1. Exports
Exports play an important role in Ireland’s economic growth. A series of significant discoveries of base metal deposits have been made, including the giant ore deposit at Tara Mine. Zinc-lead ores are also currently mined from two other underground operations in Lisheen and Galmoy.

2. Primary sector
The primary sector constitutes about 5% of Irish GDP, and 8% of Irish employment. Ireland’s main economic resource is its large fertile pastures, particularly the midland and southern regions. In 2004, Ireland exported approximately €7.15 billion worth of agri-food and drink (about 8.4% of Ireland’s exports), mainly as cattle, beef, and dairy products, and mainly to the United Kingdom.

3. Welfare benefits

As of December 2007, Ireland’s net unemployment benefits for long-term unemployed people across four family types (single people, lone parents, single-income couples with and without children) was the third highest of the OECD countries (jointly with Iceland) after Denmark and Switzerland. Jobseeker’s Allowance or Jobseeker’s Benefit for a single person in Ireland is €188 per week, as of March 2011.

Volume 1 of the report recommends:

Section 2.3. (1); Transfer functions of Bord Iascaigh Mhara into D/AF&F;
Section 2.3. (19); Consolidate all indigenous enterprise support and sector marketing functions in Enterprise Ireland (EI) and rationalise the organisations losing functions as appropriate. This encompasses County Enterprise Boards,…….Bord Iascaigh Mhara, ”

Volume 2 (Detailed Papers) recommends:

Detailed paper No. 1 Table 1.4; “Transfer export promotion function for indigenous industry to Enterprise Ireland, including those of An Bord Bia and BIM. Transfer BIM’s functions and consider transferring An Bord Bia’s functions to D/AF&F and close BIM ice plants”

Section A1 paragraph 3; “BIM’s remaining functions should be carried out in D/AF&F in a dedicated section rather than maintaining a separate organisation with accompanying overheads and BIM should be formally abolished”

In terms of absorbing BIM functions into DAFF, this is an excellent idea as industry confidence in BIM is at an all time low. However there are obvious communication problems between the fisheries section of DAFF and the wider agri-food programmes. Fish and shellfish are types of food however to date, very few examples of collaborative projects/programmes involving agri-food infrastructure being used for seafood R&D have been evident. The Ag side of the house still research Ag (beef, chicken, pork, dairy, fruit, veg, ready meals etc) and the fisheries side (via BIM) foucus exclusively on fish and seafood - despite obvious opportunities for integration/collaboration.

BIM/Dept of fisheries are nearing completion of the new €28 million facility in West Cork which will include a stand alone seafood development centre. If DAFF as opposed to the fisheries section/ BIM had carried out a thorough review of existing infrastructure and industry needs, it would have been abundantly clear that facilities, equipment and more importantly expertise already existed at various DAFF sites throughout Ireland without the need to build a stand alone facility treating seafood seperately to wider food.

For a fraction of the cost, collaborative programmes could have been developed aimed at encouraging research and third level agencies to carry out R&D for the seafood industry - instead of ploughing money into bricks and morter in a stand-alone facility. In fact, building a seafood-only facility is going against trends evident in the EU where seafood has been intergrated into wider-food-research several years ago. The recent transfer of marketing remit from BIM to Bord Bia was another positive step in th right direction as now seafood will be treated like most other food products with tried and tested business models and resources being applied to the seafood category.

In my opinion, absorbing BIM into DAFF is a very positive step however the agri-food people in DAFF should ensure that they open up existing infrastructure to the seafood industry rather than simply instruct the fisheries section of DAFF to service the industry from the new facility in Clonakilty. All of the technologies used for beef, pork, dairy, etc have direct application to seafood products and the most logical and cost effective way to service the seafood industry would be to use existing DAFF facilities throughout Ireland to assist industry and to integrate seafood R&D into the agendas such as Teagasc to access the wealth of expertise and resources which already exist.

In terms of Ag vesrsu fisheries being seperate entities, remember - fishing and agriculture go hand in hand in most of our coastal communities and job losses in either results in hardship for families in that area. We have invested Billions in the Agri-food side of the house in pervious years and it is time to open up these facilities for the seafood sector to ensure sustainable business models and maintain jobs.

As to whether the McCarthy report should have been kept secret, this was politically impossible as you know. I don’t know if Lisbon 2 will be defeated, just that farmers will vote against.

>>>In proposing these possible policy reponses, is it your view that Irish agriculture should move towards greater productive efficiency i.e. greater industrialisation. Given that many of the payments which are in line for cuts are given to remote farms, often disadvantage, does this not go aganist the principle of multifunctionality, which policy makers are trying to encourage. >>>

Do I think we should move to larger farms and fewer farmers? Yes, this process has been ongoing for decades but needs to be accelerated. Does this mean greater industrialisation? While I am not sure how you define this, the answer is no. Irish farming would still be based on a family farm structure. Would this go against the principle of multifunctionality? Not necessarily. Multifunctionality is the recognition that some farming may produce external benefits that are valued by society. I accept that this can be the case, and in my post I argued that up to one-third of family farm income could consist of direct payments for this purpose. But these should be targeted payments where farmers contract to provide a specified environmental output. For example, I was glad to see that some of the modulated Single Farm Payment money will be recycled to farmers in the Burren, where the traditional type of livestock farming is essential to maintaining the Burren as we know it. The great weakness of existing payment schemes is that, for the most part, they produce no tangible multifunctional outputs.

>>>On a side issue, is it at all possible for Single farm payments to be equalised per hectare across the country(down to the lowest rate) and the surplus spent on financing the continuation of the schemes which are proposed in the McCarty report for cutting. Perhaps too, could modualation or article 68 money could be used in a way complicable with the above schemes without the need for co-financing by the exchequer.>>>

I am not sure why you would want to see the continuation of the schemes proposed for cutting in the McCarthy report, but in practice, yes, the government has the possibility to use a so-called ‘national envelope’ for this purpose under Article 68 as you surmise. This means that the government could reduce all Single Farm Payments by up to 10% and use this funding (without a requirement for co-financing) for a range of specified activities. However, the government has also made clear it has no intention of invoking this power, presumably because it would simply recycle payments between different members of the farming community and would meet with a storm of protest from those who would lose out.

Similarly, any obligation to level payments per hectare across farms would be strongly opposed by those farmers who would lose part of their payments (the voice of those farmers who would gain will not be heard so loudly), and the government will only proceed with this when forced to do so under an EU regulation, likely to happen in the next CAP reform after 2013.

The reps scheme has environmental benefits. For example farmers have to maintain/plant new hedgerows, fertilser spreading is limited, livestock have to be kept back from waterways, farm buildings have to be painted and maintained etc….

The real problem arises for the small farmer especially in the West of Ireland who is very dependent on his reps payment. These people will have to turn to farm assist.

On the intensification issue why can we not farm this Country like the Dutch? It amazes me every time i visit there how professional they are. They maximise every square inch of ground and make good profits. Nothing goes to waste

‘There are three responses, in my view, but it would be interesting to hear other views in this thread. The first is a dramatic shift to less intensive production systems, to move away from an infatuation with production per hectare to profit per hectare. The second is land mobility; although on average all family farm income is now contributed by direct payments, there are significant differences in cost structures and management skills between farmers. We need to encourage high-cost farmers to release land to those who can farm it more efficiently’

In proposing these possible policy reponses, is it your view that Irish agriculture should move towards greater productive efficiency i.e. greater industrialisation. Given that many of the payments which are in line for cuts are given to remote farms, often disadvantage, does this not go aganist the principle of multifunctionality, which policy makers are trying to encourage.

On a side issue, is it at all possible for Single farm payments to be equalised per hectare across the country(down to the lowest rate) and the surplus spent on financing the continuation of the schemes which are proposed in the McCarty report for cutting.

Perhaps too, could modualation or article 68 money could be used in a way complicable with the above schemes without the need for co-financing by the exchequer.

Slash - €2 billion saved through the end of subsidising small businesses in the area of fish harvesting.

Would we be having a heated debate about the absolute need to retain €2 billion in direct payments and indirect support to corners shops across the country?

“The group agrees with the principle of the sale of surplus assets. The excuse that property/land prices are now too low to sell has little validity as in the foreseeable future property prices are unlikely to return to anywhere near the inflated levels of recent years.”

How does that tie in with NAMA ??

I note what you say about construction. Do you think there are many farmers getting a second income from public service employment?

Do you think the Bord Snip report should have been kept secret if the Government wanted to get Lisbon II passed?

Of course, the agricultural subsidies regime is unfair. For one thing, it takes no account of other income, e.g. vets receiving payments running to tens of thousands.

Anyway, farmers are angry and will vote against Lisbon 2. They may not be large in numbers, but they do vote.

With that said, Agriculture, Services and Other could all conceivably include some public sector workers. However, it is unlikely that it is as high as I thought.

The Construction figure is a bit of a shocker.

I presume that public sector employment would mainly either be in “services” or “other”. If it is mainly within services, it sits alongside many other sectors, notably retail and hospitality, which might fit well with a farming enterprise.

The message I take from this is that farmers are probably not especially dependent on the public sector for off-farm employment, but they are especially dependent on sectors much worse affected by the recession, notably construction. Agriculture itself is going through a tough time. QNHS data shows a drop of 13,000 (11.2%) in employment in agriculture between Q4 2008 and Q1 2009, although I’m not convinced we can take the size of the drop at face value.

I note the comment that the reduction in direct payments will be very painful. It appears that the measures will put many farms out of business altogether, but then you have farmers with dual incomes, farmers with large farms, and farmers in niche areas. Do we know what effect this will have on rural economic health and sustainablility of rural communities? In particular, do we know how many low income farmers there are who are wholly dependent on the direct payments and have no other source of income?

How great an effect will the elimination of low income farmers have on consumer demand in rural areas given that one can expect them to spend all their direct payments as well as paying feed suppliers and farm equipment suppliers with market supplied revenue?

It would be very interesting and pertinent to know how many farmers on dual incomes will be hit by other job cuts in the public sector. I suspect that a strongly disproportionate number of farmers are employed in public sector employment. Can anyone shed any light on this gut instinct of mine?

The medium-term macro challenge for agriculture can be spelled out in a few figures. Last year, 2008, total income from farming (in formal terms, net value added at factor cost in agriculture) amounted to €2.7 billion (it has fluctuated between €2.6 and €3.0 billion over the past five years). This is the return generated by the capital, land and labour used to produce crops and livestock in the farming sector.

In 2008, €0.8 billion came from the ‘market’ while the remaining €1.9 billion was transferred either by the EU or Irish taxpayer.

However, Irish farming sells into a highly protected market for its main commodities beef and dairy. A Doha Round trade agreement (still more a possibility than a probability in the next two years, in my view), with no change in farm practices, would knock anything between €100 and €400 million off the ‘market’ value added, according to a Teagasc FAPRI-Ireland analysis last September. The report itself admitted these were rather optimistic figures given that they assumed the continuation of a baseline with buoyant farm prices.

A recovery and further increase in food prices, such as we experienced in 2007-08, would of course increase ‘market’ value added. While another price spike of that magnitude is unlikely in the near future (based on historical experience), the international forecasting agencies do expect global food prices to strengthen in the medium-term. Irish farmers benefited from very strong dairy prices in 2007 and early 2008, for example. However, current projections suggest little change in EU producer prices for beef and dairy products over 2008 levels over the next decade.

In addition, cuts in the Single Farm Payment in the context of the next EU medium-term financial framework after 2013 will reduce the transfer due to direct payments, by an amount yet to be determined. But initial bargaining positions suggest that the share of agricultural spending in the EU budget will be further reduced.

So, even without taking into account any production response to the cut in direct payments, it is not unrealistic to project that total income from Irish farming could decline by one-third or more over the next ten years in nominal terms. If farmers find they can no longer subsidise their loss-making enterprises from the smaller direct payments, then the decline could be much greater.

The challenge, then, for Irish agriculture is to maintain production levels and total income from farming on a sustainable basis. In other words, how can we maintain total income from farming at around €2.5 - 3.0 billion, but change its composition so that two-thirds comes from market activity and the remaining one-third from direct payments, even in the face of these policy challenges?

There are three responses, in my view, but it would be interesting to hear other views in this thread. The first is a dramatic shift to less intensive production systems, to move away from an infatuation with production per hectare to profit per hectare. The second is land mobility; although on average all family farm income is now contributed by direct payments, there are significant differences in cost structures and management skills between farmers. We need to encourage high-cost farmers to release land to those who can farm it more efficiently. And third, we need the research to underpin the production systems of the future, hence my plea above to maintain the research capacity of Teagasc.

And yes, reducing income supports tied to land, which have encouraged ridiculous land prices and rents, is the first step in this painful process of adjustment.