Blog: Brexit, climate and consumer trends key to future of farming – Irish Farmers Journal

In the first quarter of this year, according to the Central Statistics Office, full-time employment in farming came to 89,000 people, just 4.3% of the national total. The figure has been falling steadily and, in Q1 of 2000, it was 7.8% of those at work.

This trend of decline in the share working in primary production is not new. In the 1926 census, the first in the history of the new Irish State, 53% of the workforce was engaged in agriculture.

The declining trend is also universal and has been under way since the dawn of the modern urban world 8,000 or 10,000 years ago.

A lower commitment of human resources to the production of basic sustenance has been the handmaiden of economic progress and higher living standards throughout recorded history. The falling share of the farm workforce in the Irish data is not unusual and has begun to slow. But it is natural to worry that it reflects poor income in the sector, and that the viability of rural communities could weaken further.

Primary production generates only a portion of the income of European farmers. The market is protected from lower-cost competition and income is supported from EU and national budgets. As farm production has become less labour-intensive and more mechanised, it uses more energy, hence the perception that farming is both a drain on State finances and a big contributor to carbon emissions. But it remains, in Ireland and in several other European regions, a key component of the rural way of life. There are three developments under way which will affect Irish farming greatly in the years immediately ahead.

Brexit

The first is Brexit. Ireland’s decision to join the Common Market, as it then was, at the 1972 referendum was influenced by the perception that the UK had decided to join and that the UK market for agricultural exports was critical. Export dependence on the UK is less pronounced nowadays but it remains a key market and a principal source of food imports too.

The consequences of the UK’s departure are not yet fully visible but there have already been negative impacts on dairy exporters and cost increases for traders in both directions. The full long-term impact will become clearer as the COVID-19 emergency passes and as the UK settles its trading terms with competing suppliers from outside Europe.

Unless Britain is willing, in the interest of securing new trade access for manufacturers and services, to abandon its adherence to European food safety and animal welfare standards, the terms of trade with the EU might change less than many commentators initially feared. So far, there is no evidence that the British public has any appetite for departing from high EU standards and there will be a political cost to a cheap food policy that threatens them.

Consumer tastes

Changing consumer tastes and developments in food production technology have stoked anxiety about demand for traditional meat and dairy produce. The world’s population of consumers continues to rise, and their incomes are rising too. This is fuelling worldwide demand for these product categories and there is no evidence of weakness in the broad marketplace. Nor is there any evidence that vertical farms will become commercially significant for the foreseeable future.

Climate drivers

The more imminent challenge comes from climate change and the inevitability of a more vigorous policy response. The world’s leaders meet in Glasgow in November for COP 26, the latest instalment in the search for international agreement on measures to reduce emissions. A vigorous policy response may not emerge from the Glasgow meeting, but its outcome could be secondary for Irish farming.

The EU has already embarked on commitments which will bind its members and the post-Brexit UK has adopted ambitious targets too. Irish agriculture is in the firing line because agricultural emissions are attributed to geographical territories based on production rather than consumption.

This makes no economic sense but has been enshrined in the measurement methodology adopted by the United Nations, through the Intergovernmental Panel on Climate Change since the 1990s. This penalises countries whose natural advantages in farm production result in food output which exceeds domestic consumer demand, resulting in high net exports.

Curtailing output, through herd limits for example, runs the risk of relocating output to less efficient regions, with the likelihood of higher greenhouse gas emissions. Territorial emission targets based on production would make economic sense only if each territory were a distinct planet and had its very own atmosphere.

There are other threats to farmer margins arising from emission targets, including the favourable tax treatment of green diesel. But there is an upside in the form of payments for sequestration, in substitution for income support based on acreage. Climate adaptation is the battleground on which the farm policy debate will now centre.

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