27 JUNE 2017

ICSA president Patrick Kent has expressed strong reservations that Irish farmers will suffer a double whammy as a result of Brexit because there is no plan to make up the shortfall in the UK contribution to the EU budget. Speaking in Brussels last week, where ICSA was engaged in a series of lobbying meetings, Mr Kent outlined how Irish farmers are already paying a price from exchange rate volatility and uncertainty around future UK/EU trading arrangements.

“It is unacceptable that Ireland pays the price for Brexit and we need the EU to understand this. While the EU focus is on ensuring that the UK cannot be seen to have a Brexit without adverse consequences, it is even more untenable that member states who remain in the EU would be the losers.”

ICSA met with Irish MEP Liaidh Ní Riada who sits on the European Parliament Budget committee and outlined the difficulties faced by Ireland, especially farmers in the cattle, sheep and tillage sectors who are particularly vulnerable to CAP cuts. “We believe that making up the shortfall must be a priority and that each of the EU-27 including Ireland will have to bite the bullet. ICSA pointed out that the value of the EU budget has been undermined in real terms by the process of Quantitative Easing (printing money) undertaken by the ECB in recent years.

This has made EU farm inputs such as oil and fertiliser more expensive than they otherwise would be. On the other hand, QE has boosted EU exports outside the Eurozone. This has benefitted agriculture but the overall picture is that the member states are paying less into the CAP budget in real terms than otherwise would be the case. ICSA is arguing that the impact of QE needs to be looked at. The case should be made that it is appropriate to look at maintaining the CAP budget in real terms.”

The annual UK net contribution to the EU budget is not a straightforward calculation, impacted by everything from variations in the receipt of CAP payments to the calculation of the rebate. Sources which give the figure in sterling have to be converted according the relevant exchange rate. While the 2015 UK contribution has been estimated at €13.5 billion (net of the UK rebate), the more typical net annual contribution has been around €10-11 billion. This would suggest that the net reduction in the CAP could be in the range €4-5 billion, implying a 7-9% reduction in CAP payments.