The Minister for Agriculture and Food, Mr Walsh, will join his European Union colleagues in Luxembourg today in a continuing attempt to secure agreement on reform of the Common Agricultural Policy (CAP).
The talks are likely to last for most of the week because of uncertainty over the details of what is being proposed.
The French President, Mr Jacques Chirac, has indicated his determination to resist the "decoupling" proposals put forward by the EU Agriculture Commissioner, Dr Franz Fischler, aimed at breaking the link between direct EU payments and farm production. Mr Walsh has taken a similar, if less strident, approach. Under the proposed scheme, cuts in agricultural subsidies and premiums will be introduced from 2006 in order to prevent the emergence of future food mountains.
The problem took on fiscal urgency with the accession to the EU of a number of major, food producing countries inEastern Europe. And Dr Fischler had hoped to complete negotiations in advance of this week's European Council meeting under the Greek presidency. Additional pressure has been exerted through the World Trade Organisation (WTO) because of the dumping of subsidised EU foodstuffs on world markets. The European Commission hopes to have new structures in place before WTO talks open in Mexico next September.
The proposed reforms would have a dramatic effect on Irish agriculture. Beef suckler herds and sheep flocks could decline by 30 per cent by 2010. And the market value of our milk output could fall by 28 per cent. The Department of Agriculture has estimated the planned reduction in payments over a six-year period, to 2013, would mean a loss of €460 million. Dr Fischler has said one-third of the amount saved in premium reductions will be re-directed towards rural development projects, with the remainder being spent on market development. Mr Walsh will be seeking clarification on these issues.
Irish farm organisations have objected to decoupling on the grounds that European taxpayers would not accept a system whereby farmers were paid for not producing food. As an alternative, they proposed a partial decoupling, involving premiums and continued production. Dr Fischler has rejected this approach, saying it would simply postpone urgently needed reforms.
It is not all bad news. Under the system of direct payments put forward by Dr Fischler the incomes of small and medium-sized Irish farmers will rise. A reduced level of output and higher quality in the beef, lamb and dairy industries can be expected to lead to higher prices, with the bulk of the product going to European markets. Farm incomes are predicted to rise by 11 per cent. Traditionally, Irish agriculture has depended excessively on EU intervention. That has begun to change. These reforms should encourage Irish agriculture and the food sector to concentrate on producing higher-quality materials and developing new consumer products.