CAP 2020: ICOS opposes mandatory capping and degressive direct support payments

The Irish Co-operative Organisation Society (ICOS) has voiced its opposition to the possibility of mandatory capping and degressive direct support payments under the Common Agricultural Policy (CAP) after 2020.

Decoupled direct payments are the main tool that farmers have at their disposal to support and stabilise farm income, according to the president of ICOS Martin Keane.

Capping and degressive payments would only serve to reduce income for active farmers, who are in most need of this support, Keane said.

Keane and ICOS were responding to the new CAP 2020 proposals outlined by the EU Commission in a communication earlier this week. ICOS represents the dairy processing co-operatives and national livestock marts in Ireland.

The organisation is also calling for co-ops – which, it believes, are the most effective form of producer organisation – to be enhanced in any future schemes.

The proposed reforms are welcome, but they must be supported by a strong CAP budget and effective market supports, the organisation added.

Keane broadly welcomed initiatives proposed in the EU’s CAP communication when he addressed the EU Agriculture Commissioner Phil Hogan and European farm and co-op leaders in Brussels recently.

But Keane did warn that “specific market supports and risk management measures” will be necessary to protect against volatility.

In his address, the president of ICOS said: “The commission’s proposals are a welcome step towards the positive evolution of the CAP.

“However, with Irish farmers and co-operatives facing unprecedented challenges in the coming years as a result of Brexit, climate change and global market volatility, ICOS calls for these proposals to be supported with sufficient CAP financing and strong and effective market support and risk management tools.

This will provide much-needed market stability and will enable farmers meet the outlined goals, including ambitious environmental targets.

“We welcome the focus on risk prevention and management, and in particular the call for member states to enable the development of income stabilisation tools to allow the agricultural sector to address volatility – such as the ICOS 555 income deferral scheme, which would allow farmers to defer a small proportion of their income in a good year and draw it down in a bad one,” he said.

Managing volatility

Meanwhile, Keane also emphasised that further measures must be taken to strengthen current market management measures and make them more effective in dealing with volatility.

In particular, seasonality is a key issue that must be addressed to stabilise market prices throughout the year. This can be achieved – for example – by redefining private storage aid as a market management tool, while opening support for applications during peak season each year.

“The CAP can help promote the development of a European futures market. This would be a key tool that co-operatives could use to manage volatility through financial hedging.

“To achieve this, its use needs to be encouraged and training and advisory services needs to be provided for co-operatives – so that they can effectively use it as a risk management tool.

“We also welcome the focus on trade within the CAP and the commitment to furthering EU policy to promote EU food quality and standards worldwide and improve market access for EU products globally. This policy will be critical to overcome the challenges posed to the Irish agri-food sector by Brexit,” Keane said.

Response to the CAP communication

The potential for increased national flexibility within the new CAP 2020 proposals will allow member states to better address local issues, particularly within environmental schemes, Keane explained.

“We believe that with a strong and controlled EU framework, we can avoid any potential distortion to competition or the functioning of the single market,” he added.

Continuing, Keane said: “ICOS welcomes the comments within the communication on the effective role which producer organisations can have in strengthening the position of farmers in the food supply chain.

However, ICOS reiterates that co-operatives are the most effective, socially responsible and sustainable form of producer organisation that provide numerous benefits for their members, industry and rural communities.

“They integrate the role of producer, processor and the marketer – helping to re-balance the food chain, bringing viable incomes to their members and offering a level of protection from the volatility. Therefore we call on the commission to encourage and protect co-operatives within the upcoming policy reform.”