The protests in Brussels yesterday, where police resorted to tear gas and water-cannon in order to control a huge gathering of over 30,000 angry farmers, serve to underline the importance of this week's negotiations among EU farm ministers. The Commission's proposals for severe cuts (up to 30 per cent in beef, 20 per cent in cereals and 15 per cent in the dairy sector) have triggered much more than the customary response; this time, there is the very real sense that the prevailing political winds have turned against the Common Agricultural Policy (CAP) in its present form. Unlike the MacSharry reform programme, it is clear that the compensatory direct payments to farmers will not cover the proposed shortfall in income. The EU Agriculture Commissioner, Mr Fischler, says that the proposed cuts are necessary to allow the EU face the challenge of enlargement to the east (as outlined in its Agenda 2000 proposals) and to help smooth the path for negotiations on the next round of world trade talks later this year. But the cutbacks are also driven by one other political imperative; the insistent demand by Germany, the traditional paymaster of the EU, for some stabilisation of farm expenditure.
Although the overall importance of the farm sector to our economic well-being may have declined in recent years, it is also the case that this week's negotiations are relatively more important to Ireland than to any other EU State. Agriculture remains our largest single industry and, as a EU Court of Auditors report confirmed recently, Irish farmers reap the maximum benefit from the CAP. All told, Irish farmers received some £1.5 billion in farm guarantee payments last year, which works out at over £8,000 per farm, more than twice the average EU payment.
The political challenge in all of this for the Government is to devise a realistic negotiating strategy; one that allows this State to maximise its contributions from Brussels but also one which also reflects the political realities on the ground. As it is, the Government is vulnerable to the charge that it miscalculated badly by accepting the thrust of the Commission's overall proposals for Agenda 2000 eighteen months ago. Since then, as one Irish diplomat has observed, our partners have "pocketed our acceptance . . . and upped the ante". So far this week the Government has chosen to align itself with the uncompromising approach of the Irish Farmers Association. The Minister for Agriculture, Mr Walsh, has declared that he is in the trenches. This strategy might make good politics but it is hardly a credible or sustainable negotiating position. The reality of the situation - even before next Friday's mini-summit of EU leaders on the Union's budgetary framework - is that severe cuts are inevitable. The best-case scenario, at this stage, is that the French proposal ("degressivity") whereby budget savings are achieved by cutting compensation levels in line with the increases in productivity, continues to gather support. Ultimately, the whole issue from Ireland's perspective may hinge on the level of compensation available for Irish farmers. Whatever the outcome, it is already clear, as Professor Seamus Sheehy pointed out in yesterday's editions of this newspaper, that Irish agriculture is entering a strange new world. It is a world which will present new challenges, not just for Irish farmers, but also for the Irish political system.