March 2010
Further Details:
Eddie Punch (General Secretary)
Gabriel Gilmartin (President)
ICSA
9, Lyster House,
Portlaoise.
Phone:057-8662120 www.icsaireland.com
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The agri-food sector may have become unfashionable during the Celtic Tiger era, but the global economic crisis combined with the severe difficulties in our own economy has highlighted the importance of the sector. Collapse in the construction sector, a huge retrenchment in the financial sector and the reality that jobs created by foreign direct investment are being lost to lower cost economies means that once more, Ireland must reexamine its strategy for growth and prosperity. It is appropriate at this point to focus on the agri-food sector.
It is important to emphasise the importance of the sector. Agri-sector exports of almost
€9 billion accounted for 10% of all exports in 2008, and the sector employed 150,000 people or 7.5% of the total workforce. It has the important attribute of being evenly dispersed throughout all counties and so it plays a critical role in balanced regional development. On these figures alone, it is obvious that agriculture is important; however, it has added importance against a backdrop of increasing international concern about food security, the need for alternatives to non-renewable fossil fuels and the global imperative to combat climate change.
Account should also be taken of the fact that the landscape and rural environment is inextricably linked with farming activity. Farmers shape the rural landscape and are its custodians and this underpins a lot of what our tourism offering is all about. It is for all these reasons that the EU regularly refers to the concept of multi-functional agriculture.
While the key traditional role of agriculture continues to be food production, so much more is dependent on its ongoing viability.
It seems obvious then that the strategy for the next 10 years should be of such critical importance. Moreover, it would seem that a successful strategy for agriculture should be a key objective of government policy and that such a strategy would be integrated in a central way into the overall plan for economic recovery.
This is not always so apparent however. The economic downturn saw the government take very hasty and ill-considered decisions to impose severe cut-backs on key supports to farming, most notably the decision to close REPS to new entrants and by definition to begin the process of phasing it out altogether. This does not chime with the stated government strategy to build a smart, green collar economy and it has been disappointing to see the lack of ideas on utilising the agri-sector as a source of economic recovery. Key events, such as the Farmleigh Global Irish Economic Forum, ignored the agricultural sector.
At EU level, considerable uncertainty pertains to the budget for the CAP post 2013, and there are fears regarding potential reforms, which could disadvantage the Irish farming sector. At WTO level, Ireland has had to maintain a difficult balancing act between arguing for the interests of its farming sector while simultaneously favouring a so-called
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“balanced” global trade accord, a position that is heavily influenced by multi-national companies that have located in Ireland. Although the talks collapsed at the last minute in
Geneva in 2008, negotiations continue in the background.
EU CAP reform and a possible future WTO deal will impact in a most profound way on any strategy. Despite these potential minefields, and perhaps because of them, it is crucial that Ireland has a strategy for agriculture that is fit for purpose and one which insulates to the best possible degree the sector from negative external shocks or impacts.
Regardless of what happens agriculture does have the considerable advantage that food is an essential in a world where food security is lessening and demand is growing.
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Strengths
 The huge commitment to farming from Ireland’s 120,000 farm families who typically share a love of the land with a resilience that has seen them survive and adapt in the face of all types of economic, weather related and animal health disasters.

A tradition of exporting food and animal products as well as live animals to many international markets, with a mix of global food ingredient companies co-existing alongside smaller artisan companies and live exporting businesses, resulting in an
€8 billion agri-food export sector, based on doing business with many of the leading retailers across Europe.

While the age structure of land-holders is far from ideal, there is an influx of young enthusiastic farmers to agricultural education and the likelihood that some who were lost to the good wages in the Celtic Tiger construction boon will return to farming.

Competitive advantage of grass based production.

High standards of animal welfare and husbandry, traceability, wide-scale participation in environmental schemes, combined with animals grazing outdoors and a general absence of factory farming systems all underpin the positive image that Ireland’s agriculture carries with it the highest ethical, environmental and food quality standards.

Off-farm work has brought in income, which in many cases has underpinned farm investment and improvements, as well as giving financial strength in dealings with banks.
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Weaknesses

Average farm size of 32 hectares, and the propensity towards fragmented holdings makes many farms unviable and almost all farms do not have necessary economies of scale compared to the UK, or further afield.

Heavy Debt: Extremely poor products prices combined with high investment on farm facilities (€4.5 billion in 3 years) means that many farmers are carrying heavy borrowings. The debt situation has been compounded on some of the bigger farms by investments off-farm, using borrowed money secured on farm assets in some cases, as well as the high cost of agricultural land in a limited number of cases.

Over-dependency on sale of commodities at low prices to processors and by contrast a lack of direct selling to consumers by farmers, notwithstanding the growth in farmers’ markets in recent years.

Credit crunch in Ireland has led to severe impact on cash flow for farming as well as hindering further development at a time when such development could be done more cost effectively.

Low farm incomes, which have been endemic for many years in cattle and sheep sectors and which are now also a feature of the dairy and tillage sectors.

High costs in the Irish economy- energy, electricity, labour, carbon tax on green diesel, regulatory compliance

Too much tendency by some farmers to over-invest in machinery, buildings etc without adequate assessment of the economic returns from so doing.

Lack of tradition of machinery sharing, machinery rings etc and consequent under-utilisation of costly equipment.

Over-dependence on EU subsidies.
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Opportunities

Growing global demand for food.

New, increasingly affluent markets opening up in China and India characterised by rapidly expanding middle classes.

Falling supplies of key commodities such as dairy and meat within the EU, leading to increased deficits and failures to fill the milk quota.

Evidence that the long-run trend towards higher commodity prices is kicking off again after a hiatus due to the global economic downturn. This is manifesting itself in upward spirals beginning to be seen on oil, steel etc and world beef and dairy prices edging upwards despite the fact that EU beef price is still in the doldrums.

While there is still considerable grounds to be concerned about the potential of
South America to expand beef production, Russia, Ukraine and Romania to expand cereals and New Zealand/ US/ Canada to expand dairy; this is counterbalanced to some extent by global insecurity on water supply and the difficulties in China with polluted ground.

Climate change will provide opportunities for the countries which respond most effectively to the demand for carbon foot print measuring and labelling, and who can adapt and demonstrate that their agriculture is part of the solution.

Global commitments to biofuels which increases the demand for agricultural products.

Phasing out of milk quotas provides opportunity to expand for existing dairy farmers and the possibility of converting low margin drystock farms into dairying.

The export of pedigree breeding stock to the UK and other countries should not be discounted; already it is a significant earner for our top breeders and there is tremendous enthusiasm, translating into progress, among the growing numbers of pedigree breeders of the key beef breeds. On the dairy side, the top Holstein herds have achieved high standards also. Of even greater importance is the fact that the evolution in pedigree breeding will determine success and efficiency in the mainstay commercial suckler and dairy herds and close co-operation between
ICBF and the pedigree societies will be an important determinant of progress.
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Threats

Dominance of Irish and UK beef sectors by 3 processors is undermining competition for Irish farmers and keeping prices low.
 Failure to develop “Brand Ireland” means that we are still far too dependent on cut price marketing and undercutting our competitors on European markets.

This has led to an invidious situation where British farmers are increasingly frustrated at the role of Irish beef in undermining their product price and this will lead to further bad press for us and potentially militant action against Irish beef.

Short-sighted decisions to opt for genetically modified crops could undermine our clean, green image; rule out the development of the organic sector and may have other unforeseen consequences.

Failure to develop our marketing capabilities means that key Irish products such as beef are sold at low prices.

Failure on the marketing front has been particularly acute in the Irish meat sector where the three dominant players have a long tradition of reliance on taking advantage of export refunds, intervention and other supports, and have evolved only to the extent that the high volume, low margin model is now adapted to undercutting on price in order to get supermarket contracts.

While Bord Bia makes valiant efforts on promotional activities, the reality is that overall Irish spend on marketing of beef and lamb is absurdly low and the failure to follow up on the 1960s success of the Kerrygold brand/ Bord Bainne model has hindered our capabilities in meats. Innovation and foresight on marketing of our key commodities is sadly lacking, and it is only comparatively recently that we moved away from our outright opposition to country of origin labelling.

There is an ongoing risk to the ability to export both live animals and food products from disease problems and food risks. While we have seen the devastation that can be caused by the likes of an FMD outbreak, we also have had close encounters with blue tongue, scrapie etc. TB remains a blight on our capabilities and it is likely that, increasingly, herd health status as measured by diseases such as Johnes, BVD and IBR will dictate our success or otherwise in developing live exports.
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Section A: Policy Framework
1.
CAP Post 2013: Assessing the necessary changes required to take account of what the post 2013 CAP will look like.
2.
The End of Milk Quotas: Putting in place a strategy to take advantage of the very profound change that will arise with the phasing out of milk quotas.
3.
WTO Challenges: Ensuring that every effort is made to prevent a bad WTO deal from undermining the viability of Irish agriculture
Section B: It’s Not Easy Being Green- Farmers as Frontline Staff for the Environment
4.
New Challenges in the Environment : Ensuring that agriculture is fit for purpose in dealing with the new challenges of climate change, water and soil quality, biodiversity and energy needs.
5.
Sensible Regulation : Realising that farming by dates is unworkable and that contradictions between schemes is undermining the original purpose
6.
Funding: Admitting that the REPS decision was a grave error
Section C: Selling the Product
7.
Low Product Price Problem: Finding solutions to the low product prices at farm-gate level and the endemic lack of profitability in sectors such as cattle and sheep.
8.
Consumer Wants: Deciding on what are the consumer concerns of the 21 st century that will determine the success of the sector.
9.
Marketing: Giving strategic direction to the marketing of Irish agricultural produce.
Section D: Commodities and Practical Farming Issues
10.
Dairying: Time to expand?
11.
Can we do better in livestock?
12.
Animal Health
13.
Mol an óige
Section E: And the Overall Objective is…
14.
Viable Farm Incomes: All of the specific components of the agri-food strategy must be designed with the over-riding objective of delivering viable farm incomes to the optimum number of farmers, and the success or otherwise of the strategy and all related actions can only be measured by success under this heading.
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Assessing the necessary changes required to take account of what the post 2013
CAP will look like.
The difficulty with devising the 2020 strategy is that we don’t yet know what will happen in the upcoming CAP reform negotiations. It is, of course, axiomatic that Ireland must work to achieve the highest possible CAP budget post 2013. Even though Ireland has moved away from being a net beneficiary of EU funding, a well funded, EU wide
Common Agricultural Policy is decisively in our best interests.
If this can be achieved, the likelihood of agreement on a CAP that will suit Irish interests is much higher. However, the current outlook suggests much uncertainty and a risk of radical change that will be challenging in the extreme to the future viability of Irish farming.
Key problems include:

Demands from the EU-12 for a bigger share of the CAP.

The apparent desire of the Commission to move towards a flat rate payment.

Ongoing calls for a greater proportion of the CAP to be used for public goods payments.

Challenges to the validity of the historic decoupled payment based on reference years 2000-2002.
ICSA favours stability in CAP payments and is committed to supporting the retention of the Single Payment in its current format, but with additional support to deal with qualified new entrants and to take account of inflation. We also believe that there may be scope to take advantage of Ireland’s substantial grassland area as a part of the solution to climate change mitigation, in the event that public goods payments play a greater part in
EU policy. Detailed discussion of these issues is beyond the scope of this submission.
In general, the overall trend at EU level is towards reducing the proportion of the EU budget spent on CAP. As argued in Section 1, we need to reduce dependency on CAP payments and this must be achieved through higher product price. There is no CAP policy that can be designed that will compensate for the ruthless exploitation of family farms by multi-national retailers, and any future CAP must be accompanied by EU led regulation to protect farmers from the worst excesses of price gouging and other abuses by supermarkets.
One key change that is already agreed, following the CAP Health Check, is the phasing out of milk quotas. This has profound implications, which must be taken on board in the
2020 strategy.
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Putting in place a strategy to take advantage of the very profound change that will arise with the phasing out of milk quotas.
Opportunities for Expansion
Irish agriculture has been characterised by relatively static output over the past 20 years.
There is a new sense of opportunity based on a growing gap between supply and demand on EU and international markets. In beef, the prediction is for the beef deficit in Europe to rise to some 600,000 tons by 2015. Sheep meat has seen a serious fall in production levels, with Ireland now below 2.5 million breeding ewes, compared with 4.13 million in
2000.
Dairying has also seen a fall-off in production levels, with failure to fill milk quotas becoming commonplace in Europe. While the milk quota system, which has been in place since 1983, has acted as a regulated barrier to expansion, the sudden fall in dairy commodity prices in 2009 has resulted in carnage in milk production levels, not just in
Europe but in key dairy regions such as New Zealand and the USA. Widespread culling of cows in the US has set back the productive capacity there in the short-term, although this could be reversed in the medium term.
In Ireland, the choice of enterprise has also been heavily influenced by the cumulative effect of various policy choices as well as the impact of opportunities elsewhere in the economy. Aside from the aforementioned milk quota, the MacSharry reform led to direct payments which in particular encouraged the expansion of the suckler herd from some
400,000 cows in 1983 to over a million cows in 2000.
On many farms, the decision was taken to exit dairying because of quota limitations and get into suckling, where the skills are readily transferable. The lower labour requirement in suckling facilitated off-farm employment opportunities for many. This rather radical transformation was readily encouraged, manifested by the stark policy decisions but also explicitly encouraged by ministerial comments on a regular basis.
The outcome of all this has been the fall in dairy farms from 68,000 to 19,000 and it is likely that the figure will go down below 15,000 in the light of the difficult dairying environment in 2009/ 2010.
This submission contends that it is now time to reverse this process. Although all enterprises have been doing badly in 2009, the fact is that dairying regularly out-performs other sectors by a factor of up to three times in terms of profitability. This is examined in detail in Section D.
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Ensuring that every effort is made to prevent a bad WTO deal from undermining the viability of Irish agriculture
At WTO level, Ireland has had to maintain a difficult balancing act between arguing for the interests of its farming sector while simultaneously favouring a so-called “balanced” global trade accord, a position that is heavily influenced by multi-national companies that have located in Ireland. Ultimately, Ireland will go along with whatever the EU position is, and although the mandate is a matter for all the member states at Council level, the EU
Commission makes the running both in terms of the detail and in terms of the WTO ministerial negotiations which are led by the EU Trade Commissioner. Although the talks collapsed at the last minute in Geneva in 2008, negotiations continue in the background.
The key risks are that import tariffs will be slashed and that export refunds will be phased out.
Recommendations:

Ireland should work with the other 22 member states who are pro-agriculture to withdraw the negotiating mandate given to the Commissioner for Trade in 2008, given that the global economy is a completely different proposition now and in view of the growing realisation that unfettered free trade and unregulated markets are not a panacea but have serious deficiencies.

The government should re-assess the importance of the agri-food sector relative to the importance of other sectors in the national context.

In the event that export refunds are abolished, the money used should be reallocated to additional direct supports for farmers.

The government should insist that the EU works to get issues such as labour standards, food safety and environmental degradation onto the WTO negotiations.
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Ensuring that agriculture is fit for purpose in dealing with the new challenges of climate change, water and soil quality, biodiversity and energy needs.
ICSA believes that Ireland should concentrate on developing a coherent clean, green island strategy as a tool for marketing our food. It follows that Ireland will have to be to the fore in dealing with the major environmental concerns of the 21 st
century, particularly climate change, water and soil quality, and biodiversity. Ireland must decide whether the growing of GM crops would be consistent with such a policy.
A key challenge facing Ireland is the target of reducing GHG emissions by 20% by 2020.
This target relates to the non-trading sectors of energy, agriculture and transport. While agriculture contributes 26.4% of national emissions, it is the only sector that has actually reduced emissions since 1990.
Recommendations:

While accepting that Ireland is committed to a 20% reduction in GHG emissions by 2020 compared with 2005, it is essential that agriculture is recognised as having an equally critical task of food production.

Credit must be properly allocated to agriculture for the sequestration available though forestry and soil/ grassland.

Being able to demonstrate that Irish farming methods are at the cutting edge of dealing with climate change commitments. This means rejecting the concept of drastically reducing livestock or other agricultural production but rather adopting best technology and capitalising on our strengths such as a high proportion of grassland farming.

We need to emphasise that emissions/ kg of food produced are low by comparison with many of our competitors.

We need to make better progress on anaerobic digestion as a means of reducing emissions, decreasing use of artificial fertilisers and producing renewable energy.

The strategy for AD should be based on measuring and rewarding farmers for the externalities associated with anaerobic digestion separately from the payment for actual energy supplied. Anaerobic digestion is likely to be limited to very large scale farmers or to co-operative ventures but there are potential additional raw materials (e.g food waste) that can be added to agricultural waste provided that the correct protocols are developed in terms of ensuring that pollutant and hazardous waste risks are eliminated.
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Ensuring that environmental regulations are workable while delivering real environmental benefits
We need to sort out the inherent contradiction between the REPS/ Agri-environment model, which encourages the development and maintenance of biodiverse wildlife habitats and the SFP model, which penalises farmers for allowing anything other than the growth of productive grasses or crops. The current campaign to exclude scrubland, habitats etc from the SFP area is inherently unfair, moving the goalposts after farmers had been allowed to establish Single Payment entitlements based on an area including scrub etc. Moreover, many farmers have been actively encouraged to allow the emergence of scrub as a habitat in their REPS plans.
This sends a very clear signal to farmers to bring in the bulldozers in order to avoid SFP penalties but at a significant cost to wildlife and biodiversity. Some accommodation between the two contradictory measures must be negotiated.
Under the Nitrates directive, there is widespread frustration at the farming by dates regulation relating to slurry spreading. The last three summers in a row have conclusively highlighted just how absurd and unworkable this is and it is now essential that this is re-negotiated.
Anomalies such as these create widespread resentment and act to create a hostility among farmers to the very notion of environment and this must be avoided.
Recommendations:

Re-negotiate the farming by date restrictions under the Nitrates Directive.

Resolve the contradiction between habitat maintenance in REPS and recalculation of area under the SFP.
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Admitting that the REPS decision was a grave error
The decision to close REPS as a consequence of the emergency budgetary situation may have seemed inevitable but the short-sightedness of the decision is already clear-cut. The possibility of an area based payment has been lost while the new agri-environment options scheme will struggle to attract sufficient numbers to draw down the available funding.
Ultimately, over 60,000 farmers will be taken out of REPS over the next five years and much of the progress made is at risk of being lost. Similar problems have been caused by the budget cut on forestry.
Recommendations:

That the 2020 strategy should encourage the Department to begin the process of devising a real alternative to the REPS scheme for the post 2013 period, with suitable levels of funding, and in anticipation that the AEOS will not be an adequate replacement. Such a scheme might be linked to climate change and utilising the benefits of permanent pasture from an emissions perspective, farmed in a sustainable way.

The 2020 strategy should strongly emphasise the importance of long-term planning in agri-environment policy that cannot be over-turned by emergency measures in response to whatever economic crises may arise.

Forestry must be given a stable and adequate funding regime for the long-term.
Short term budget cuts are disastrous and must be rectified if confidence is to be restored and targets met. We need critical mass if the timber industry is to be viable. Forestry is also necessary in terms of climate change benefits and can be the best solution on marginal land.
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By far, the biggest challenge facing Irish agriculture is to overcome the problem of extremely low product prices. It is apparent that the level of support for farm incomes in the CAP is not going to increase significantly; in fact the pressures are in the opposite direction. In relation to costs, farmers have already made huge inroads but there is a limit to cost reduction where the parameters are set by:
 the realities of operating in a high cost economy,
 farm structure and size,
 worsening weather conditions and long wintering periods,
 huge investment in housing and facilities.
The realities of product price deficiencies in Ireland are well-rehearsed- beef price of
€2.94 in 2010 compared with €3.30 in 1988; similar scenarios for milk and tillage.
Admittedly the early months of 2010 have seen a boost to sheep price but this must be put in the correct perspective whereby numbers of breeding ewes has fallen from 4.13 million in 2000 to less than 2.5 million now.
Poor product price feeds into the overall family farm income crisis. The National Farm
Survey highlights the fact that farm income declined in real terms by 22% from 1995 to
2008, even though, in that period, direct payments more than doubled. While the role of
CAP support is vital, the reality is that direct payments are not solving the price crisis.
The problem is well represented in Table 7.1, which shows the extraordinary extent to which farmers are dependent on direct payments whereby most sectors are getting more than 100% of their income from direct payments. This reflects the fact that most farms are losing money on the actual economics of production. Moreover, the dependency ratio is worsening as can be seen from the comparison of 2004 with 2008; and it is certain that the 2009 figures will be even worse.
Table 7.1 Direct payments as a % of Family Farm Income
Dairy
Suckler
Sheep
Tillage
2004
31%
139%
137%
92%
2008
45%
183%
165%
131%
The low price achieved by Irish farmers is a function of:
 overall difficulties relating to commodity prices in general,
 the oligopoly style dominance of the food supply chain by large retailers,
 manipulation of the supply chain by a limited number of dominant processors,
 poor marketing of our key attributes and a reliance on selling at below our competitors.
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Even though commodity prices have seen a worldwide drop in 2009, it is the case that, in relative terms, Irish farmers fare even worse. Ireland performs extremely poorly in terms of the price achieved at farm-gate level. The cattle representative price (R3) for Ireland is the worst of the EU-15, and is also lower than several of the EU-12 states (Czech republic, Slovakia, Slovenia) and is well below the EU-27 weighted average.
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Therefore, it is our contention that the predominant focus must be on getting higher product prices, while also examining ways of delivering diversified revenue streams for farmers. Ideally, this could be part of wider economic recovery strategy in which the synergies between agriculture and other sectors such as tourism, energy and leisure could be optimised. We suggest that this strategy should be designed to complement the green smart economy approach already outlined by government and that considerable emphasis is given to ensure a unity of purpose and that the strategy is coherent and consistent.
Under such a strategy, every farm and every major farm product would have multiple market options. All ages and grades of livestock would be exported live as well as processed in Ireland. As much as possible, Irish food products would achieve the highest prices in Europe by going through premium retail channels, by being recognised and unique, by capturing and exploiting market and consumer trends regardless of how faddish such trends might appear, and by ensuring that companies were not all competing in the same crowded markets.
It would be vital that the farmer gets a better and more sustainable share of the final retail price. While we might like to hope that this would happen automatically, the reality is that the Irish farmer must have unique selling points that cannot be easily replicated by our competitors and such selling points must be a part of brand Ireland, part of our international reputation such that even Irish processors could not conceive of replacing the Irish farmer’s product with a cheaper non-Irish product. This will require a consistent branding of what Irish agriculture is about, but moreover, this will have to be backed up by the ability to verify that it is what it is, that it is certified, labelled, quality assured and that it lives up to its promise every time.
Public procurement should be carefully managed to respect EU regulations while at the same time putting in place higher standards for the food consumed in state controlled canteens. Procurement policy for example should favour a minimum amount of organic and/ or sustainably produced food. Procurement contracts should be developed to afford an opportunity for smaller scale, local processors and suppliers to compete.
In addition, to ensure that farmers have more sway, there must be an option for every animal to be exported live to multiple different markets and the regulatory framework must not just facilitate this but government should ensure that such exports are positively encouraged.
1
(Agra Europe, Representative prices 14/3/10. Ireland: €2.85 c/kg, EU-27 €3.18 c/kg).
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If such an approach was adopted, then key debates have to be resolved.

Do we want to try to compete at the bottom of the barrel as the lowest cost producer and by extension, the receiver of the lowest product prices?

Do we want to distinguish our products from the commodity products of Brazil or are we happy to compete with them?

Are we happy to continue with generic commodity promotion or do we have greater ambition to add value, to target niches, to certify and label our differences and strengths, to move up the value chain, to build brands and above all to brand
Ireland?

Do we really believe that we are the clean, green food island or is that just guff?

Do we think that the problem of cattle farm incomes can be resolved by cheaper cereals and if so, what happens to our tillage farmers?

Is there any way to avoid Irish companies undercutting each other on international and domestic markets?

Are we happy to allow retailing giants to continue to abuse their dominant position?
ICSA believes that the answers to the questions raised in the last sector demand that we must build a strategy based on achieving better prices for higher quality products, destined to be sold in the best outlets to the most discerning consumers.
In order for this to happen, we need a plan to market our agri-food exports, based on a coherent and consistent understanding of what Irish food is about. In essence, we must decide on what are the consumer concerns of the 21 st
century that will determine the success of the sector.

We need to define in a comprehensive and meaningful way what is meant by the clean, green food island, and whether or not this has any relevance to the image of our food that we would like to convey. This means making our mind up on key choices- is Ireland about family farms or industrialised farming? Is the world’s greenest dairyland now redundant? Is Ireland about cheap food or superior quality food? Do the choices we make have implications for the way we in which we develop our tourism product?

Brand Ireland needs to be developed. We are falling behind the likes of New
Zealand and Australia who are actively moving to emphasise pasture based farming, low carbon foot-print and animal welfare. We need to quickly move to a labelling and certification based development of the image/ brand Ireland. The ability to accurately measure carbon footprint of key farm products is an urgent task without which we may lose ground in terms of competing for key markets.

We need to extract maximum value from our predominantly grass based, freerange production in dairy, beef and lamb in terms of marketing. For some ten
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years now, we know from Teagasc research that grass-fed beef is high in conjugated linoleic acids, which have important anti-cancer and heart-disease properties. In the USA, nutrition & fitness experts extol the superiority of grass fed beef and dairy products over cereal reared. Yet this information sits redundant in the National Food Centre.

We need to be cognisant of trends on GM labelling. Even the discount supermarkets (i.e. Aldi/ Lidl) are moving in this direction and the Landliebe label, developed by Friesland-Campina in Germany is based on GM free production and delivers a milk price of 40c/l to its farmers. Consumer resistance to GM remains strong in our key export markets such as Italy, France and the UK. According to the Nielson company, GM free was the fastest growing health and wellness claim among store brands in the USA in 2009.

We should not rush into growing GM crops in Ireland because this would close a lot of options in terms of green image, organic farming and may hinder efforts to promote Irish food in markets such as Italy.

The EU Commission consultation on Food Quality is indicative of the trend towards highlighting quality advantages or differentiation. The key essential is that the success of a country’s agri-food sector will be defined by the extent to which it can capture the mood of the consumer through labels, which identify its unique selling points. Marketing standards need to be established and utilised.

This means that it will be necessary to develop voluntary, credible certification systems that can verify quality, environmental, ethical and social sustainability.
Success will mean reassuring consumers about animal welfare, production methods such as GM free, free range, grass fed and/or organic and all the while having impeccable food safety standards.

ICSA believes this is the critical challenge for Ireland and that we must prioritise this instead of fooling ourselves that we can somehow become even more costcompetitive. Being as cost competitive as possible is an essential, being the lowest cost producer on a global level is an impossibility. Therefore we need to follow the examples of producers in countries like France (e.g. Label Rouge) and
Italy (e.g Emilia Romagna region) rather than fixating on replicating low-cost, large scale industrial scale agriculture carried out in Brazil and Argentina.
If we can resolve how it is that the agri-food sector is going to position itself to respond to the consumer concerns of the 21 st
century, then we can begin to plan how to market.
We also need to decide where to market. This decision needs to take account of trends in trade and economic issues, such as currency fluctuations.
The Irish agri-food sector is highly export oriented, being over 200% self-sufficient in meat and over 1000% self –sufficient in butter. In 2008, exports from the total agri sector reached some €8.9 billion, accounting for about 10% of all exports from the economy. Moreover, these exports are of particular intrinsic benefit to the economy being largely driven by Irish based and controlled companies, having a low import
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content, being unaffected by the phenomenon of profit repatriation or transfer pricing and with the benefits being widely dispersed across the regions.
However, in 2009 the value of exports fell by over €1 billion. This was clearly a reflection of the global recession but it is also very much affected by the devaluation of sterling against the euro.
The strategy has been to move away from third country exports in favour of maximising penetration of the EU markets. This has been achieved to a large extent. Food and Drink exports for 2008 saw 45% go to the UK, 32% to continental Europe and 23% to international markets. The move away from international markets has been most pronounced in the beef sector where in 2009, 245,000 tons were exported to the UK,
214,000 tons to continental Europe and just 2000 tons went to international markets.
(Bord Bia Review & Outlook 2009/2010).
However, within these figures are grounds for alarm. The volume of beef exports to the
UK fell by 6% without a corresponding increase in continental EU exports. Overall export values for the agri-food sector is down over €1 billion in 2009. Exports from the agri-food sector were worth €6.3 billion in 1999 and the 2008 figure of €8 billion has slipped back to €7 billion for 2009, suggesting that the sector has been more static than desirable in terms of increased output and value.
The Strategy
Ireland should develop an integrated plan to market its food and drink exports, as well as develop its tourism offering, all based on the concept of a clean, green food island.
Under this strategy, Ireland would be a tourist destination of choice for walking, countryside recreations and pursuits and high end gastronomy.
The agriculture 2020 strategy should be co-ordinated with a strategy for tourism. Ireland has done poorly on tourism in the first decade of the new century with visitor numbers static. While we have concentrated on tax breaks for hotels, we now find that we have
12,000 too many bedrooms! Meanwhile, the future of airports such as Shannon are in doubt as the major airlines are rapidly withdrawing services.
In our view, the belief that we need to reduce hotel capacity is a wrong approach.
Instead, the target should be to increase visitor numbers, by taking advantage of the fact that our surplus hotel capacity now means that we have very competitive rates for accommodation.
From an agriculture perspective, increased tourist numbers from target markets provides an opportunity to introduce them to Ireland- the food island. Tourists who leave Ireland with a favourable impression of our agriculture, our food and our environment form a potentially receptive export market for branded Irish food products. The approach of
Austria should be studied where many farm families benefit from tourism and the
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combination of tourism and farming provides a very real alternative to the stresses of the
Irish model for smaller holdings, of part-time farming with a job away from the farm.
Recommendations

Overall strategy should be to reduce dependence on the UK export market, as there is a considerable risk that the current unfavourable currency exchange rate between sterling and the euro will persist.

We need to plan for greater penetration of niche EU markets and to understand what will be required in terms of consumer needs in countries such as Italy,
Scandinavia etc.

New emerging markets in Asia must be focused on. Some signs of success can be discerned from the fact that the government target for Asia of €400 million was reached two years ahead of time. The relentless economic growth of China cannot be ignored and the likelihood of an upward appreciation of the renminbi
(Financial Times) means that this market will become all the more attractive.

Islamic markets cannot be ignored either. They are important in terms of sheepmeat and North African countries have been important customers for Irish cattle and beef.

Appropriate levels of funding need to be put in place not only for the state agencies such as Bord Bia but also to food companies and processors that are willing to invest in more ambitious marketing strategies that will deliver higher prices to farmers, based on developing the image and value-added of our food rather than continuing to off-load commodities at the lowest price.

The success of state bodies and private food processors in marketing and developing our export markets must be much more rigorously assessed in terms of how much it leads to better prices for farmers.

Future funding levels should be contingent on targets relating to improved farmer price being met as a result of marketing strategies successfully implemented.
Instead of grant aiding rationalisation of capacity in the processing sector, a much more positive approach to grant aiding successful development of new and better markets would be more positive.

The marketing of food should be co-ordinated with tourism marketing, with a view to maximising the return from the clean, green food island image. Ireland should be seen as a destination of choice for “foodie” tourists who would then return to their own countries to act as evangelists for the quality of the food experience in Ireland, and by extension for the quality of the ingredients produced by Irish farmers.
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Dairying is realistically the only enterprise that has the prospect in the medium term of giving a full-time livelihood to a young farmer. While there is much concern about the volatility in the dairy markets, the National Farm Survey (table 10.1) shows that dairy farms earned €45,000 compared with €7,700 for suckler farms in 2008 (despite very little difference in the size of holding). When looked at on a per hectare basis (Table 10.2), the potential for dairying is far superior to other enterprises. While cereals can be profitable on big units with suitable land, dairying has been the only viable business on medium size units.
Table 10.1 Family Farm Income- All Farms (Teagasc National Farm Survey)
Income/Farm
Dairy
Suckler
Beef fattening
Sheep
Tillage
2004
€
34,421
7,286
8,712
10,966
24,012
2006
€
36,221
8,291
11,292
11,902
28,536
Table 10.2 FFI/ Hectare- All Farms (Teagasc National Farm Survey)
FFI/Ha
Dairy
Suckler
2004
€
837
271
2006
€
814
300
2008
€
961
260
Beef fattening
Sheep
292
286
379
353
361
281
2008
€
45,700
7,700
11,200
9,600
19,400
Tillage 409 506 335
Since 1983, the possibility of development has been completely hamstrung by milk quotas but the likely abolition of quotas in 2015, preceded by the increasing trend of
Europe being under quota provides new opportunities.
ICSA believes that it is critical that we prepare for quota abolition and that we see it as an opportunity rather than a threat. We need to encourage the optimum number of new entrants and milk quota policy in the coming years must reflect this priority. ICSA has strongly favoured the recent policy of setting aside some quota for new entrants, where the strategy has been to make realistic allocations, which gives qualifying applicants a good start in terms of quota. The old policies of giving a little to everyone are not appropriate. Instead, all allocations of quota and milk restructuring must serve the greater goal of optimising the number of farmers who will be able to take advantage of milk quota abolition in 2015. Spin-off opportunities for other farmers in contract rearing replacement heifers could be developed.
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Ireland has the competitive advantage to be the most efficient dairy farming country in
Europe. For many years now, the most successful farming nations have been the countries where dairy farming has been central- New Zealand, Holland, Denmark, California. In
Ireland, we are ahead of the rest in Europe in terms of developing long grazing season, low input dairying systems.
Moreover, it is the only enterprise that can provide a realistic career path for young trained farmers. In recent years, the lack of opportunity in Irish dairying has seen some young farmers emigrate to countries such as New Zealand where they have gained invaluable experience.
Of equal importance is the fact that Irish based food companies such as Kerry, Glanbia,
Lakelands, Dairygold, Glenisk are strong, consumer focused businesses that have the infrastructure to utilise increased dairy production. Unlike beef, brands such as Kerrygold,
Glenisk, Baileys, and many artisan and niche products in the cheese, yogurt, ice cream and confectionary sectors give us a marketing advantage. The support infrastructure is the
Dairy Board.
Recommendations:

The 2020 strategy should envisage a significant expansion in dairying, which, despite the disastrous collapse in 2009, offers the long-term possibility of profit over and above the level of direct payments.

Ireland should further target policies to establish new entrants in the run-up to
2015. Young farmers need the opportunity to develop a strong quota base now in order to be geared up for 2015.

At the same time, market management measures have to be part of the post quota environment but these should not take the form of a rigid quota system. The current system based on a reference year of 1983 is no longer appropriate.
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Cattle & Sheep Trade
We have already discussed low product prices in the context of the need for better marketing strategy. While this submission argues for a radical overhaul of marketing strategy for exports of key products like beef and lamb, there are other issues that need to be resolved.
For suckler farmers, the only incentive to stay in production is the availability of live exports. Live exports are also taking large numbers of dairy bred calves and a significant level of heavy and forward cattle are now being exported to the North and the UK. The first quarter of 2010 has seen a 50% increase in numbers and if trends continue, we could see upwards of 450,000 cattle exported live in 2010.
However, for suckler farmers, the disappointment is that the live export trade needs Irish beef finishers to be able to compete more aggressively for top quality stock. The introduction of a quality price grid will not change much given that U grade cattle are currently making nowhere near a realistic price to cover the costs of production and, moreover, the fact that the purchase of top quality weanlings is only realistic in the context of a bull beef system. Bull beef is not included in the new QPS, which is a major weakness. Beef finishing is in serious difficulty, particularly winter finishing. Without a radical re-think on beef price by processors, the QPS will be seen as a badly missed opportunity.
Sheep farmers have started 2010 with a sense of hope arising from much higher prices. It is interesting to see spring lamb making over €6/kg in the middle of the deepest recession in memory. Only a few years ago, during the boom years, sheep farmers were constantly told that sheep meat was too dear and its price was impacting heavily on consumption.
For both cattle and sheep farmers, there are gains to be made from increased efficiency, primarily through increased output and reduced costs. Teagasc eProfit monitor is a very useful tool for benchmarking and it shows the variation in profit from farm to farm on a per ha basis. Unfortunately, all but the very top farmers are actually losing money from their enterprises when premia are excluded. The Teagasc Better Farm programme is also a very useful strategy to establish the key management actions in real live farm situations that define the level of profitability or otherwise. This work must continue to be supported.
Recommendations:

Live exports are vital for the cattle trade. The 2020 strategy must acknowledge that live exports are absolutely essential and no government policy or action should set any artificial limits on live exports.

The QPS system will not work without a viable base price and there is an urgent need for a quality-pricing framework for bulls.
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
Fatstock sales should be encouraged more to provide an alternative option for finished cattle, and to encourage more competition.

Farmers should have access to an independent appeals system on factory grades, which will necessitate the re-deployment of Department staff.

Increased technical efficiencies on farms can be achieved and the use of eProfit monitor and the Teagasc Better farm initiative are key tools which must be expanded to reach more farmers. Teagasc is facing a tighter budgetary environment but these initiatives must be prioritised.

We need to ensure that there is no collusion or price fixing at processor level and that competition for livestock is upheld.
Animal Health
Animal Health is a critical part of the strategy for agriculture for the next decade. It is important because it impacts on the profitability of farm production but it is also vital in terms of being able to market food products.
Whereas the animal health strategy has been characterised by fire-brigade responses to animal health crises, we now need to build on work to move on to a more proactive and preventative strategy. ICSA supports the establishment of AHI and believes that its work will be a critical element in the long-term strategy.
The overall theme of this submission is that we must secure as many varied outlets as possible for our livestock sector, both for live exports and meat exports. It is therefore critical that we have the highest possible herd health status. Individual farms need to be recognised and certified for their achievements in terms of herd health so as to facilitate the export of cattle, not just for further feeding but also those farms who wish to take advantage of opportunities to sell high value pedigree breeding stock outside of the island.
We also need to remain cognisant of food safety risks linked to livestock production systems. Mastitis remains a problem which can have knock on consequences to dairy products in multiple ways. A variety of bugs that affect livestock, ranging from e-coli to staph aureus have significant implications for human health. It is vital that the Irish livestock sector is facilitated and supported in tackling all such diseases.
Therefore, the work of AHI will be pivotal for the coming decade in order that we have the highest possible herd health status and that where problems occur, we are already ahead of the curve in terms of solutions.
Bovine TB remains a blight on the Irish farming sector. We need to actively pursue new techniques in identifying and combating this disease. Brucellosis eradication has been a
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success story, but we need to co-operate closely with the Northern Ireland authorities to ensure that the gains are copper-fastened.
Recommendations:

AHI should be amalgamated with a similar body in Northern Ireland in order to achieve synergies of effort and cost efficiencies.
 TB eradication should be prioritised in tandem with DARNI’s efforts.
Alternatives to the skin TB test should be readily considered and the badger issue must form part of the overall solution. While blood testing is emerging as a possible alternative to the TB test, ideally we might move towards multi-process blood testing which gives farmers a read on not just TB but also other diseases.

On BVD, consideration should be given to financially supporting a full national test for PI animals in breeding herds. This would be on once-off basis to ensure that all farmers were made fully conscious of the impact of this disease and to engender the habit of rooting out PI animals, in order to ensure that vaccination programmes were correctly targeted.
There is need for a fundamental change in outlook regarding young farmers- particularly in the context of the sudden loss of employment in the Irish economy, increased numbers in agricultural education and the need to improve age structure in farming.
Recommendations:

The decision to close Installation Aid is a retrograde step and should be reversed.

Milk quota policy must be designed with a view to quota abolition in 2015. New entrants into dairying are essential. (see section on dairying)

CAP reform will have to make provision for qualified new entrants.
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All of the specific components of the agri-food strategy must be designed with the overriding objective of delivering viable farm incomes to the optimum number of farmers.
It is also critical that the 2020 strategy sees the agri-food sector re-located as an integral and vital part of the national plan for economic recovery. It must emphasise ways in which it can complement strategies and actions in other sectors, such as tourism and energy, especially in the context of the green collar economy and against the urgent need to generate foreign earnings.
By 2020, the agri-food sector should be held up as an example of how a country can revitalise itself following a severe economic depression. The Celtic Tiger years saw the sector perceived as a sunset industry but the reputational damage done to our country by an over-dependence on a construction boom and a laxly regulated financial sector simply serves to highlight the folly of not putting more emphasis on the potential of agri-food.
Food security, environment and global population growth as well as a renewed emphasis on competitiveness in the economy are all strong reasons why the future can be good for this sector. Ultimately, however, none of these will be the final arbiter of success in terms of this strategy- that will be measured by the level of improvement by 2020 on the average farm income for full time farms compared with the figure of €16,993 from the last National Farm Survey (2008).
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