Midlands and south-east worst hit by downturn, says economist

PEOPLE in the midlands and south-east have endured the worst impact of the economic downturn, economist Jim Power told those attending yesterday’s National Rural Development conference in Tullamore, Co Offaly.

Those two regions urgently need rural enterprise to be nurtured and a sustainable economic model to be developed, he told the 250 rural entrepreneurs and rural development activists at the conference which was run by the National Rural Network, Teagasc and LEADER.

“At the end of September last year unemployment nationally stood at 13.9%. It was 17.6% in the south-east region and 17.3% in the midland region. The figure for Dublin was 11.8%,” Power said.

“The institutional framework will have to become more focused on supporting rural enterprise. Local authorities should be radically reformed and made more efficient. Cost savings from this reform should be passed directly back to business in the form of lower commercial rates and local authority charges.

“Red tape and the regulatory burden will have to be reduced. This recession and national crisis will have to be used to improve the structures of the Irish economy and create an environment where real risk-takers and real entrepreneurs will be given scope to take risks and create employment,” he added.

Jim Power said that while foreign direct investment will remain a very important driver of growth, agri-food, tourism, alternative energy, professional services, personal services and high-tech indigenous activities all offer tremendous potential.

John Malone, former secretary general of the Department of Agriculture, said the one positive to come from the economic slump is that it has cast the agriculture and food sector in a new light.

“The sector, which faded from national headlines during the period of the Celtic Tiger, is now viewed as an important driver of economic recovery, with 150,000 jobs, annual output of €24 billion and substantial potential for growth.”

He said the ‘visibility’ of increased farm incomes will be felt in local economies throughout the country over the coming year.

“Much of the increased income in 2010 was used by farmers to pay off debt incurred during the collapse in incomes in 2009. However, if the predictions of continuing buoyancy in 2011 are borne out, farmers will have increased purchasing power,” he said.

He said the target in the Food Harvest 2020 report of an increase of €1.5 billion in agricultural output was achievable. But he warned that adding €3.5bn to annual food output and €5bn to exports is challenging.

“It will require optimum efficiency across all links in the chain and will mean a significant step-change in processing efficiency, innovation and knowledge of the market place. Equally, there can be no weaknesses in regard to quality and in speed of response to consumer needs,” he said.

Malone highlighted the importance of small-scale food production to rural employment and economic output. There are 800 small food companies in the country, half of which have annual sales of more than €3.5 million.

He said many rural areas have suffered heavily from the economic downturn, with one-third of off-farm jobs lost in 2009 alone.

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