Teagasc Examines Impact of Tighter Extensification Rules
Issued 1st May 2002
A further tightening of the stocking rate eligibility and a corresponding increase in payment levels under the EU Extensification payments scheme would have little impact on Irish beef incomes but would lead to a drop in the suckler cow herd, according to an analysis by Teagasc economists.
The analysis, carried out by economists in the Teagasc Rural Economy Research Centre, is aimed at providing information on the impact of possible changes in EU policy following the mid-term review of Agenda 2000 which is due to get underway shortly.
Currently, a special 'Extensification' payment is paid on suckler cows and male cattle provided the stocking rate on the form is below a certain level. This year farmers with stocking rates of between 1.4 and 1.8 livestock units per hectare are paid extensification of €40 per eligible animal. The payment increases to €80 where stocking rates are less than 1.4 livestock units per hectare.
The Teagasc economists have looked at the impact of lowering the stocking rate eligibility by 0.2 livestock units per hectare and the results were outlined by economist Dr Kevin Hanrahan at the Teagasc Outlook 2002 conference in Dublin (Tuesday, 30 April, 2002).
In the new scenario, Extensification would be paid at the low level at a stocking rate of 1.2 -1.6 livestock units per hectare and at the high level at a stocking rate of less than 1.2 livestock units per hectare. The Teagasc economists have assumed an increased payment of €25/head at the low level giving a new payment of €65 and an increase of €33.33 per head at the high level giving a new payment of €113.33 per head.
The analysis shows that the changes would lead to an increase of 4% in direct payments to farmers and an increase of 3% in farm income. However, the suckler herd would drop by 3% resulting in a decline of just over 1% in beef output volume.
Dr Hanrahan told the Teagasc conference that the impact of the tighter extensification rules would bring the greatest benefit to smaller-scale beef producers. A reduction in stocking rate on these farms would be more than compensated by the higher extensification payments, leading to an increase of 10% in income.
Larger-scale farmers, not currently availing of extensification, would have to reduce livestock numbers by 20 per cent in order to avail of the new low level payment. This would reduce incomes by 40%. Therefore, it would not pay these farmers to change stocking levels.
The analysis shows that the reduction in beef output in Ireland and the EU would lead to some improvement in cattle prices, resulting in a small increase in income for larger-scale farmers.
Another Teagasc economist, Yasmina Behan, told the conference that a change in extensification eligibility would make a contribution to reducing Ireland's level of greenhouse gas emissions. Earlier Teagasc analysis projected a drop of 5% in emissions between 2000 and 2010, representing a 3% decline on 1990 levels, the base year of the Kyoto Protocol. A tightening of extensification rules would lead to a further 1% decline in emissions, as a result of lower cattle numbers, according to Yasmina Behan.
For the full proceedings of the Teagasc Outlook 2002 Conference, click here.
