A farmer’s life is still no bed of roses

We shouldn’t get carried away with all the talk of an agri-boom restoring the country’s fortunes, writes Conor Humphries

AFTER the Celtic Tiger died, Anthony Slattery quit his job as an accountant and bought some cows.

With food and drinks exports rising by close to €1 billion a year and food firms among the best performers on Ireland’s bruised stock market, agriculture beckoned as one of the few sectors to survive a devastating property collapse.

The Government has climbed on the bandwagon, citing food and agriculture as a route back to growth.

Experts warn that expectations have become inflated, however, and with incomes in the sector highly dependent on both EU subsidies and international commodity prices, and exports skewed towards struggling European markets, it could yet suffer its own shock.

“Multinational investment was the sexy thing in the 90s; in the 2000s, it was construction and financial services,” said Jim Power, chief economist at financial firm Friends First. “Now everyone is sitting up and taking notice of the agri-food sector.”

While home-buyers and small businesses found it all but impossible to get credit this summer, leading lender Bank of Ireland boasted it was approving 85% of loan applications in agriculture, fishing and forestry.

In speech after speech, Ireland’s leaders laud the sector as key to the country’s recovery.

“The agri-food sector is worth around €24bn, but about €22bn of that actually stays in the Irish economy, which is an extraordinary figure,” said Agriculture Minister Simon Coveney.

Half of all exports by indigenous companies are in the sector, he said.

The Government expects agri-business exports to grow to €12bn by 2020 from €8bn last year, with two thirds of the increase from food processing and one-third from commodities.

Part of the growth will come from commodity prices increasing and phasing out production caps on dairy products, which the industry believes could boost dairy exports by 40%, or up to €800 million.

But before policymakers get too excited they should remember that even if the strategy succeeds, agriculture would likely amount to no more than 10% of annual economic output, up from under 7.5% today, economist Jim Power said.

The top market performer in recent years has been Glanbia, whose stock price has grown 130% in the past three years to lift its market capitalisation to €1.3bn, while the broader Irish market is up 5%.

Its larger rival Kerry Group, up 95% in the same period, has become one of the world’s largest ingredients and flavourings companies, with manufacturing operations in 23 countries, including India and China.

While Ireland’s food multinationals have grown and diversified, local farmers remain heavily dependent on commodity prices and have had limited success in moving up the value chain, despite a mini-boom in the number of artisanal producers selling at weekly markets in Dublin.

For the moment, dependence on commodity prices is not a problem, and farmers joke that girls have started talking to them again at rural discos.

But commodity prices have fluctuated wildly in the past, as in 2008 when some milk prices fell by over 50%.

The other important factor is subsidies, mostly from the EU, which aim to support those who want to farm a reasonable standard of living as well as preserve a rural way of life.

For all the government support and recent financial gains, farming continues to be a hard and largely unappreciated profession.

While exam scores needed to secure a place in the agriculture course at Dublin’s largest university have soared, for example, the scores needed for medicine and finance are still much higher. Farm incomes also remain lower than other sectors.

After milking his cows on a recent evening, Slattery admitted he was planning to do some part-time accountancy to ensure his financial stability once his farm is up and running.

Things are going well, he said, but you never know.

“In 25 years I can’t remember it ever going as well, but I don’t want call it a boom,” he said.

With all the country has been through lately, “that has bad connotations in Ireland.”

— Reuters