Exports glimmer of hope
A similar cut in Ireland in next month’s budget would be a body blow for agriculture.
However, the two situations are not usefully comparable.
It wasn’t all bad news for British farmers, with some at least welcoming plans to scrap about half of the “quangos” associated with DEFRA.
They also welcomed plans to return food and farming to the top of the department’s agenda. They turned thankful eyes to Brussels, from where their single farm payments will not be affected until 2013, at least.
Irish farmers too are somewhat insulated by EU single farm payments. Rural development funding co-funded by Brussels helps too, but is not immune to Government cuts, as seen in the scrapping of REPS, farm retirement and young farmer installation in recent years. Now that the EU has a close eye over Ireland’s shoulder, perhaps the Government will be slower to interfere in EU co-funded schemes.
Any budget cuts that could impinge on agricultural exports must also be in the last resort category.
In 2009, the agri-food sector’s exports were worth €7 billion, or 9% of Ireland’s total exports.
Finance Minister Brian Lenihan knows the economic outlook for next year depends heavily on export growth.
Exports are seen internationally as the glimmer of hope for our fragile economy to turn a corner.
Economic commentators believe Ireland would probably have needed an EU or IMF national bail-out by now, if it wasn’t for our export base.
The farm organisations have rightly pointed to the role of incentives and supports which stimulate farm production, and in turn, exports.
IFA president John Bryan said agri-food exports have already grown by more than 10% this year, and can contribute to the Government’s projection of a 5% increase in exports in 2011.
But it was vital that funding for farm schemes, including REPS, AEOS, disadvantaged areas, suckler cow and other investment schemes was maintained.
He acknowledged farm families will be affected by general changes to the taxation system and cuts in services, and warned against cuts “on the double” through vital farm schemes or key farm taxation reliefs.
ICMSA has pledged that Irish agriculture, and the wider agri-business sector, can contribute significantly to Ireland’s economic recovery – with the proper incentives and support.
Areas of spending previously thought off-limits for political reasons are now being considered, in order to achieve the deficit reductions agreed with the European Commission.
Cabinet discussions have included across-the-board cuts in all social welfare benefits, at least €1 billion off the government’s capital spending, at least €500 million in tax increases, at least €1.5 billion in other spending cuts.
Pre-budget submissions across the political spectrum have ranged from views that income taxes on middle and higher earners have reached a tipping point beyond which the Government cannot benefit, to ICTU’s call for a €75m rise in DIRT tax, a wealth tax for those with assets worth €2m or more, and more tax from high earners.
Within this mix, farmers can legitimately plead for special treatment, if they are to play their part in exports growth.
For example, significant growth in dairy exports is targeted by the government on foot of a projected 50% increase in milk production by farmers.
But these farmers depend on the likely modest increase in their 2010 incomes to cover significant debts built up in 2009, one of their worst years ever, when milk production earnings slumped 48%.
Our other main farming enterprise, beef, is kept in business by the EU single farm payment and co-funded EU schemes. With the cloud of Common Agricultural Policy in 2014 hanging over them, beef farmers too depend on a break in the budget.
