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.
However, the economist accepted that breaking all links between the payments and production would effectively turn the Basic Payment Scheme into a sort of 'welfare subsidy'.
Such a move would likely be strongly resisted by farm groups fearful that this would leave the €1.2bn of EU payments that Irish farmers receive annually more vulnerable to severe cuts.
"We have to decide what we really want, because we can't have all things. So if we want more land mobility, then we need policy changes that would involve sacrifices, such as fewer farms and less people working on the land," said Mr Donnellan.
He also highlighted the challenges facing the Irish farm sector looking to maintain or increase the national cattle herd.
"If we are trying to justify the emissions from cows on the back of their economic contribution, it will be easier the more dairy cows that make up the national herd.
"But reducing the beef herd will result in lower employment, since milk processing is less labour intensive compared to beef processing," said Mr Donnellan.
But he believes that conversions of beef farms to dairying will be limited.
"Small beef farms can't really convert because they are too small for the farmer to be able to make a full-time living from, and dairying just doesn't suit as a part-time enterprise," he concluded.
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