“The farmer is the only man in our economy who has to wholesale whatever he buys, wholesale whatever he sells, and pay the freight both ways,” former US President John F. Kennedy once said .
he quote is popular with farmers because for many it perfectly encapsulates their relationship with the market – and it has never been more common than it has been this year.
When Ireland got the green light from Brussels yesterday for its shiny new plan to implement the EU’s recent Common Agricultural Policy (CAP), it came amid a cloud of inflation across the economy, and particularly at the farm level.
Agricultural input prices have increased by 40.2 percent in the year to June 2021. That’s an amazing number and farmers see it every day when they buy fertilizer or feed, and even the high-priced items now cost staggering amounts.
The phrase “You need Land Cruiser money” is popular with farmers today, such is the cost of Toyota’s 4WD vehicles these days.
Certainly dairy farmers are having a bounty year with farm gate milk prices in excess of 60 cents per liter, but the reality is that farm gate prices are difficult for many to sustain. Beef and lamb prices have fallen in recent weeks as consumers abandon these higher quality products in favor of cheaper alternatives.
Getting a complex program like this over the wire is no easy task
But despite concerns about inflation, the rural economy is currently doing well overall. Not affected by a cost of living crisis as acute as in urban areas, employment and pay are strong in the regions. With many farmers working off-farm these days, the economic well-being of the rural economy has a major impact on farming decisions.
In this context, the Government will launch its new €9.7 billion CAP plan to support Ireland’s 135,000 farms, on which it has pinned many hopes and expectations.
Agriculture Secretary Charlie McConalogue went to great lengths to consult with farmers, traveling to every corner of the country to seek their views. Getting a complex program like this over the wire is no easy task.
He believes it strikes the right balance between helping farmers through targeted support and taking important actions to protect our environment and restore biodiversity. There is no doubt that the plan’s effectiveness will be crucial if agriculture can hope to meet its goal of reducing its carbon emissions by 25 percent by 2030.
Many of the measures in the new CAP seek to reduce agricultural emissions and thereby, as farming groups naively say, production, especially livestock production.
Flagship actions include a €1.5 billion investment in a new environmental program called ACRES, targeting 50,000 farmers with specific actions to achieve better outcomes on biodiversity, climate, air and water quality. A further 256 million euros will be used to triple the agricultural area for organic farming.
Like many governments across Europe making similar decisions, reducing agricultural emissions is more of a carrot than a stick. Instead of using the stick and arming farmers, they used EU funds to persuade farmers to move in a certain direction.
Unfortunately for Mr McConalogue and his colleagues across Europe, the carrot is getting smaller by the day.
Pat McCormack, President of ICMSA, pointed out what he considers to be “inadequate payments” from the ACRES program.
“If we assume an average payment of €4,000 a year, will that be the game changer that some seem to be anticipating? We doubt it, and we particularly doubt it, when inflation is almost certain to be above 10 percent for the first two years of the program.”
Farmers are hands-on business people and will look at many of the new CAP programs and measures and simply ask: “Is it worth it?”
If inflation continues at the same pace, the government will worry that many farmers will say it hasn’t.
https://www.independent.ie/business/farming/comment/with-jfks-words-in-mind-our-farmers-are-hoping-97bn-cap-reforms-will-pay-41952068.html With JFK’s words in mind, our farmers are hoping the €9.7 billion CAP reforms will pay off