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CAP provides important funds for Irish farms

18 March 2020
Type Press Release

FARM MANAGEMENT: Farmers are hugely dependent on the Basic Payment Scheme and other CAP payments for their income and to support their farm business. The BPS for 2020 is open until May 15th

The application process for the Basic Payment Scheme is now open. Farmers are hugely dependent on these payments for their income and to support their farm business. Indirectly this funding supports thousands of rural businesses as it flows through the economy.

The EU Basic Payment scheme delivers almost €1.2 billion to Irish farmers annually, and on top of that there are various other payments that farmers opt for depending on the circumstances of the farming business.

In 2018 the average subsidy payments made up 74% of the family farm income of the average farm. Drilling deeper, the figures are more concerning, for cattle and sheep farms, where the payments were up to 158% of income. This means that one third of the payment received was spent farming.  2018 was a tough year due to weather extremes, 2019 was more normal, and what has 2020 in store?

Figures below are from the Teagasc National Farm Survey, a representative sample of about 90,000 farmers with sales greater than €8,000.

Every farmer should have a look at table 1 and compare with their own business. If the figures are similar to your farm and repeat year on year, then I would suggest some tough conversations need to be had with your advisor to implement change.

Table 1: Average value of Direct Payments & Contribution to Family Farm income (FFI) 2018
Farm EnterpriseDirect PaymentFFI contribution
Dairy €21,022 34%
Cattle Rearing €13,098 158%
Cattle Other €16,226 111%
Sheep €18,980 143%
Tillage €22,451 55%
All €17,244 74%

So what’s next?

Firstly, the 2020 Basic Payment Scheme is now open. All Teagasc Basic Payment appointments will now be processed over the phone rather than an office consultation. Teagasc staff will contact farmer clients in the coming weeks. BPS application for clients, in so far as possible, will be done over the phone.  It is important to get the application completed. This secures a vital part of your income for 2020.

Secondly, review the farming business. As soon as possible discuss the operation of your farm with your advisor. Are there simple changes that can be made to improve farm profit, or should you be considering a more drastic enterprise change? Forestry, land leasing, organic farming, solar panels, partnering with a neighbour, contract rearing are just some of the options that other farmers have embraced.  

There’s a lot of risk in farming now. If you change enterprise there is a risk, but if you keep doing what you are doing there is also risk. The next Common Agricultural Policy (CAP) is being negotiated at present, and we must rely on our Politicians to get a good outcome for Ireland. It won’t be easy due to budgetary pressures.  That’s a risk outside the farm gate, but with obvious implications for the business inside the farm gate.  

Farm debt in Ireland, in the most part, is on dairy farms, and given the recent volatility in the financial markets, interest rates will probably remain low for the time being. But what about the price of our commodities, milk and meat? Reduced global spending could have an effect on the value of our exporters. So it is essential farmers review 2020 spending plans, even at this early stage in the year. Review your farm plan, farm finances, or plan a change. You may need a farm visit and if so make an appointment for a future date. It could be your most important business meeting of 2020.

James McDonnell

Teagasc Farm Management Department
Oak Park