Situation and Outlook Farmers Plans for 2003

Response to Fischler Proposal

The main policy under discussion in 2002 was the Fischler's Proposals on the Mid-Term Review of the CAP. These proposals would effectively decouple direct payments from an animals and crops to an area basis, based on payments received during a historical reference period. Whilst much of the detail concerning rates of payment, eligibility for payment, reference period, impact on product prices are uncertain, nevertheless the principles involved were clear and farmers participating in the National Farm Survey were asked how they would react or respond if these changes were to be introduced in the medium term i.e. by 2005/06. It should be emphasised that these are only proposals and may not be introduced or may change significantly before being agreed.

The farmers were asked how the Fischler proposal would affect their farm income in the medium to long term.

Thirty seven per cent of all farmers felt that the policy changes if introduced as proposed would have no impact on their incomes, whilst 9 and 20% felt that the changes would increase or decrease their incomes respectively. The sheep system had the highest percentage of farmers who felt that the proposals would have no impact (48%) whilst dairying and cattle system had the lowest percentage (21). Cattle systems had the highest percentage of farmers who felt their incomes could increase (11%), whilst the dairying and cattle system had the highest percentage who thought their incomes would decrease (41%). One third of all farmers did not know or were uncertain of how the proposed policy changes would impact on them and were evenly distributed across all systems.

Farmers were also asked what long term adjustments they would make to their livestock numbers and cereal acreage if the proposals were introduced as outlined (Table 6.2).

Farmers said that they would reduce cattle and cereal enterprises whilst the dairy enterprise was the only sector that would expand.

Milk Quota, Winter Forage and Schemes

Farmers operating a milk quota in 2002 were asked to state their plans in relation to their milk quota over the next 3 years and results are shown in Table 6.3.

Farmers with less than 30 cows are contemplating the most change in their enterprises with 12% getting out, 2% decreasing, 27% increasing and 24% unsure.

Inclement weather caused problems in conservation of hay and silage in summer of 2002. Weather conditions improved subsequently but at the time of drafting this questionnaire it was felt that winter forage supplies would be inadequate for the winter of 2002/03. Farmers were asked if they had sufficient forage for animals to be overwintered. The response showed that 83% of farmers have sufficient forage with 14% having insufficient forage and 3% did not know. Of these with insufficient forage 7% had less than 50% of requirements, 40% had 20 to 50% of requirements and 53% had under 20% of requirements. The question related to quantity of silage only and the quality was not raised with the farmers.

Farmers were also asked if they planned on availing of the Department of Agriculture Early Retirement Scheme. This question was confined to those eligible on an age basis for the scheme, i.e. between 55 and 66 years. The results are shown in Table 6.4.

Only 11% of these eligible stated that they planned on joining the scheme. The main reasons given for availing of the scheme were financial (48%), followed by successor ready to take over (23%) and health grounds (17%).

In relation to the transfer of the family farm, all farmers in the survey were asked if they had a successor for the farm. This question was not applicable to 22% on an age basis (too young), 50% had a successor, 16% did not have a successor and 12% were unsure or did not know. Organic farming is being encouraged by the EU and Department of Agriculture and Food through various support measures. Farmers were asked if they would convert to organic production over the next 5 years and their responses are shown in Table 6.5.

Only 2% are likely to convert and the majority of those are in drystock systems, who were encouraged by the higher REPS payments and the premium product prices.

Investment Plans

Each year farmers are asked for their investment plans in the coming year. These results are compared to their planned investment at the same time last year i.e. planned investment in 2003 versus planned in 2002. In the autumn of 2002, 25,500 farmers stated that they planned on investing an average of €11,500 per farm in 2003 giving a total additional investment of €295m. This is a slight increase on the 23,800 who planned on making additional investment in 2002 when asked last autumn. However the average investment planned per farm was higher in 2002, giving a total of €344m. Farmers investment plans for 2003 are therefore 14% down on that planned for 2002 with the highest reduction in buildings.

It should be pointed out however that the actual investment carried out in 2002 was much higher than that planned - 38,425 farmers investing a total of €503m, viz. 46% higher than that planned. In the past farmers have always understated planned investment in machinery and 2002 was no exception with an actual investment in machinery of €237m compared to that planned of €69m. The actual investment in farm buildings in 2002 was only €125m compared to that planned of €180m. Actual investment in milk quota in 2002 was €36m compared to planned of €37m. If the above pattern is repeated then the actual overall investment in farming in 2003 could be over €400m.

As in previous years dairy farmers accounted for the bulk of total planned investment at 50% with a smaller proportion than in 2002 (59%). Planned investment on cattle farms was down slightly with a large increase planned on sheep farms - accounting for 16% in 2003 compared to 8% in 2002. Planned investment on tillage farms in 2003 also increased on the 2002 figure.