Problems must be tackled if farm sector is to prosper
ANALYSIS:IRISH FARMING has had two outstanding years but the agricultural sector faces big structural problems which are a hindrance to further development. The question of land structure and mobility is once again coming to the forefront.
The structure of agriculture is very challenging and has if anything disimproved in recent decades. Agricultural output remains at about the level of 20 years ago.
Over time there has been ongoing change, with fewer and larger farms, less employment, more specialisation and concentration of production and growth in part-time farming.
The recent farm census showed there were 139,829 farms in June 2010 compared to 141,527 farms in June 2000, a reduction of 1.2 per cent, or less than 0.1 per cent per year.
However the number of farms fell from 170,578 in the 1991 census to 141,527 in 2000, a decline of 17 per cent, or at an annual rate of about 1.5 per cent. And the decline in the number of farms in the period from 1980 to 1991 was also substantial, at about 24 per cent or 1.8 per cent per annum.
The increasing concentration in agricultural production is demonstrated also in the 2010 census where an ever decreasing number of farms account for an increasing share of production. In that census, there has been a reduction in the number of holdings with cattle from 124,000 to 111,000 enterprises from 2000.
But better examples of concentration are where 18,000 farmers now produce more or less the same volume of milk as 62,000 did when the milk quota was introduced in 1984. And 1,200 farmers now produce about the same number of pigs as 2,800 did 20 years ago.
Other statistical sources show that there has been a decline in the numbers and proportion of farmers in the younger age categories over the period 1991 to 2007, with the proportion of farmers aged 44 or younger decreasing from 33 per cent to 25 per cent. And the proportion of farmers aged 65 and over increasing from 23 to 25 per cent.
Land renting is another major structural feature of Irish farming. In 2007, 42,500 farms rented in a total of 762,000 hectares of agricultural land.
This compares with 36,500 farms in 1991 that rented in a total of 553,000 hectares.
Farm fragmentation has also increased noticeably. The average number of parcels per farm was 1.9 in 1991, rising to 3.4 in 2005 and 3.5 in 2007.
Part-time farming is also a structural issue affecting growth and development. The incidence of part-time farming really took off in the 1990s and in 2006 about 42 per cent of landholders had off-farm jobs.
It has since tended downwards and last year it stood at 30 per cent, reflecting the more challenging jobs market in the rural economy.
It is estimated that the proportion of the total land area in the hands of part-time farmers had grown from about one-fifth to nearly one-third from 1994 to 2006. While this trend has now been reversed, it is too early to say whether it will have positive implications for development
One of the continuing obstacles to improving land structure is the recently very low level of land mobility as evidenced in the land market. The largest area of land traded over recent decades was in the late 1970s when the figure stood at more than 2 per cent of the total land area annually, declining to about 1 per cent of land area in the 1980s. It has been largely in decline ever since and now stands somewhere between 0.1 and 0.2 per cent or about 6,000 hectares per annum.
Turning to the present, certainly these are heady times for the farming sector – cast as it is as a beacon of light in recessionary times and a stimulus to economic recovery.
However, it is salutary to note that the 65 per cent increase in farm income in the past two years was largely the result of a massive increase of more than 26 per cent in agricultural prices.
Indeed, one of the factors inhibiting a growth trajectory in the next two to three years is the sluggish performance of agricultural output – with little prospect of expansion in any meaningful way until after 2014. In summary, in many respects adjustment in farming has slowed down over recent decades.
A larger proportion of the utilised agricultural area is now in the hands of part-time farmers. Land fragmentation has also increased, the age structure has deteriorated and there seems to be a general torpor affecting a wide swathe of dry-stock farmers in particular.
Increasingly, there is a decline in the number of farmers in intensive enterprises with operators whose further potential is thwarted by the low degree of land mobility, while the proportion of farms in the more extensive system(s) is growing all the time.
This issue is especially relevant to the target of a 50 per cent increase in milk production by 2020 as outlined in Food Harvest 2020 where land availability could be a major obstacle to its attainment.
The structure and productivity of our greatest resource does not appear high on the agenda of policymakers, support services or the farming organisations although it did receive much more attention in the recent budget.
When did it last feature as a substantial topic at any conference or discussion on agriculture?
Moreover, when did it merit more than a perfunctory reference in the many official publications of recent decades on the state of agriculture?
Unless the inherent defects in the structure of farming are acknowledged and addressed on a significant scale, then the impediments to land mobility will remain. And targets for growth and development will be under-achieved.
Brendan Kearney is an economic consultant and former assistant director of An Foras Taluntais (now Teagasc)