Outline of ‘old young’ farmer issues in the Common Agricultural
Policy
Joint Oireachtas Committee on Agriculture, Food and the Marine
16th June 2015
Introduction
Chairman, committee members, thank you for the opportunity to attend this meeting and
to outline issues effecting a cohort of young farmers referred to as ‘old young farmers’ or
‘forgotten farmers’ and who are setup in farming for more than five years and receive low
or no levels of support under the Common Agricultural Policy.
Present today from Macra is Bryan Hynes Macra’s Agricultural Affairs committee chairman,
Derrie Dillon Macra’s Agricultural Affairs Manager and myself Sean Finan National President
of Macra na Feirme.
The new CAP reform has been very positive and important incentives for young farmers
such as the Young Farmer Top Up for those who are within their first 5 years of set up.
However the rules for establishing and administering these young farmer schemes covered
in the Basic Payment and Rural Development programs haven’t had the same positive
impact on other young farmers namely ‘old young farmers’. There is a group of ‘old young
farmers’ who have been particularly disadvantaged by the CAP. Many of these ‘old young
farmers’ have either low levels or no Basic Payment under the CAP for a variety of reasons
related to the historical model upon which the Single Farm Payment was based.
This situation has now been compounded by the introduction of a ‘five year rule’ for
eligibility for support. The result is, they lack the support of the CAP system to help them
manage issues such as income volatility and facilitate investment in their farms businesses.
The convergence model under the new CAP will bring them within 60% of the national
average Basic Payment by 2019.
In terms of Macra’s active engagement on young farmer issues and developments in the
CAP process, the organisation works closely with CEJA the representative body for young
farmers in Europe representing 2 million farmers. Macra is active at Irish and European
level participating and feeding young farmer policy into the various institutions and
stakeholders.
Firstly, we will provide some background and context to the situation these young farmers
find themselves in, we will outline a young farmer case study and we will summarise the key
issues and possible solutions for these ‘old young’ farmers.
How we arrived at this situation – the result of previous CAP reforms
Historically, some of the most far reaching and fundamental changes in the Common
Agricultural Policy to date arose out of the Luxembourg agreement where farmers who
previously claimed production based premiums, instead received a decoupled payment
from that reform. This broke the link with production and subsequent CAP reforms used a
historical basis to determine the value of farmers Basic Payment. Macra believes in the
underlying principle that farmers should be rewarded for developing their businesses and
generating economic activity and Basic Payment allocation to farmers should reflect this. As
a general principle Macra believes land and Basic Payment should be released from persons
who don’t want to engage in agricultural production and made available to active farmers
who want to produce food.
Where Macra’s policy fundamentally differed from others in the last reform is that Macra
believed payments to individual farmers should move from a historic basis to a ‘rolling
reference year’ basis whereby farmers would continue to be paid a Basic Payment but based
upon their current level of farming activity. The main motivation for this approach is that,
over time, the historic basis for Basic Payment becomes less equitable as farmers develop
their enterprises and thus change from what they did in 2000 – 2002. The only obligation on
farmers currently is to maintain their lands in good agricultural and environmental
condition, with no obligation or encouragement to maximise the productive potential of the
land. Furthermore, the historic system does not adequately take into account new entrants
and young farmers to farming who did not establish a Basic Payment entitlement in the
reference years.
CAP reform 2014-2020
In Pillar 1 the introduction of a mandatory Young Farmer Basic Payment scheme to deliver a
25% top up of the average Basic Payment on a maximum of 50ha for their first 5 years in
farming was a very positive element of the new reform and a policy that Macra had sought
and lobbied for young farmers. The young farmer measure is worth approximately €800
million annually for European young farmers and up to €24 million for Irish young farmers or
€64 per hectare approx.
The Basic Payment National Reserve is also a very important mechanism to ensure young
farmers get a fair start relative to their established counterparts in farming. For the first
time the EU Commissions proposals emphasises that National Reserve entitlement shall
prioritise young farmers who are commencing their activities. The European Court of
Auditors particularly welcomed the change to prioritising the allocation of entitlements
from national reserves to young farmers. Potentially eligible young farmers for the National
Reserve included those who commenced farming since 2010 and meet the additional
objective criteria such as off farm income limit and educational requirements. An additional
category in the National Reserve was established base on a hardship case for young farmers
who commenced farming in 2008 or 2009 due to the fact that Installation Aid was
suspended. Macra acknowledge that this category was introduced however there are still
young farmers who commenced before 2008 with low levels of Basic Payment.
However, the rules of the Basic Payment National Reserve as implemented at Member State
level can constitute a barrier to entry for certain young farmers and new entrants when
applying for entitlements. Many of our members have been very dissatisfied with the level
of Single Farm Payment they were able to establish from previous National Reserves.
Farmers who commenced farming activity before 2008 are not eligible to apply to the Basic
Payment National Reserve. These ‘old young’ farmers who have low or no Basic Payment
feel that the CAP system has failed them as many have fallen outside the criteria of various
schemes in the past.
The ongoing replenishment of the National Reserve is also a concern and Macra has
proposed that mechanisms should be put in place to guarantee that entitlements are
available in the National Reserves every year for young farmers applying for it. We need to
learn the lessons from the past National Reserve and avoid a scenario of inadequate
resources to meet the needs of young farmers. The experience in recent years has been
that the National Reserve does not provide sufficient payment to new entrants as it
becomes depleted of funds as there is no sufficient ongoing mechanism to fund a National
Reserve.
In Pillar 2 the introduction of a 60% Young Farmer Targeted Agricultural Modernisation
Scheme on certain capital investment for start up young farmers within their first five years
of set up was also important in the absence of the introduction of an Installation Aid
scheme.
The key obstacles for young farmers starting up in farming in order of priority are: transfer
costs and conveyance, cost of stocking and land improvement. Many young farmers are not
in a position to make significant physical infrastructural developments within their first five
years of setup. They have to prioritise investments that will give a short to medium term
return. Therefore, Macra believes that the 60% Young Farmer Targeted Agricultural
Modernisation Scheme should be extended to all young trained farmers in order to benefit
from the support.
In summary the overall CAP scheme package for farmers is positive but the measures for
young farmers are restrictive and therefore will be more limited in their impact. This
amounts to a missed opportunity to support all young farmers. Accommodating ‘old young’
farmers in the National Reserve and all young farmers in the 60% young farmer TAMS was
deliver a comprehensive package for Ireland’s young farmers. The sympathies towards
these young farmers need to be converted into action.
The main issues
Young farmer definition: The EU Commission definition of a young farmer under the new
CAP reform is a young farmer who has establish in farming (generally activated a herd
number) within a five year timeframe. This is a very restrictive definition with the result
that a young farmer who activated a herd number at 18 years of age is no longer defined as
a young farmer at 23 years of age while a farmer who activates a herd number at 39 is still
defined a young farmer at 43 years. The definition is also linked to both Pillar 1 and Pillar 2
of the CAP. Macra believes the EU definition of a young farmer needs to be reviewed as
part of the simplification of the CAP and the mid-term review.
Basic Payment National Reserve: The National Reserve needs to be a real support for young
farmers who find themselves with no or low entitlements. It needs to be available
throughout the duration of CAP 2014-2020 so that as each year passes by a new tranche of
young, trained farmers will have the opportunity to go the reserve and thus get them on the
first rung of the ladder for a successful career in agriculture. Otherwise, this group of young
farmers will become the next ‘old young farmer’ group who will have missed out on the
opportunity to access young farmer schemes.
The National Reserve must remain available to young farmers and further linear reductions
on Basic Payments may be required to replenish the National Reserve. Young farmers
accessing the National Reserve should not be tied up in red tape and ruled out by a range of
restrictive criteria, which is generally at the Department of Agriculture, Food and the
Marine’s discretion to implement.
Targeted Agricultural Modernisation Scheme: Farming is a capital intensive, expensive
industry for young farmers to develop their farm business. The definition of a young farmer
who commenced farming within the past five years to activate the 60% Young Farmer
Targeted Agricultural Modernisation Scheme is restrictive. Many young farmers still have
infrastructural deficits on farm that need to be addressed. Macra believe that the 60%
grant rate should be applied to all young farmers.
Conclusion
The new CAP Reform will benefit many young farmers through the Young Farmers Top Up,
National Reserve and 60% Young Farmer Targeted Agricultural Modernisation Scheme.
However, there is also a group of ‘old young farmers’ who have for a variety of reasons
related to the historical model upon which the Single Farm Payment fallen between rules
and miss out on measures intended for their benefit. Thank you for your attention.