Dairying is our sweet spot – we must increase output before things turn sour
Ireland’s food role model is infant formula – we account for 11pc of global market share
I ’LL be broadcasting on Newstalk from the National Ploughing Championships at Tullamore on Tuesday and Wednesday, followed by late-night live co-presentation of the new ‘Tonight Show’ on TV3 with Matt Cooper. When at ‘The Ploughing’ – the Electric Picnic of the farming calendar – it utterly consumes you in its bubble of frantic feet tramping around 1,700 exhibits. If you were to spend just four minutes at every pitch, it would take five days to absorb it all.
I’m very comfortable in the heart of rural Ireland. Farming folks’ lifestyle and culture are irreconcilable with modern urban living – a different pace of life where time isn’t rostered, there’s less noise and neighbourly, personable, face-to-face engagement supersedes interaction on faceless social media.
The future lies with city life, however. A recent US population survey revealed that in 1950 three out of 10 people lived in towns and cities. By 2050, that will be eight out of 10. The US today, Ireland tomorrow.
This year’s National Ploughing Championships (NPC) mega-marathon could host 300,000 punters.
A notable milestone will be sales of the just-published book ‘Queen of the Ploughing’, an autobiography by National Ploughing Association (NPA) director Anna May McHugh.
It’s a compelling read that chronicles eight decades of ordinary family life in Co Laois and the history of the NPA.
The book highlights the NPA’s backbone of democratic volunteerism. ‘A few life lessons’ is the best chapter and the extraordinary successes of an iconic woman in a man’s world. McHugh’s adaptability, can-do drive and common sense are cornerstones of the work that has seen the championships becoming the largest event of their kind in Europe.
The NPC showcases the agri-food sector – the heartbeat of rural Ireland. As the bedrock of the indigenous economy, it accounts for €11.5bn of exports, 163,000 jobs and comprises 140,000 family farms.
Unlike aircraft-leasing finance, there is no leprechaun economics, transfer pricing, stateless corporate tax avoidance or repatriated profits.
The agri-conversation in Tullamore will focus on the present state of milk and meat prices, harvest and weather conditions, farm incomes – not the prospects for the industry beyond 2020.
I learned in the 1990s that the fickle popularity of the minister for agriculture of the day was in direct correlation to price of cattle that week in Tuam mart.
The Agricultural Science Association, representing the brains trust of 1,800 agricultural science graduates, held its 75th conference last week on the future of agri-food.
Official narratives remain ‘upwards and onwards’, as embodied in the Government’s ‘Food Wise 2025’ plans, which target exports of €19bn, and its ‘Food Harvest 2020’ plan, which identifies a surge in global food demand in the coming years.
It could become complacent claptrap if the impending threats of Common Agricultural Policy (CAP) reform and Brexit materialise. Alarm bells are ringing – but who’s listening?
European agriculture and related sectors are the EU’s largest employer, accounting for 44 million jobs. The CAP accounts for 38c in every euro of total EU finances.
The CAP’s annual €56bn programmes are due to be reviewed by 2020.
At last week’s conference, the EU’s Agriculture Commissioner, Phil Hogan, warned of acute political downward budgetary pressures on the CAP.
Back in 2004, the EU enlarged with the accession of 10 eastern states, including Poland, Hungary, the Czech Republic, Slovakia and Slovenia.
Their farmers receive 60pc of the direct income subsidies obtained by existing 17 member states’ farmers. They were promised parity after 2020. This can be levelled upwards or downwards, depending on an increased CAP budget allocation.
Last June, the EU budget commissioner, Gunther Oettinger, floated the idea of increasing national contributions of each member state by 0.1pc of GDP (currently 1.1pc). Germany’s Wolfgang Schauble dismissed the proposition. Only three states – France, Austria and Ireland – favoured more cash for the CAP, despite parity obligations.
The winds of political change in Brussels mean any extra finance approved will be allocated at EU Council level to prioritise expanded EU defence/security commitments and coping with migration pressures.
EU leaders rank international politics above agri-exports. Look at the impact of trade sanctions on Russia until 2018: up to 2014, Irish food exports increased by 500pc over five years to €722m; since the EU-US blockade of €12bn of agri-food output, sharp declines occurred.
The boycott has scuppered this market into future self-sufficiency, as the Kremlin pursues import substitution policies. C AP reform will also have to embrace the fallout of Brexit – creating a €3bn black hole of missing UK contributions. No net contributor is offering to make up any part of the €10bn net British annual fiscal transfers.
The inescapable conclusion will be the introduction of a ceiling of direct payments per farmer, (eg largest tillage operators/factory beef feedlots). This only achieves miniscule savings. Farmers’ cheques in the post will diminish in the long term.
Of the food we export, 50pc goes to Britain, largely because the British and Irish have the same consumer culture and tastes.
Asian exports are really only applicable to the big players of Kerry and Glanbia, due to cost and scale.
The fundamental fact, as confirmed by Teagasc, is a hard Brexit of World Trade Organisation (WTO) tariffs would wipe out entire margins from our UK market overnight.
In reality, beef and sheep farmers still live on EU income subsidies. Grain farmers have had no profits for several years.
Ireland’s USP in food is grass-based milk production.
We account for 1pc of world output. The intrinsic competitiveness of Irish food lies in the perpetually profitable sector of dairying.
Grass-based milk selling for 24c a litre becomes world-class under the Origin Green quality mark.
This ‘farm-to fork’ transparently audited process is the essence of sustainability. Traceability derives back to natural soil and water.
Ireland’s food role model is infant formula. We account for 11pc of global market share, which is growing by 2pc per annum. That’s worth €1.3bn annually. Supersensitive parental trust is secured by Origin Green credibility, without political or subsidy dependence.
Post milk-quota output limitations, we need to scale up dairy farms to herds of 200 to 250 cows.
We must address looming labour problems through greater land mobility, with tax and career incentives modelled on those in New Zealand. That country increased milk output from five billion to 20 billion litres over two decades.
The tectonic plates of EU politics, CAP reform, Brexit, global consumer trends and imperatives of environmental sustainability/climate change are all shifting in one long-term strategic direction: to double down on dairy output.
Policymakers and agrigiants must target this sweet spot of Irish agri-food to gain a competitive advantage.
Our destiny lies in refocusing investment in infant formula.