Transcript Department`s Centenary Seminars

Agricultural Science Association
Conference 2000
Irish Agriculture - Painting the
Economic Framework
Alan Matthews
Trinity College Dublin
1
The issue
The Irish nonfarm economy is booming
What is the appropriate agricultural policy
response?
Should policy continue to subsidise
farming activity at current levels…
Or should the opportunity be taken to
pursue a more vigorous structural
adjustment policy?
2
Agriculture’s contribution to the
Irish economy
Gross Agricultural Product as % GDP,
1975-1999
20%
18%
16%
14%
12%
10%
8%
6%
4%
2%
0%
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
3
U
Sw K
ed
en
re
ec
e
Sp
ai
n
Ire
la
nd
N
et Ital
he
y
rla
n
Po d s
rtu
D gal
en
m
ar
Fr k
an
ce
EU
Be 15
lg
iu
m
Au
s
G tria
er
m
an
Fi y
nl
an
d
G
Per cent
EU: Agriculture as % GDP, 1999
7.0
6.0
5.0
4.0
3.0
2.0
1.0
0.0
4
Farm Numbers Declining
Farm Numbers 1975-1999
250,000
225,000
200,000
175,000
150,000
125,000
100,000
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
5
Direct payments increasing
AgriFood 2010
6
Subsidy element of agricultural
gross value added, 1999
2.5
2
£ billion
1.5
1
4% of
GNP
0.5
0
GVA at factor cost
7
Subsidy element of agricultural
gross value added, 1999
2.5
2
DIRECT
PAYMENTS
£ billion
1.5
1
0.5
0
GVA at factor cost
Breakdown of GVA
8
Subsidy element of agricultural
gross value added, 1999
2.5
2
DIRECT
PAYMENTS
£ billion
1.5
CONSUMER
TRANSFER
1
0.5
0
GVA at factor cost
Breakdown of GVA
9
Subsidy element of agricultural
gross value added, 1999
2.5
2
DIRECT
PAYMENTS
£ billion
1.5
CONSUMER
TRANSFER
1
0.5
DEPRECIATION
0
GVA at factor cost
Breakdown of GVA
10
Direct payment share in farm
incomes, 1998, NFS data
Mainly Tillage
83%
Mainly Sheep
128%
Cattle Other
102%
Cattle Rearing
124%
Dairy +Other
53%
Dairy
25%
All Systems
69%
0%
20%
40%
60%
80%
100%
120%
140%
11
EU support to farmers (bn euros)
Producer Support Estimate
Total Support Estimate
140
120
100
80
60
40
20
0
1986-88
1997-99
12
EU and US support per farmer
(thousand euros)
EU
US
25
20
15
10
5
0
1986-88
1997-99
1997
1998
1999
13
Nominal assistance coefficients
OECD 24
EU
200
190
180
Per cent
170
160
150
140
130
120
110
100
1986-88
1997-99
1997
1998
1999
14
Composition of EU farm support
100%
90%
80%
50%
Payments based on
input use or input
constraints
Output-related direct
payments
40%
Market price support
70%
60%
30%
20%
10%
0%
1986-88
1997-99
15
Can support be sustained?
WTO Millenium Round negotiations
negotiations started but uncertain outcome
EU enlargement
necessary to revisit Agenda 2000
The future of direct payments
modulation
degressivity
decoupling
16
Agricultural competitiveness at
world market prices
Dairying likely to expand
Beef - the big uncertainty
Pigs, poultry, horticulture to continue as
at present
Cereals and sugar beet to contract
Forestry may expand depending on level
of competing subsidies
17
Land sales, 1990-1998
18
Farmers’ managerial experience
90
80
70
Per cent
60
50
40
30
20
10
0
Full Time 3rd
Level
Qualification
Cert. In
Other Formal
Farming or
Course of 60
Farm
hours or more
Apprenticeship
Other courses
Practical
Experience
Only
19
Ensuring future agricultural
competitiveness
Structural adjustment to favour fewer and
larger farms
Technical innovation and research
Improved managerial skills
Tighter links to consumer markets
… is it time to change the terms of the
debate?
20