Dairy farms could be “worse off” under the new Pillar I Common Agricultural Policy (CAP) Reform, according to economists at Teagasc.

In a new report, published today (Wednesday, December 14) Teagasc economists examine the impact on family farm income and agricultural output of the Pillar 1 CAP reform, which will come into effect in January 2023.

The report uses data from the Teagasc National Farm Survey (NFS) and direct payment schemes including the Basic Income Support for Sustainability (BISS) payments, an eco payment and a Complementary Redistributive Income Support for Sustainability (CRISS) payment.

The report is based on a farm scenario with an average BISS payment of €156.18/ ha by 2026 and an eco payment of €77/ha and a CRISS payment of €43 on the first 30 hectares.

Economists highlight in the report that because of the “convergence strategy” for Pillar I payments under the CAP reform some farmers could be worse off while others may see an improvement to their income streams.

They also state that the “continuation of a convergence strategy” for Pillar I payments in the CAP reform “implies reduced levels of income support” to some farms.

But overall it is anticipated that “for most farmers the change in income support received and in family farm income” will be relatively small.

CAP reform

However there are exceptions to this rule and according to the Teagasc economists under the CAP reform, from next month, “the majority of dairy farms are worse off than they were in 2019”.

It is a similar scenario for tillage farmers as the economists estimate that it is likely “only a very small proportion of specialist tillage farms gain in terms of direct income support” under the CAP reform.

But in contrast the prospects for specialist sheep farms are less clear.

Just over 50% of specialist sheep farms – represented by the Teagasc NFS – would see improved family farm incomes under the CAP reform, compared to where they were in 2019.

When it comes to cattle there is more of a divergence on the impact of the CAP reform.

The Teagasc economists state: “The proportion of farms losing in terms of changes in family farm income under the reform scenario is greater for cattle other (mainly finishers) farms than it is for cattle rearing farms, where a slightly greater proportion of the farms represented by the NFS see gains in income due to the CAP reform”.

Separately they also analysed the scenario for low output farms – which were defined as “small’ farms” with less than €8,000 of standard output – and found that a greater number of these small farms stood to “gain in income rather than lose” under the CAP reform.