Land costs make Irish farming less competitive
Dr Fiona Thorne, Teagasc Rural Economy Research Centre, examined the relative competitiveness of agricultural production in Ireland and selected EU member states, during the period 1996-2000, for the detailed report.
She found that high land and labour costs are having a major impact on the competitiveness of Irish agriculture.
Teagasc believe the findings have implications for Irish farmers in the medium term as direct payments are decoupled from production.
For it is expected that full and partial decoupling of direct payments will force producers to make production decisions based on full economic costs, including adequate remuneration for land and labour.
Profitability, costs of production, value of output and some partial productivity indicators, such as milk yield, stocking density, cereal yield and labour productivity were examined in the study.
The primary source of data used was the Farm Accountancy Data Network (FADN) published by the European Commission.
In terms of profitability, the competitive position for Ireland, for all four enterprises examined, milk, beef, cereals and sheep, was positive when cash costs alone were considered.
Irish beef rearing, beef fattening and sheep farms appeared as the lowest cash cost producers (as a percentage of output) compared to the other countries examined in the study.
When cash costs were measured relative to the value of market based output, the competitive position of Irish beef and sheep farms deteriorated slightly, but still had lower costs as a percentage of output than the average of other countries included in the analysis.
However, as the opportunity cost of the farmer’s own labour and land is not included in this calculation, Dr Thorne said this indication of competitiveness can only be considered valid in the short term. In the longer term, total economic costs of production must be examined.
