Farmer breathes more easily

THREE weeks ago, Co Laois farmer Mr Ger Bergin was looking at proposals which would have cut some £4,000 to £5,000, about a third of his earnings, off his income.

Had the proposals gone through, all three enterprises on his 170-acre mixed farm at Ballycolla would have taken a hit, especially beef, which was scheduled for a 30 per cent cut.

Cereal prices were set to fall by 20 per cent, a cut which would have been aggravated by the application of degressivity, under which partial compensation for the cuts would have been clawed back progressively over a number of years.

Sheep prices, in an enterprise already suffering because of flat prices as well as the EU method of calculating premiums, would have tumbled still further in line with falling beef prices.

Yesterday, Mr Bergin was relieved, heaping praise on Mr Tom Parlon, Mr Michael Berkery and the commodity chairmen of the IFA "for keeping a fire lit under the Minister and the negotiating teams".

"This deal is a big improvement on where we were," he said. "On the beef side, it has worked out better than expected. We've retrieved the situation. It looks like when price cuts are put against compensation, we'll be budget neutral and we'll be OK.

"My biggest worry would be if we had another crisis in the next few years, like BSE or the Russian and Asian market collapses, and prices were to drop by 20 per cent to 57p a pound. We'd be in big trouble if something like that were to happen. But compared to what could have been, this deal is a massive improvement.

"In cereals, we have a small improvement on the original proposals. There is still the 20 per cent cut with partial compensation of 35 per cent to 50 per cent so there's no change there. But the good news there is that we got rid of degressivity. Had that not happened, we would have been back to where we were, or worse, with the price cuts.

"I'm not in milk but I believe the dairy farmers are reasonably happy. They never wanted quotas to go and under this deal the evil day has been postponed. Quotas control the supply of milk and supply and demand are almost in balance now but it doesn't take much to tip the scales and with oversupply, the price of course goes down. I think there's still a commitment to abolish quotas from 2006 onwards but for now it's all right.

"The sheep side is the one I find most worrying because there's been nothing done there. It's as you were with the premiums and whatever price cuts come in beef will be reflected in sheep. But at least with lower beef cuts, the sheep cuts will be less as well."

What all of this means to Mr Bergin and his income is impossible to say yet.

"The devil is in the detail and there will always be traps when you start looking into it more deeply. There's a lot of technical stuff that has to be worked out in the next few months and it'll take about two years before it all comes in because it will be done in stages. What happens to my income really depends on where prices go on the cereals side, whether we take the full brunt of the 20 per cent price cut.

"Whether that happens or not depends on whether the markets are buoyant and there's no indication that they would be at the moment. But then you could have a bad summer in America or a bad harvest in Russia that would change that.

"By no means are we insulated from what's going on at world market level, no way. We know where the bottom line is now, though it's still lower than one would have wanted. The great thing about the EU and the CAP was that the bottom line was pretty high up but it's been lowered a lot in the last two reforms."

However, he is quick to admit that things are looking up. "Beef has gone up to 80p a pound; still a bad price but an improvement. And lamb prices have gone up from about 85p to £1.10. That's because the season is at its peak now. But it's still an improvement and it's most welcome.

"Agriculture is cyclical. We've had a big trough since 1996 but I think it has begun to turn. There are positive indications for the next couple of months on the cattle side. There's just a chance that we might be in an upward trend again."