Agriculture must adapt to challenges in marketplace

Farming sector can compete by focusing on high-quality produce, writes Claire Shoesmith

The future of the agriculture industry was brought to the fore last month as Greencore announced the closure of its sugar beet plant in Mallow. Some newspapers were quick to criticise Greencore's decision to "abandon" the 3,700 sugar beet growers who now have no buyer for their produce and eager to slate the Government for its failure to secure a better deal at EU level for the industry.

However, if people in the industry are honest, they knew it was coming. The timing may have been hasty, but without downplaying the effects of Greencore's decision, it is another part of the inevitable change in Ireland's agriculture industry.

"In the agriculture sector, there are many challenges to be faced in adapting to changing market conditions," Minister for Agriculture Mary Coughlan said in a speech last November.

Despite the media coverage given to the deterioration of the industry, the agri-food sector accounts for about 9 per cent of GDP; employs about 9 per cent of the population, and accounts for more than 8 per cent of exports. Still, there is no doubt farmers and other food producers are under increasing pressure in making a living.

"The combination of competitive pressures presents a formidable challenge to the sizeable core of farm families that are, and will be, committed to farming as their main income source for the foreseeable future," the Irish Farmers' Association (IFA) said in its 2006 Budget submission.

The IFA claims that the industry has to cope with increased competition and with reforms that mark a fundamental change in agricultural policy.

The sector is concerned about the effect of changes to the Common Agricultural Policy (CAP), which have removed the connection between farm supports and production, meaning that production decisions by farmers will be determined by market returns and the scale of production necessary to generate an adequate income to support the farm family and reinvest in the business.

There are worries about other changes to the CAP, which will significantly reduce the income received by dairy farmers, traditionally the most profitable section of the Irish farming industry. Another big challenge is remaining competitive.

As a result of the July 2004 World Trade Organisation agreement, EU farmers will be progressively exposed to increasing international competition.

According to Coughlan, who last week published a 166-point plan for the farming, food and drinks sectors, competitiveness is a life or death issue for farms and food firms. It needs to be acknowledged that, if the sector wants to prosper, it will have to adapt.

While the proposals sound like they make sense, the industry is still awaiting details about how these changes will be funded - something they are unlikely to receive confirmation on until the publication of the new National Development Plan later this year.

According to the Minister, the industry should be consumer-driven, with particular focus on food quality, nutritional value and ethical production. It will have to cater for better labelling, animal traceability and marketing, as well as adopting a more nutritional focus with increased research into consumer needs.

No one doubts agriculture is facing threats. On top of the issues already mentioned, there are broader concerns such as globalisation, increased liberalisation in trade policies and EU-wide reforms. Moreover, no one denies that the sector is important to the economy.

Despite complaints about declines in subsidies and other European countries taking Ireland's share of EU money, Irish farmers last year received €2.4 billion in direct support and are this year expected to receive some €1.7 billion

So where does the future lie for agriculture? If you listen to the Minister, it's not far from where it lies now, but with an increased focus on competitiveness, consolidation and investment into research and development.

People are now much more aware of what they are consuming than they were in the past, and as well as wanting to know what's in the food they are consuming, there are large numbers of people who are increasingly eager to buy local produce.

This may be oversimplified, and it can't provide a living for all farmers, but is there not a opening for farmers who don't have to export very far?

Almost everyone I have spoken to would prefer to buy their meat and fresh produce from a local butcher or grocer, and surely Irish farms are perfectly placed to fill this growing need.