New EU Policy Offers Opportunities for Tillage Farmers

28 January, 2004

Two-thirds of tillage farmers will be worse off as a result of CAP reform unless they change their system of farming, according to the results of Teagasc analysis.

Teagasc economist, Fiona Thorne, told the Teagasc National Tillage Conference in Carlow that with no change in production patterns average tillage farm incomes will drop by 7% by 2012.

The analysis contrasts with the results of a recent Teagasc survey on tillage farmer reactions to the new policy. The majority of the farmers surveyed felt that the complete decoupling of payments from production would not affect their production systems or profit levels.

“Our analysis is a wake-up call for tillage farmers and highlights the importance of a detailed assessment and the development of a plan to suit the particular circumstances of each farm,” said Fiona Thorne.

Under the new policy, which comes into effect on January 1, 2005, Irish tillage farmers will be paid an average annual ‘entitlement’ of €363/hectare.

The Teagasc analysis shows that the least efficient one-third of tillage farmers would be better off drawing their entitlements and cease producing crops.

“At present, these farmers are making a loss from the market place and are ‘eating into’ their annual EU payment in order to cover production costs,” said Fiona Thorne.

She stressed that increased productivity or a change of farming system could dramatically improve the income prospects for the majority of tillage farmers.

“Our analysis shows that changing the tillage crop mix, cutting costs, increasing yields, joining the Rural Environment Protection Scheme (REPS) or switching to livestock enterprise could lead to higher incomes on 70% of tillage farms by 2012,” she said.

The new policy will also allow farmers to sell their entitlements. According to Fiona Thorne, the price of an entitlement would need to be in excess of €1,500/hectare before it could be economically justified on the majority of tillage farms.

She said the average tillage entitlement of €21,526 per farm is the highest of all farming systems in Ireland.

“Provided they adopt their farming systems, the new policy offers a real opportunity for the majority of tillage farmers to improve income,” said Fiona Thorne.