For sixty years the Common Agricultural Policy of the EU has sought to support European farmers by improving their standards of living and the quality of produce. It has also been of great significance in Ireland, given the role of agriculture in the Irish economy. This Just the Facts looks at the development of the Common Agricultural Policy, its benefits to Ireland and what is in store for its future.
History of the Common Agricultural Policy
Established in 1962, the Common Agricultural Policy (CAP) was introduced to provide affordable, safe and high-quality food to people, in addition to ensuring a fair standard of living for farmers.
Over its lifetime, the CAP has gone through many reforms. The first came in 1968 from Sicco Mansholt, the first European Commissioner responsible for Agriculture. The Mansholt Plan aimed to improve the standard of living for farmers by advancing a wide-scale modernisation of the agricultural sector and enabling European farmers to become more self-sufficient.
Some of the most recent and important improvements were introduced by Ray MacSharry. He held several Irish cabinet posts, including Minister for Agriculture from 1979 – 81 before becoming European Commissioner for Agriculture and Rural Development from 1989 – 93.
In 1992, the ‘MacSharry Reforms’ were agreed. These reduced the overall budget of the CAP and shifted policy direction from a market support system to providing more direct income supports to farmers.
Then, under Franz Fischler, who was the European Commissioner for Agriculture, Rural Development and Fisheries from 1995 – 2004, the EU turned focus to its ‘Agenda 2000’ programme.
In anticipation of future EU enlargement, the programme added a second ‘pillar’ within the CAP dedicated to rural development and was intended to provide new sources of income to rural areas. The establishment of rural development into the CAP added to a first ‘pillar’ introduced by the MacSharry Reforms, which dedicated direct income supports to farmers. ‘Agenda 2000’ also aimed to strengthen social cohesion and increase the competitiveness of the agricultural sector.
EU Member States agreed to reform the CAP once again for the period 2014 – 2022. The response to climate change became an important factor as the EU encouraged sustainability of natural resources and increased funding towards rural development projects.
Impact on Ireland
Ireland’s membership of the EU has been of particular importance to the agricultural sector. It was one of the key reasons behind Ireland joining the then European Economic Community (EEC) in 1973. At the time 24% of Irish employment was in agriculture, according to the CSO.
Funding support to Irish farmers is channelled through two separate pillars. The European Agricultural Guarantee Fund (EAGF) “helps the EU’s farmers to provide a secure supply of safe, healthy, and affordable food”. While the European Agricultural Fund for Rural Development (EAFRD) finances the EU’s rural development objectives.
Through the 2014 – 2020 period, it was estimated that Ireland received a total of €10.68 billion in CAP funding towards the agricultural sector and rural development. As noted in the Teagasc National Farm Survey, “in general, farm income continued to be highly reliant on direct payments”. The standard family farm income in Ireland was €25,615 in 2020, where each received an average of €17,842 in direct payments.
Looking to the Future
On 2 December 2021, a new agreement on reform of the CAP was adopted that will cover the period of 2023 – 2027.
The new CAP will have a total budget of €387 billion, which includes €291.1 billion from the EAGF, and €95.5 billion allocated within the EAFRD. It is closely aligned with the objectives of the European Green Deal, the EU’s main action plan to mitigate against the threats from climate change and modernise European industry and its energy infrastructure. Among these goals, the EU aims to ensure food security, reduce environmental footprints and transition toward sustainability.
In addition to this, a certain percentage of funding has been allocated to specific areas. For instance, at least 25% of the EU budget for direct payments will be directed towards eco-schemes, and at least 35% of funds will be directed towards the support of greener rural development.
The plan also seeks to meet ten specific targets set out in the EU legislation. Among these are competitiveness, ensuring the food chain, climate action, protection of the environment, preserving landscapes, ensuring generational renewal, developing rural areas, improving food and health quality, fostering knowledge and innovation, and ensuring fair incomes for farmers.
While the plans adopted seek to ensure a seamless transition to sustainable agriculture, the CAP for 2023 – 2027 has also come under criticism from leading industry stakeholders who predict that it will cut the incomes of many Irish farmers.
Tim Cullinan, CEO of the Irish Farmers Association has stated, “The plan will hit a cohort of our most productive farmers who will see a devastating cut in their Basic Payment. Many beef, sheep and tillage farmers who do not have off-farm income will find it very difficult to achieve viability.”
Other organizations’, such as Greenpeace, have also faulted the new reforms, suggesting that the future CAP will continue to serve “only the largest and most polluting businesses,” while doing nothing to address the impact that industrial farming has on the climate.
In the latest Eurobarometer report on the CAP, 72% of Irish people think that agriculture and rural areas very important for our future. Further, 86% of people believe that securing a stable supply of safe, healthy, and sustainable food should remain the primary objective of the CAP. The link between climate change and agriculture has also grown closer in public perception, as 92% of Irish people say that extreme weather events can have an impact on food security and supply in Europe, while 77% said they believed CAP was fulfilling its role in protecting the environment and tackling climate change.