Farming is a key sector of Irish society. It is the back bone of our rural communities.
There are 162,500 farms in Ireland north and south. That figure has been falling continuously over the last number of generations. This is happening in large part due to the economic difficulties involved in farming. Like most sectors of the Irish economy statistical data on Ireland as a whole is in short supply. There is a hard border when it comes to joined up information. This is a major challenge in the economic management of Ireland. It is Aontú’s view that this information gap needs to be fixed.
Farming is a key sector of Irish society. It is key to our food security. It is the back bone of our rural communities and it generates significant economic activity and employment. It produces 7% of the gross value added (€13.9 billion), 9.8% of merchandise exports and it provides almost 10% of all employment in the south of Ireland.
However farming is not in good shape. Only 37% of Farmers in south are considered to be independently economically sustainable. That means that in only 35% of farms the income of the Farms is sufficient to cover all the costs of the family. A further 35% of farms are only economically sustainable because a family member supplements the income of the farm by working outside the farm. According to Teagasc the remaining 30% of the farms are not economically sustainable.
The average wage of a farmer is €24,000, this is €10,000 less than the average industrial wage. Average farm income in 2018 fell by 15%. Dairy incomes fell 22% on 2017. Tillage incomes bucked the trend and rose 6%.
Brexit is a threat to the economy of Ireland as a whole, but no sector is more vulnerable than that the agri-food sector. Difficulties in this sector have already started to manifest themselves. Sterling/euro exchange rate has already changed, reducing export competiveness and increasing import competitiveness.
Brexit will reduce the size of the EU budget. Agriculture is 40% of the EU budget. Lower CAP spending will lead to lower farm incomes in Ireland. Higher trade costs will develop between Ireland and Britain in the case of tariffs barriers and non-tariff barriers.
Particularly exposed is Irish Beef. 90% of Irish production is exported and more than half of this is to Britain. 90% of Irish milk is exported and while Britain accounts for 21% of export value over, half of Irish cheddar is exported Britain.
Farmers in the North face massive fall in their incomes. Real time farm incomes have already fallen in 2018. No replacement has been identified for the £286 million of payments to farmers from the EU’s CAP.
With no Stormont in place there is no plan in how to replace this income. Farmers in the North may face significant tariffs selling their product into the EU and would have to compete against lower quality and lower cost imports in northern and British market.
Sheep is a large segment of Farming in the North of Ireland. 50% of sheep are sold south of the border for processing and are then shipped on to France,
On top of all these challenges the market structure is also damaging farming. There are a small number of really large factories and retail multiples. These exert massive buyer power and can significantly determine the terms of trade and most importantly the price.
- There must be no hard border. A hard border is serious threat to incomes and supply chains. It must not happen.
- A future trading relationship which seeks regulatory convergence and customs arrangements must be achieved.
- The government and the EU must provide a comprehensive package of supports to the agri-food sector in the case of a Brexit Shock.
- The absence of an Executive in the North of Ireland is a serious obstacle to resolving Brexit related challenges in the North.
- Capacity must be increased at Cherbourg and other continental EU entry ports to allow for increased direct exports to these areas.
- Contingency plans must be made for the imposition of the World Trade Organization’s tariffs, regulatory divergence, disruption to the British land bridge, the imposition of arduous customs requirements, changes in the VAT regime and Sterling Euro fluctuations.
- Supports for market diversification must be made available for famers and agri-food companies currently dependent on the British market.
- The current Fisheries status quo must be protected.
- The shortfall from CAP North and South must be replaced in the short to medium term.
- Given that the average farming wage is €24,000 it does not make sense that Pillar 1 Basic Payment Scheme (BPS) in the next Common Agricultural Policy is capped at €150,000. Aontú seeks that cap be significantly reduced. This should be done to protect small family farms, many of whom are living in poverty.
- The government must join the dots. Ireland needs to decarbonise our energy. Farmers are well placed to produce small scale wind energy, small scale solar energy and bio digestion. This could add as much as €10,000 to their annual income. Yet Ireland is the last country in Europe to provide a feed in tariff to allow this to be done.
- The government must root out unfair trading practices in the food-supply chain that allow factories and large multiples abuse their buyer power. There needs to be transparency with regards the margins in the food supply chain. If a firm is taking excessive profits then customers should know this information to allow them make their purchasing choices accordingly. Any uncompetitive trading practices need to be rooted out by the Competition Authority.
- Late payments for perishable food products; last minute order cancellations; unilateral changes to contracts; refusal to enter into a written contract; returning unsold or wasted products; and payment for buyer’s marketing are all practices that are undertaken due to the inordinate buyer power of a few large buyer firms. These must be brought to an end.
We urgently need a new deal for farmers to support them to protect our threatened habitats and species. Bio diversity and agriculture go hand in hand. It is necessary that Farmers are given an explicit role to the protection of that bio diversity and they are compensated for this role.