The cake is not getting bigger; it is actually getting smaller. We cannot give more farmers the same worthwhile slice they were getting. It looks like the final outcome will be the lowest payment will have to reach 85% of the average by 2026. This is a noble aspiration, except for the fact that it takes from the already strapped suckler, sheep and beef farmers, especially those with low hectarage and above average payments.

The solution to this proposed by the Commissioner for Agriculture is the complementary redistributive support for sustainability, CRISS. The ICSA favours insulating smaller and medium sized farmers from convergence cuts. We would like to see a system that allocates more support for the first 40 ha. The CRISS is insufficient and it is not funded. Instead, it takes a linear cut from all farmers, which is robbing Peter to pay Paul, and does not do enough. Department modelling suggests that if payments to all farmers are cut by €54 million, an extra €20 per hectare for the first 30 ha can be given. This will not make any worthwhile difference.

In our view, the family sized cattle, sheep or tillage farmer is desperately dependent on CAP supports. This means we cannot ignore the elephant in the room. According to the 2019 Teagasc national farm survey, the average payment from Pillar 1 on a dairy farm was €280 per hectare. A suckler farmer got €240, a beef farmer €290, a sheep farmer €245 and a tillage farmer got €320 per hectare. How can it be fair that a very profitable dairy farm, which is less dependent on CAP subsidies, is getting more per hectare than suckler or sheep farmers on a per hectare basis? Beef and tillage farms are not getting much more; these systems of farming used to get the lion’s share of CAP supports. We have seen the areas of natural constraint, ANC, payments slashed, while more than 20 years ago the old headage payments were targeted at suckler, sheep and beef farms. They were all viable as a result.

It is a very interesting fact that in the year 2000, the average dairy farmer got €5,500 from CAP supports. In 2009, that had increased 400%, fourfold, while suckler, sheep and tillage farmers saw an increase of between 20% and 50%. However, the dismantling of price supports, such as intervention, had a devastating impact on ICSA members. I am asking now, is it fair that dairy farmers, who are investing six figure sums in massive expansion programmes, are getting more money per hectare than suckler, sheep, beef and tillage farmers who are badly in want of it? The national farm survey states direct payments are 120% to 160% of the income of the dry stock cohort compared with 31% dependence for dairy incomes.

The reality is that whatever happens in EU talks over the coming weeks, we have hard decisions to face up to in Ireland. The ICSA is very clear. Like my colleague, Pat McCormack, we think payments should be capped at €60,000, no ifs or buts. The cap should be €60,000. We believe that suckler, sheep, beef and tillage farmers should not be cut per hectare. They should be supported much more through payments linked to their enterprise and also through agri-environmental schemes that are targeted at them.