Can’t live with free trade
They were used over the past 11 days by world trade deal supporters to try to justify an agreement which would have left Irish farming to wither away.
A snapshot in time shows Irish farmers enjoying high prices, getting 75% of their income from EU payments which are not affected by world trade deals, plenty of off-farm employment to boost farm household income, and Brazil’s huge agri-industry weakened by cattle disease and currency fluctuations.
Against that background, said pro-WTO economists, the EU’s offer in world trade talks wouldn’t hit farmers very hard.
They agreed with EU Trade Commissioner Peter Mandelson that the offer he and Agriculture Commissioner Fischer-Boel made would have put pressure on some parts of European farming, but over a manageable period of time, and would not have undermined the essential stability of the European farm sector.
With the prospect of a lucrative world trade deal in sight, they tried to drown out Irish farmers who said a WTO deal would have cost Ireland €€4bn per annum in losses, 50,000 farmers would be put out of business and 50,000 jobs would be lost in food processing and agricultural services. The Irish government did its own analysis, but refused to release the results.
However, it is difficult to see how the 80% cut in trade distorting subsidies on offer, and the 54% cut in import tariffs, would not have condemned Irish farming to a slow decline. It would have left market support non-existent when world production recovered and prices fell to more usual levels. Farmers would then have to give up production and depend entirely on EU handouts like the single payment.
Indulging in farming activity would cost them too much, and would be too risky, especially if off-farm jobs were less available to supplement single payment, REPS, forestry, and less favoured area money.
Farming in general would go the same way as the sheep industry is heading already. With lower prices and fewer off-farm jobs available in sheep farming areas to subsidise farming activity, our sheep flocks have shrank 44% since 1992. A WTO deal would have killed them off, and other enterprises could have followed, shrinking slowly as the current farming generation melted away. Already, the average cattle farmer here loses money at farming and is only kept going on a hobby farming basis by off-farm work and the single payment. A world trade deal could have ended farm development, because a fall in the value of farmland would make it even less viable to fund borrowing. Food processors would be left depending on imported raw material. This works for our computer and pharmaceutical industries, but basing a meat or dairy product industry on imported raw material wouldn’t do as well as some economists seem to expect. Food import-export could hardly survive in Ireland’s island location, due to high transport costs.
State aid would have been less forthcoming for a food industry whose net export potential was greatly reduced by shortage of Irish raw material.
As for farmers, the loss of 80% of subsidisation for prices and production could eventually have left them depending on EU or State handouts — social welfare by another name.
It was another lucky escape for our farm and food industry, which can relax for a few years while the WTO licks its wounds.
