Irish lessons at Oxford
In particular, farmer Jim McCarthy’s wide-ranging presentation shed much light on the topic of global agriculture — a vitally important topic, but obscured in Europe by constant political bickering over the Common Agriculture Policy.
McCarthy speaks from both sides of the fence, admitting that he owes his success very much to EU farm subsidies, but had to move to the US and Argentina to become a large-scale global farmer.
He told how the EU’s generous guaranteed grain prices allowed him and his wife to lease land and make the move from farm manager to farmer, in the 1980s.
Thanks to their high production from 2,000 acres in Ireland then, they still qualify for a single farm payment of €160,000.
Now, they are shareholders in a dairy farming business in the US which has purchased 12,000 acres and milks 7,000 cows.
McCarthy is also CEO of Agro-terra Ireland, producing soybean, wheat, corn, rice, and a small amount of cattle, on 12,300 purchased hectares of double cropping land in Argentina.
There are no subsidies in Argentina, and retention tax on export sales and corporate income tax rate are both as high as 35%. But it is farmers in Europe who pay a very high price for their subsidy, far higher than many of them realise, he said — because farm productivity has been completely abandoned, and is doomed to become second rate.
He said it is easier to make money farming in Argentina than in Europe, despite punitive tax, no subsidy safety net, and dependence on exports. Purchasing and marketing power have enabled large businesses to earn 20% return on capital on rented land in Argentina over most of the last 15 years. There is an excellent supply of highly qualified people anxious to work in agriculture.
While subsidies held back commercial agriculture in Europe, grain production doubled in Argentina between 1992 and 2007, to well over 100 million tonnes.
However, with average farm sizes of 500 hectares in Argentina and 30 in Europe, subsidies are a survival necessity for 80% of European farmers, said McCarthy.
He said Europe needs two-tier agriculture, for the 20% who produce 80%, and the 80% who cannot survive without assistance.
After his report from the coal face, the utterings on the EU’s Common Agriculture Policy from British Environment, Food and Rural Affairs Minister Caroline Spelman sounded vague to the point of complete irrelevance.
Her criticisms of a “morally wrong” tendency to protectionism in other member states undercutting producers in developing countries were part of a please-everyone presentation calling for a new CAP to tackle global food security and changing climate, while reducing reliance on direct payments and planning for their abolition, continuing environmental measures, and increasing food chain competitiveness.
At least her EU ministerial colleague, Ireland’s Brendan Smith, came down solidly on the side of direct payments to support farming — although he also wants competitiveness, sustainability and innovation in agriculture. But there are no prizes for guessing which minister came away from the Oxford Farming Conference with more credibility in the real world of global food production.
