Beef production: It will be late 2005 before the old system of 'cheques for everything' comes to an end, writes Seán Mac Connell, Agriculture Correspondent.
The dire predictions that rural Ireland would fall apart when the CAP reforms come in from this January and that farmers would be taking to the pubs with their annual cheque to drink themselves to death are unlikely to come true.
In fact, beef farmers will have one of their best ever years, because 40 per cent of what they should be getting this year will be paid in 2005 and they will get their new Single Payment as well.
There will, however, be some pain, especially for beef farmers who have not yet come to terms with the realisation that from now on they will have to farm for consumers, not for subsidies.
The 100,000 or so beef producers are the first in line to feel the new reality of farming without subsidies.
The €50 per animal from the Special Beef Slaughter Scheme, which was paid out to encourage farmers to hold their cattle off the market when grass growth finished in the autumn, ends on the last day of December.
Later in 2005 the last of the bullocks qualifying for premia will make their way through the Irish beef factories.
It will be near the end of 2005 before the old system of "cheques for everything" will have ended and farmers will be given their Single Farm Payment, the annual pay-out known in rural Ireland as "the mother of all cheques".
This is to compensate the beef men for an expected fall in what they will receive from factories.
The producer price may fall if farmers allow it, but it is unlikely that the price to consumers will follow. No one has yet been able to find out why.
Despite a number of studies by Teagasc, the Department of Agriculture and Food and the Irish Meat Association indicating that there will be a sizeable drop in the number of cattle Irish farmers will keep, there is little evidence of this. Most beef farmers appear to have put their suckler cows, which produce beef calves, in calf. That will mean there will be at least the same level of beef-producing animals available for not just 2005, but for the following year as well.
Some of the experts see it differently, with predictions of a huge drop in beef production from 2005 onwards.
A report compiled for the Irish Meat Association, representing the beef factories, by Brendan Kearney and Associates late last year stated that decoupling would "have a dramatic negative impact on the beef sector in terms of output and exports".
It estimated that gross indigenous production of cattle and beef would decline from 656,000 tonnes to 457,000 tonnes, a reduction of 31 per cent. "The decline in the value of production would be even greater, at €445 million or 32 per cent, due to the higher quality and value of the suckler beef production lost as compared with beef from the dairy herd," the report said.
The most recent report from the Teagasc rural economy team predicted a slight drop-off in the number of beef animals available in 2005 and said it was premature to predict a serious destocking of beef-producing cows.
However, it identified a "problem" for beef farmers this year - too much cash, because 40 per cent of the 2004 payments will be made over 2005.
Because some of the old schemes will flow into 2005, additional income of €550 million will be floating around the sector, and there was a worry that this "one-off bounty" would artificially inflate the prices of young cattle in the autumn of 2005.
The FAPRI (Food and Agriculture Policy Research Institute) prediction was that the Irish beef herd would drop by 30 per cent by the year 2010, which would lead to a 12 per cent drop in beef production by the same year.
There was a prediction of a 5 per cent drop in cattle prices next year, but by 2010 cattle prices would be 8 per cent higher than at present. Irish beef exports would also drop by 18 per cent by 2010.