The impact of an 85% convergence in the next Common Agricultural Policy (CAP) could have a serious impression on the level of direct payments made to farmers with entitlements above the national average – in some cases potentially slashing payments by one third.
This is according to new modelling on payment entitlements under Common Agricultural Policy (CAP) reform published this month by the Department of Agriculture, Food and the Marine.
However, the department stresses that, as the discussions on the new CAP are ongoing, the options available to member states will not be clear until this process is concluded
The modelling exercise focused on payment entitlement unit values under the proposed Basic Income Support for Sustainability (BISS) – the successor to the Basic Payment Scheme (BPS) – but does not look at any proposed eco-schemes, for which 20% of CAP funds will be ring-fenced.
The current average BPS entitlement value came to €266 in 2019, according to department figures.
Using a sample population based on a snapshot of the payment entitlements held by Irish farmers that submitted a 2019 BPS application, the department conducted the modelling exercise based on an 85% convergence.
The average BPS payment for this population is €9,385, including Greening. The average payment per hectare held by this population amounts to €265 (BPS and Greening).
Three farmers are used to form the basis of this case study and it has been assumed that all three farmers own 32 BISS payment entitlements each.
The unit values of these BISS payment entitlements are as follows:
- Farmer X – €160 BPS and Greening;
- Farmer Y – €300 BPS and Greening;
- Farmer Z – €400 BPS and Greening.
The modelling then details the impacts convergence would have over a four-year period, from 2023 to 2026, based on the assumed BISS payment entitlement unit values.
The subsequent BISS payments based on assumed number of payment entitlements held are also included, the study notes.
Under the forecasts based on the convergence path, reductions in direct payments make for stark reading.
Farmer A, who would have received €12,800 in direct payments based on his/her 32ha at €400/ha, would see his/her payment slashed by 32% (€4,126.4) for a 2023 payment of €8,673.60. This would be reduced further, eventually to €7,462.40 for 2026 based on modelling predictions.
Farmer B would go from €9,600 in 2021 down to €6,706.56 – a drop of €2,893.44 or 30%. This would then drop over the following three years to €6,403.52 for the 2026 payment.
Finally, Farmer C would go from €5,120 of a payment based on 32ha at €160/ha down to €4,008.64 for a BISS payment in 2023 (down €1,111.36 or 21.7%). This would steadily rise to €5,142.72 by 2026 – about €23 in total better off than at present.