Maintaining a "well-resourced" Common Agricultural Policy (CAP) "supports agricultural incomes in Ireland", Teagasc said.

A public consultation on the CAP post-2027 regulations recently took place.

The consultation, which was launched to gather views from farmers, stakeholders and members of the public on Ireland’s priorities for the next CAP, was open until March 27, 2026. 

Teagasc has outlined in its submission the importance of CAP budgetary expenditure to Ireland’s national receipts from the EU budget.

It has also highlighted the "likely negative impact" that a reduced budget for EU CAP will have on Ireland’s direct receipts from the proposed EU budget for the period 2028-2034.

Teagasc submission

In July 2025, the European Commission proposed a new Multiannual Financial Framework (MFF) for the period 2028 to 2034 and within that context, also published proposals for the new CAP post-2027.

"While the overall size of the proposed EU budget for the period 2028-2034 is larger than that for the current budgetary period, the additional resources are largely absorbed by new EU policy priorities," Teagasc said.

In Ireland, the ringfenced budget for direct income support measures under the CAP amounts to around €8.2 billion for the period 2028-2034, compared with a budget for the equivalentmeasures under the current CAP of around €10.8 billion.

"Ireland can choose to allocate more of its National and Regional Partnership Fund (NRPF) allocation to the CAP, but such a choice would reduce the budgetary resources available to achieve other objectives of the NRPF," Teagasc said.

EU budget expenditure

Teagasc highlighted that maintaining a "well-resourced CAP supports agricultural incomes in Ireland", and is also the "principal mechanism through which Ireland derives a direct benefit from EU budgetary expenditures".

"Ireland is now a net contributor to the EU budget and benefits both directly and indirectly from the EU budget," Teagasc said.

"In 2024, according to the European Commission budget implementation data, Ireland contributed €3.01 billion to the budget while in that year EU budget spending in Ireland amounted to €2.19 billion.

"In 2024, spending under this heading in Ireland amounted to €1.55 billion or 71% of all EU budget expenditure in Ireland in 2024."

Teagasc said receipts from the CAP "continue to be the principalmechanism through which Ireland directly benefits from the current EU budget".

"Reductions in the resources devoted to agriculture will likely lead to a reduction in the EU budgetary resources that Ireland directly benefits from," it said.

CAP payments

Expenditure under the current CAP supports agriculturalincomes via pillar one and pillar two of the CAP.

In national income accounting terms, spending on direct payments that support farm incomes is broken into what are termed subsidies on products and subsidies on production, Teagasc outlined.

Subsidies on products are those directly linked to the production of specific agricultural products and paid per unit of product produced, and subsidies on production are those paidto farmers that are not related to the volume of output produced.

"The reliance of Ireland’s agricultural sector income on direct subsidies on products and subsidies on production differs by region reflecting the different regional composition of agricultural activities," Teagasc's submission said.

"In those regions with a lower prevalence of dairy production, direct payments under both pillar one and pillar two make up a much greater share of agricultural sector income than is the case nationally."

In 2025, net subsidies on products and production accounted for 41% of agricultural sector income (operating surplus) in the state.

The most up to date data at a regional level are for 2024.

In 2024, the share of operating surplus accounted for by net subsidies on products and production ranged from 30% of agricultural sector income in the Dublin and mid-east regionto 91% of agricultural sector income in the west region.

"Reductions in the aggregate value of direct income support to farm incomes resulting from the proposed CAP would be expected to have a greater impact on those regions of the country with the greatest dependence on these CAP subsidies," Teagasc said.

"The proposed targeting of income support payments and the degressivity aspects of the proposed income support payments may affect the degree to which regions with greater dependence on direct payments are negatively affected by a reduction in the budget for income support measures under the current CAP proposal."

The highest level of average dependence of family farm income direct payments is for farms in the west region, while in the south-east region the share of subsidies and direct payments in average family farm income is the lowest.

Volatility

Agricultural incomes in Ireland have become increasingly volatile over time, Teagasc highlighted in its report.

"Fluctuations and shocks to agricultural input and output markets are becoming more frequent and are increasingly reflected in family farm incomes, while the impact of weather volatility onagricultural incomes continues," it said.

"This increased impact of global commodity market volatility on Irish agricultural output and input prices reflects a confluence of factors including a convergence of European and world agricultural commodity prices and an increased incidence of geopolitical shocks."

Teagasc said that direct payments receipts from the CAP, as a stable element of farm incomes, are the "principal risk management policy instrument in Irish agriculture".

"The role of direct payments in reducing farm income risk is particularly important on those farms such as dairy and tillage farms that, on average, where family farm income are less dependent on direct payments."

Impact of CAP reform

Teagasc said for all recent CAP reform cycles, it has undertaken economic analysis of the impact of the reforms on Irish agriculture and on Irish farm incomes.

"Teagasc’s agricultural economists will again undertake analysis of the impact of the reform proposals from the European Commission and the ultimate agreement on reforms of European agricultural policy to be agreed by the European Council and European Parliament before the end of 2027," it said.

Teagasc's previous work has "highlighted the importance of direct payments to Irish farm incomes and the impact of changes to such payments on family farm income and agricultural production".

"The magnitude of the gains and losses resulting from the last reform of the CAP in absolute terms and relative to family farm income were generally modest," Teagasc said.

Analysis showed "how the reform was unlikely to have changed the economic viability status of a significant number of farmers", Teagasc said.

"The commission’s budgetary proposals for the period 2028-2034 and the proposed budget for the CAP for the post-2027 period, andIreland’s allocation within that overall EU budget, make it a priori likely that the impacts on agricultural income will be more significant from this reform than from the 2023 CAP reform," Teagasc said.

The advisory body added that the reduced budget for direct income support measures under the proposed MFF in Ireland and the targeting of supports to specific categories of farmers will "lead to winners and losers amongst the population of CAP beneficiaries in Ireland as compared to the status quo ante".