Dairy sector expansion threatened by land shortage
Dairy farmers are not going to be able to access enough land to maximise the potential of the sector without a complete change of policy on EU farm payments, a top Teagasc economist has claimed.
Up to 200,000ha of additional land is required by expanding dairy farmers if they are to hit national targets, but the link between land ownership and CAP payments must be broken to allow this to happen, claimed FAPRI's Trevor Donnellan.
"Dairy farmers will be ok for the next few years because they'll be able to off-load drystock, but without access to extra land, they are going to end up drifting into a high cost system similar to Britain," he said.
He claimed that only 10,000ha of land was sold annually in Ireland, pointing out that the farm subsidy regime would severely restrict the movement of land over the next seven years.
"The ship has sailed on the current regime. Ireland campaigned for as little change as possible but we need a debate now if we're serious about maximising the contribution of the agriculture sector to Ireland's economy," said Mr Donnellan.
He believes radical reform, including a complete break in the link between the payments and production or land, should be considered.
"The system allows those with small margins to remain reasonably profitable. It also tells people that they shouldn't sell their land if they want to keep their payments.
"But we can't really link the payments to productivity beyond a historical base period, because it would contravene WTO rules. Paying farmers a fixed amount for something like 20 years would be one option that would get support from a number of countries," he said.