Economics of Cattle Production Systems Post CAP Reform.

Abstract

The radical reform of the Common Agricultural Policy (CAP) in the early 1990’s impacted directly and indirectly on most of the farm enterprises in Ireland. The direct focus of the reform was largely confined to the cereal and beef enterprises. The reforms consisted of: • A phased reduction in the institutional support prices for cereals and beef of the order of 30 per cent • A phased switch to a direct payment system of farm income support to compensate for the product price reductions. Most farms in Ireland have a cattle enterprise, either alone or in combination with other land using enterprises. Therefore, the reforms of the CAP affected almost all the farms in the country either directly or indirectly. For cattle farmers, the potential consequencee of these changes could be far reaching in terms of their magnitude and their permeation into the details of the husbandry practices of the production system(s) themselves. These changes clearly impact on the economic efficiency of beef systems without necessarily affecting technical efficiency of the systems. The economic optimum cattle production systems would thus be achieved by using the best mix of feed resource costs, carcass values and direct payments. The purpose of the study was to: • determine the economic impact on the cattle enterprise of the switch to: • lower EU prices for beef • lower EU prices for cereals and as a consequence a lower price for concentrate feeds • the direct payment system of income support • identify the economic optimum cattle production system(s) that would arise from these changes • quantify the sensitivity of the economic optimum system to key policy, economic and technical production variables.