Wednesday 15 January 2014

CAP Reform

Coveney Announces Support of more than €12.5 billion for the Agriculture Sector.

The full text of the Minister for Agriculture press release is shown below. The notes provided to media editors are available through a link at the bottom of the page.

The Minister for Agriculture, Food and the Marine, Simon Coveney TD, today announced the allocation of more than €12.5 billion in Common Agricultural Policy and exchequer funding to the agriculture sector in the period to 2020.

Speaking at the CAP announcement the Taoiseach said "Getting all parts of Ireland working again remains the Government's top priority. Economic recovery has to be felt by all regions across Ireland. For this reason I'm delighted to welcome the agreement of a new draft Rural Development Programme for Ireland as a part of the Common Agricultural Policy's €12.5 billion investment in Irish agriculture. The Rural Development Programme will see more on farm investment as we grow our indigenous food and drink industry to new heights. At a time of scarce resources this represents the Government's strong commitment to job creation and investment in our rural communities."

Minister Coveney said: "Today marks a further landmark day in what is an unprecedentedly exciting period for the agriculture sector and the agri-food industry in Ireland. In addition to the €8.5 billion in EU funding that will be paid in direct payments to farmers in the period up to 2020, I am delighted to announce that €1.9 billion in national funding will be added to the €2.2 billion EU funding already secured for expenditure on rural development. It brings the total funding for the sector over the period to more than €12.5 billion. This represents a very significant, strategic financial investment in the agri-food sector, and comes on top of the large commercial investments that have been made by major players in the sector in recent times and the very positive news from Bord Bia on the continuing rise in the value of agri-food exports in 2013."

Minister of State Tom Hayes emphasised the importance of ensuring that this level of funding is spent effectively: "It must be done in a forward-looking way that will help the sector to achieve its full potential by supporting innovation and improving competitiveness. Only in this manner can we ensure that we give ourselves the best possible chance to achieve the objectives agreed for the industry in the Food Harvest 2020 strategy."

Minister Coveney developed this point further, recalling that, throughout the CAP reform process, his efforts have been informed by the need to ensure that the agriculture sector can grow in a competitive and sustainable manner: "The focus for me is consistently on the need to achieve smart, green growth, as envisaged in Food Harvest 2020. We need to be smart about what we do so that we can become more efficient and more competitive, and we need to do it in a way that is sustainable from an environmental and climate viewpoint. The package of measures I am announcing today provides practical, targeted support that will help the sector to achieve its ambitions while meeting its climate change responsibilities."

Direct Payments

The Minister announced that, following extensive consultations with stakeholders on the structure of the new direct payments system, he has decided that Ireland should implement the so-called 'partial convergence' model. Under this approach, payments will move part of the way towards a national average rather than to the uniform payment also provided for under the CAP reform agreement. By opting for this approach, he is ensuring that the direct payments system is made fairer and more equitable while at the same time ensuring that the level of redistribution of payments between farmers is not of a scale that could jeopardise the achievement of the Food Harvest 2020 objectives.

The Minister said: "During the CAP reform negotiations I argued very strongly for Member States to be given the flexibility to tailor the reform outcome to their own farming circumstances. I am delighted now to be able to take what I believe to be full advantage of this flexibility. There will be significant transfers given that all entitlements must be valued at 60% of the national average entitlement value by 2019. However, I think I have struck the right balance between making the system fairer and supporting the sustainable development of the sector."

Young Farmers

The Minister also took the opportunity to highlight the ongoing efforts to encourage the participation of young farmers in agriculture. Following consultation with stakeholders, he had decided to use the provisions of the CAP reform agreement as follows:

the full 2% of the national ceiling will be allocated to young farmers, providing for a 25% 'top-up' on direct payments on up to 50 hectares for farmers under 40 years of age (worth more than €16,000 over the period where payment is made on the maximum area for the full five years of the scheme),
additional, educational criteria will ensure payments are made to genuine young farmers, in addition, young farmers will be prioritised in the allocation of payment entitlements from the national reserve.
These direct payments measures will be complemented by further support under the Rural Development Programme, where a separate strand of the support for on-farm capital investment will be ring-fenced for young farmers at a higher rate of aid intensity of 60%.

The Minister said: "It is vital that we do everything we can to encourage young people to take up a career in farming if the innovation and new ideas required to generate the smart, green growth envisaged under Food Harvest 2020 are to be realised. I have previously stated my strong commitment to action in this area, and am delighted to be able to introduce a range of measures across the direct payments regime and Rural Development Programme that I believe will attract and support young farmers."

Rural Development Programme

The Minister emphasised that the priority in deciding how the Rural Development Programme would be structured was the need to ensure an effective contribution to the achievement of the Food Harvest 2020 objectives in a way that would complement the direct payments regime. He was pleased to be able to confirm the available funding of €1.9 billion at this point, which has allowed him to give an outline of the proposed new measures to be included in the Programme. These will be discussed in further detail with the stakeholders over the coming weeks before the Programme is finalised and submitted to the Commission for approval.

The Minister said: "We must ensure that all of the resources available to us are targeted effectively and that they add strategic value. In the case of rural development funding, this means making sure that the money spent enhances the overall competitiveness of the agri-food sector, ensures a more balanced development of rural areas, and meets environmental and sustainability challenges."

The Minister referred in more detail to the main areas to be targeted (in addition to young farmers as mentioned previously):
  • a substantial new agri-environment/climate scheme (GLAS), which will build on the progress made under REPS and AEOS. This will provide for a maximum payment of €5,000 for up to 50,000 farmers, and a further payment of up to €2,000 for a limited number of farmers who take on particularly challenging actions,
  • continued strong support for disadvantaged areas (now Areas of Natural Constraint), to the tune of about €195 million per year,
  • incentives for on-farm capital investment, including support for the expansion of the dairy sector following the abolition of milk quotas in 2015,
  • knowledge transfer and innovation measures, aimed at underpinning farm viability, sustainability and growth through the adoption of best practice and innovative solutions, and
  • a new beef data and genomics measure worth up to €52 million per year aimed at improving the genetic quality of the beef herd.
Sectoral Impacts

Summarising briefly the effects on individual sectors, the Minister first of all pointed out that "farmers in all sectors will benefit from the changes I am making to the direct payments regime, as well as from the measures under the Rural Development Programme." He also noted that the allocation of capital investment funding will be phased over the 2014-2020 period in line with the requirements of measure design and budgetary requirements.

The following are the main points which demonstrate the more strategic thinking being adopted. Further details are outlined in the Notes for Editors.


While there will be a dividend for beef production arising from dairy expansion, the Minister said that "it is critically important to recognise the specialist beef breeding sector as the seed bed for Ireland's high quality indigenous beef industry. Public support for this vital sector must focus on increasing the value of its contribution to the economy, but also on addressing the key vulnerability of relatively poor efficiency and profitability at farm level." This will be achieved through a combination of building on existing supports and adopting a more strategic approach, as exemplified by the following:
  • the new beef data and genomics scheme (payment of €80 per calf),
  • knowledge transfer measures that will improve key skills needed at farm level,
  • the GLAS environmental scheme, payments for farmers in Areas of Natural Constraint and measures to encourage collaborative farming, which will especially benefit suckler farmers,
  • the targeted advisory measure on animal health and welfare, and
  • beef quality schemes to assist marketing of local products through EU programmes.

The Minister said that "with milk quotas to be abolished in 2015, significant investment will be required at farm level to manage the additional milk volumes targeted in Food Harvest 2020." The Rural Development Programme will therefore support the sector through the following measures:
  • support for capital investment for dairy equipment, including targeted support for young farmers setting up for the first time, will be a priority in the initial phase,
  • knowledge transfer measures will be prioritised for dairy expanders and new entrants,
  • targeted advisory service on animal health and welfare,
  • support to partly offset the start up costs of approved collaborative farming arrangements.

The Minister pointed out that "with export values in 2013 exceeding €220 million, support for this vital sector is maintained in the overall CAP package." He highlighted the following:
  • the €13 million Grassland Sheep Scheme is subsumed into the baseline Single Farm Payments figure for sheep farmers,
  • knowledge transfer measures will help to improve efficiency and profitability in sheep production,
  • the targeted advisory measure on animal health and welfare, support for collaborative farming arrangements and lamb quality schemes,
  • the new GLAS environmental scheme and payments for farmers in Areas of Natural Constraint, will be of substantial benefit to sheep farmers,
  • sheep farmers in particular will benefit from the redistribution of direct payments.

Pigs and Poultry

Capital investment support will continue to be made available under the new Programme, subject to the phasing decisions made following the forthcoming consultations with stakeholders.


Investment support will be made available for slurry storage on cereals farms.
A new incentivised support programme for the protein sector will be introduced.

Artisan/Food SMEs

A new Artisan Food Cooperation Scheme, comprised of annual grant support to help artisan food producers to improve and validate production quality, and improve the awareness and marketability of local and niche category products.

Island Communities

The Department is actively exploring mechanisms to support island farming. Additional support for island communities is important given their dependence on the agriculture sector, and given the particular constraints and difficulties associated with island farming.

Concluding, the Minister said: "In short, I believe the range of measures I have decided upon under the direct payments regime and the Rural Development Programme for the period to 2020 provide a sound basis for the sustainable development of the agriculture sector and give it the best possible chance of achieving all of the objectives set out in the Food Harvest 2020 strategy. I look forward to the sector exploiting its potential to the full over the next number of years, while at the same time continuing to make a significant contribution to Ireland's economic recovery."

Editors Notes

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