Farm Ireland

Saturday 20 April 2019

Analysis: Extreme weather puts spotlight on viability of high-production farming model

More dry weather in store

Alan Matthews

The latest Met Office forecasts suggest drought conditions will continue, exacerbating the fodder shortage.

This shortage has resulted from a sucession of extreme weather events - the wet autumn last year, the very wet and cold spring which delayed the onset of grass growth, and now the lack of rainfall which has led to a dramatic deterioration in the grass growth that would normally be expected at this time of year.

Tillage yields have been similarly affected by the adverse conditions.

Soil moisture deficits are very high, ranging from around 30 to 60mm in Ulster and Connacht, with values elsewhere exceeding 75mm.

According to the Met Office, little change is expected in the coming week, apart from some slight relief in the northwest of the country. At the moment, the focus is on measures to help farmers to manage the fodder shortage.

The fodder census conducted by Teagasc for the Interagency Fodder Committee has quantified the extent of the problem. Teagasc estimates that the national fodder deficit for winter feed next winter is now around 28pc - this ranges from 5pc to 50pc on individual farms.

At farm level, fodder sharing arrangements mediated by co-ops and Teagasc advisors have been put in place. A food transport support measure and a fodder import support measure have been introduced by the Department of Agriculture.

The Department has also requested permission from the EU Commission to make advance payments of up to 70pc for direct payments and of up to 85pc for support granted under rural development schemes, including for areas.

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Other suggestions such as a low-cost loan scheme and subsidised meal vouchers have also been made.

Although the focus, rightly, is on addressing the immediate challenges, it is important to ask what are the lessons to be learned from this second severe fodder crisis in five years, both for future farm production and future agricultural policy.

The starting point must be the evidence that these weather abnormalities are likely to become more frequent, in line with the changes that are occurring in the earth's climate.

The evidence suggests that with a warming climate Ireland will experience wetter winters and drier summers. In addition, there are worrying climate feedback effects which appear to be adding to weather variability.

For example, the unusually cold weather across Europe in March has been attributed to the warming of the Arctic, which is affecting the position of the polar vortex (a low-pressure system that traps cold air in the Arctic region).

From time to time, the polar vortex weakens, allowing cold air to escape from the Arctic to more temperate climates. We experienced this as the 'Beast from the East'. Researchers believe that the warming Arctic may be weakening the polar vortex, thus making this weather phenomenon more likely in the future.

At farm level, the high-intensity high-stocking model of farm production will need to be revised to include a greater safety margin for when things do not all go according to plan.

The emphasis on getting stock out to grass in February to maximise the length of the grazing season and to increase the proportion of grass in the diet makes sense if grass is growing in February.

But what is the fall-back if this is not the case? At a minimum, farmers will be well advised to maintain higher stocks of winter feed to offset the greater variability that is expected.

Some farms may be over-stocked in the light of the need to allow for a greater safety margin when weather does not turn out as expected.

The policy question is, how sustainable is a model where additional government support is sought every five years or so to support the industry through another weather crisis?

Are there ways in which the industry could organise itself better to cope with what are increasingly regular events?

The European Commission highlights that it provides support options for different kinds of insurance schemes in its rural development programmes, including mutual funds and income stabilisation schemes. Ireland has not opted to include such measures in its Rural Development Programme.

Insuring agricultural income against weather-related risks is often not an attractive business proposition for commercial insurers because of the problem of systemic risk.

Unlike insurance against fire, or hail, where the insurer can expect claims to be made rather randomly among the insured population, weather-related events are likely to affect large numbers of farmers at the same time.

There is also evidence that farmers are not very enthusiastic about purchasing income insurance, and often prefer to self-insure.

Putting money aside in the good years for a rainy day is the most obvious example.

Such behaviour can also be encouraged by tax incentives which encourage the smoothing of taxable income.

Nonetheless, it is striking that there has been no study of the potential for weather-related insurance in Ireland as a way of taking some of the stress out of adverse weather events for farmers.

It would be a very valuable exercise if the Department set up a working group including participants from the commercial insurance industry to make an objective study of the costs and benefits of such an instrument, whether it could operate on a stand-alone commercial basis and, if not, what level of subsidy might be required.

Alan Matthews is Professor Emeritus of European Agricultural Policy at Trinity College Dublin

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