There would be no farmers if we faced what UK counterparts are threatened with
Published 17/08/2016 | 02:30
British farmers are facing an uncertain future in the wake of the Brexit vote, with some already expressing regret due to fears that farm subsidies will be much lower than those received under the EU Common Agricultural Policy (EU CAP).
The National Trust, which is the British equivalent of An Taisce, recently demanded an end to direct farm subsidies in the UK after Brexit. It stated: "Farmers should only be rewarded for managing land in a nature-friendly way and direct income supports should be removed altogether in a post-Brexit rural policy", a frightening prospect for all British farmers.
Surely this is a self-serving stance by the National Trust generated in a country where successive governments have followed a cheap food policy and its elected representatives pander to the utopian views of the countryside from a primarily urban electorate, most of whom have never even set foot on a farm. Maybe in Ireland, we in the industry do not appreciate the high level of support our people and Government attribute to our agri-food industry. The current utterings from the UK do, however, cause us to ask the question: what would happen in Ireland if farm subsidies suddenly stopped?
I recently asked a farmer client this very question and he answered as follows: "Sure the price of land should fall to €3,000 per acre and land rents should fall to about €50/acre." Then he paused for a few seconds and added: "But they would not fall at all would they?" He is probably right when it comes to land and farm profitability - Irish farmers are an enigma, they would most likely do the complete opposite of what economic theory would suggest.
Of course, in the medium to long term, there would certainly be an impact on the shape of industry. Teagasc National Farm Survey results from 2011-2015 indicate the nerve of arable, beef and sheep farmers would be severely tested in the no-farm-subsidy world. This is how I project the industry would react.
In the no farm subsidy world, initially, there would be no impact on the price or movement of land as suggested by my farmer client. However, many arable, beef and sheep farmers would eventually get sick of supplementing their farm business with hard earned off-farm income and they would cease farming and look to initially lease out and, possibly, eventually sell their holdings. Good quality land offered for lease in strong dairying areas would still command strong land rental prices in the region of €150-€250/acre, however land in non-dairying areas for lease would struggle to find interested takers if there were no farm subsidies.
In respect of the price of land for sale, presently it is the lack of supply which drives the uneconomic price of land in Ireland, but if significantly more land was offered for sale in all regions of the country, the price would certainly decrease except perhaps for hobby farms and land with development potential in and around cities and large towns. How much it would decrease by is the million dollar question.
Farmers & farm enterprises