The Minister for Agriculture and Food, Mr Walsh, will this morning meet farm leaders to plan concerted opposition to the reforms of the Common Agricultural Policy to which he plans strong resistance.
Speaking after the sweeping reforms were announced in Brussels yesterday, Mr Walsh said he was convinced that as drafted, they were detrimental not only to "the agricultural economy but to the economy as a whole".
Central to the reform package is the breaking of the historic link between direct payments and production, something Irish analysts say will devastate the beef industry here.
The farm organisations claim the so-called "decoupling" proposal for beef would cost the economy €300 million in lost exports and the meat processing industry claimed its implementation would cost 2,500 jobs and export losses of €500 million.
There were similar claims made about the proposed reform of the dairy regime which was an unexpected part of EU Commissioner Dr Franz Fischler's announcement.
With decoupling, he announced a 28 per cent reduction in aid for supporting and marketing dairy products, a move, the dairy industry said was a breach of the Agenda 2000 agreement.
There were also claims that the cuts in intervention prices and skim milk powder prices would cost the Irish industry €400 million in lost exports.
Last night Dr Fischler rejected Irish fears and said the Irish dairy industry would benefit from the cuts in supports which would make it more competitive on international markets on which it so heavily relied.
He also said he could not understand why Ireland was predicting such a fall in its beef herd when European experts had predicted only a 3 per cent reduction because of the decoupling proposal.
"If farmers are going to get a better price for their animals, and that is what is going to happen, why should they stop farming?" he asked.
Earlier, Dr Fischler said reform was necessary to encourage farmers to base business decisions on the market rather than on the level of subsidy. He dismissed farmers' fears that their incomes would fall, stressing that direct payments would offer income security but would allow farmers to earn more by responding to the market.
"The most common criticism is that farmers would be paid for doing nothing. This criticism is completely unfounded - farming would be dictated by market conditions. Incomes would rise as a result of these market reallocations and this is not accidental. It's hard to see how this could mean paying farmers to do nothing," he said.
Mr Fischler said that a Commission study predicted that farm incomes throughout the EU would rise by 1.7 per cent as a result of the reforms. He suggested that beef producers' incomes would increase by 4 per cent.
"We can expect in the beef sector a reduction of about 3 per cent in production but more balanced prices - an increase of about 7 per cent in prices - so an overall increase in income of 4 per cent," he said.
Under the Commission's plan, farmers will no longer receive subsidies based on how much they produce but will continue to receive direct payments as long as they keep their land in good order. The payments will be based on what farmers receive at present but they will be reduced over time, with the money saved going to rural development.
Dr Fischler announced that these direct income cuts, known as "degression", would not come into action until 2007 and would not apply to farmers receiving less than €5,000 in direct payments annually. However, over the next seven years to 2013, farmers receiving between €5,001 and €50,000 would see their direct payments reduce by 12.5 per cent.
For farmers receiving over €50,000 in direct payments annually, the cuts would amount to 19 per cent over the six years.
The Commissioner said the money clawed back by these cuts would go towards providing additional rural development funding by €1.48 billion and would in part address the criticisms that too much aid was going to the larger farmers and not enough to the smaller operators.
Beef, dairy sectors lose out as Fischler ploughs ahead with reforms; Widespread opposition to plans; CAP review keeps key Fischler proposals: page 11 Editorial comment: page 17
