The Background
It is widely recognised that the agricultural industry in Ireland and in the U.K. is in a state of crisis. Livestock prices at market have plummeted in recent months to levels not seen for many years. Farmers are taking to the streets in unprecedented numbers, protesting at perceived government insensitivity to their plight, and there is no immediate prospect of any significant easing of their lot.
Blame for this state of affairs is generally attributed to a variety of factors, including:
The situation is particularly noticeable in Ireland, on account of the country's long history of reliance on the agricultural industry and the fact that the industry accounts for a significantly higher proportion of the workforce than the E.U. average.
It is apposite, then, to examine some facts and figures relating to the industry, and perhaps gain an insight into the nature of the problem, and to suggest some questions which need to be addressed.
The Facts
The statistics which follow are drawn, in the main, from the Dept.of Agriculture and Food ( D.A.F.F. ) and The Central Statistics Office (C.S.O.) .
Some timing differences occur between various sets of figures, but they are close enough, chronologically, to give a reasonable illustration of the general situation.
The 1996 census revealed that, of a total labour force of 1,533,964, some 140,625 were farming, fishery or forestry workers (9.2%). Of these, 101,562 were described as 'employer or own account' workers and it is that category which is the subject of this study.
The D.A.F.F. estimated that in 1994/95 the average gross household income for farm families was £18,852. Of this, farm income (including direct payments) accounted for 51%. The direct payments in question are subsidies and compensation payments, funded, for the most part, by the E.U. under the Common Agricultural Policy (C.A.P.).
The total of non-capital direct payments in 1997 amounted to £940.4 million, giving an average per farmer of £9,259. Using the 1994/95 figures above, the average total farm income (51% of £18,852) was £9,614. Assuming that this figure has not changed significantly, and doing a straight subtraction, we arrive at an average annual farm income of £355, excluding direct payments.
It would be reasonable to assume that the reason for these substantial direct payments was to maintain an affordably-priced supply of essentials for the consumer. This does not, however appear to be the case. Ireland's self-sufficiency in the main agricultural outputs for 1996/97 was as follows:
It is clear therefore that the subsidies support a massive oversupply for which markets need to be found. At present, it appears, there is no such market, and yet production continues apace. As at June 1998, the livestock populations were:
To take a very crude average, these figures could be said to equate to an annual income of £2 per year per head of livestock, based on the overall net income figure of £355, above.
What return does the Government see on this investment? In an article in the Sunday Times of November 1st 1998, John McManus highlighted the enormous disparity in the income tax yield from the various sectors of the workforce:
Of the £84 million, some £33 million is shared between the 7,000 farmers in receipt of aid under the Smallholders Assistance Scheme.
McManus also drew attention to other C.S.O. information which reveals that the average size of farm holdings is 29.2 hectares, the average selling price is £6,907 per hectare, and the average daily increase in value of the land is £2.50 per hectare.
According to the above, the average holding is worth £201,684 and is earning at a rate of £26,645 (13.21%).
The Future
According to the C.S.O., almost 1/3 (31.9%) of farmers are in the 55+ age group; over half, (53.8%) are aged 45 or over. More significantly, perhaps, only 8.6% are aged 25 or under. There are fewer school-leavers, both proportionally and in absolute numbers, entering the industry now than ever before. The lack of a structured career programme or long-term prospects for advancement, compared with other career choices must be the major cause of this phenomenon.
Traditionally, those opting for the farming life did so at an early age and with little or no secondary education. With the opening of the doors of opportunity in recent years to secondary and higher-level education, coupled with the huge growth in the economy and the consequent wide range of job opportunities, farming is viewed as a less attractive option, and seems set to continue on that trend for the foreseeable future.
Globally, the trend is towards large-scale 'ranch' style farming, where economies of scale and efficiency - rather than government subsidies - are viewed as being the key to securing a sustainable, profitable future for the industry. In Ireland, too, there is a small but significant shift in this direction, albeit with the aid of the subsidies.
Massive pressure is mounting from both within and outside the E.U. for reforms to, or the abolition of, the C.A.P. Resentment is generated throughout the community by approximately 48% of the total E.U. budget being allocated to an industry which accounts for roughly 5% of the workforce in a manner which is perceived to encourage overproduction, inefficiency and dishonesty.
Sooner, rather than later, the industry will have to come to terms with the prospect of the total elimination of farming subsidies. Even if they remain, the iminent admission of Poland and other Eastern European countries into membership of the E.U. will ensure that there will be severe changes.
In the meantime, there are two schools of thought as to how such funds as are available might be reallocated. Some say that they should be targeted towards the poorest, most needy farmers, and capped so that nobody should receive above a certain limit; that the more successful, profitable enterprises do not need subsidies.Others maintain that this would be to reward inefficiency and waste, and that the funds should be channelled towards those who can demonstrate long-term viability.
The inescapable fact is that the Irish farmer will have to come to terms with the realities of economic life on the eve of the 21st Century. In a world where factory closures and mass-redundancies are an everyday fact of life for the rest of the community, the farmer can no longer expect to be treated as a special case and shielded from the harsher aspects of economic activity.
In the U.K. in the early 1980s, the coal and steel industries each employed over 200,000 workers and continually sustained massive losses at the expense of the taxpayer. It was considered unthinkable that this would not continue to be the case, as these essential industries were special cases and their workers' jobs must be protected at any cost. Today, each of those industries employs approximately 10% of that number and is seen as a model of efficiency and competitiveness on the world market.
The questions
We are left, then, with some questions which our politicians might prefer to leave to their successors, but which, nevertheless, have to be addressed - and soon. An Irish solution to the problem would be to wait for the numbers of older farmers to reduce through 'natural wastage' and hope that no youngsters would take their place. Time pressures, however, rule out that option.
Is it desirable to encourage a sector of the economy to produce unmarketable commodities, in whatever quantities they choose, for as long as they choose, at the expense of the taxpayer?
Is it realistic to expect a collection of ageing, undereducated, untrained sole-trader farmers to be able to compete effectively with the technologically advanced 'superfarms' which are now proliferating worldwide?
Should we acknowledge that a large proportion of these 'self-employed' farmers are, effectively, unemployed; and reclassify the subsidies they receive as social welfare payments?
Should politicians who are themselves farmers be allowed to vote on such issues?
Your comments or observations would be appreciated, particularly if you are a farmer or a politician. If you have the time, email me at Michael.Flynn@nuigalway.ie
Thank you for taking the trouble to read this.