Teagasc warns of WTO wipeout

TEAGASC, the State body responsible for the development of agriculture and food, yesterday warned that World Trade Organisation (WTO) reforms would undermine the livelihoods of thousands of Irish farm families.

In its assessment, Teagasc allows for the fact that — among the proposals by the WTO — the abolition of export subsidies for agricultural products, with a 50% cut in 2007 and a gradual phasing out in equal installments over the next nine years, will take place.

On that basis, the impact of the WTO reform package would see the number of viable dairy farms fall dramatically to below 8,000, from 24,000 in 2004.

Even excluding WTO scenario, Teagasc concludes that the outlook for Irish agriculture remains pretty depressing.

Even with the current spate of rationalisation, the total number of economically viable dairy farms is set to fall from roughly 13,500 at present, to 10,000 in 2015.

The research was carried out by the Teagasc Rural Economy Research Centre, which takes account the abolition of export subsidies and a cut in import tariffs for the main agricultural commodities.

Commenting on the findings, Dr Fiona Thorne of Teagasc said “the results showed severe consequences for the farming sector which is already under pressure after recent policy changes”.

In the case of cattle and tillage farmers, roughly 13% and 35% of producers respectively will not be capable of making a positive gross margin by 2015, once subsidies are abolished, she said.

In the case of the dairy sector, Dr Thia Hennessy said the research showed “the average gross margin per cow is expected to fall by over 40% as a result of WTO reform and this is likely to have serious consequences for producer numbers”.

However, there were some positives from the research, which found that up to 13% of cattle producers and 35% of tillage farmers could boost their incomes by using their land simply to claim decoupled payments.

One of the other key findings is the potential impact of non-farm income on a significant number of farm families.

According to the findings, a large number of economically “non-viable farms” could be maintained if a family member has an off-farm income.

“It’s predicted that 70% of cattle farmers and nearly half of tillage farmers will have an off-farm job by 2015,” according to the research.

In summary, Dr Hennessy warned of trouble ahead.

“There will be a significant number of farming households that will be economically vulnerable because the farm business is not viable and there is no other income source in the household,” she said.

That could leave as many as 15% of dairy households, 21% of cattle farmers and 27% of tillage farms facing a bleak outlook, according to the research findings.