FARMERS who thought that increasing production and exports might be a good route out of recession have to think again, after the Government decided last week to slash spending on development of food and farming in 2009 by 52%.
It was indicative of the grave state of the economy that €215 million was pulled back from a sector which has contributed 32% of Ireland’s net foreign earnings of primary and manufacturing industries in recent years.
That didn’t save the Department of Agriculture from a €242.4m cut in its 2009 budget.
No other department was asked to save so much. Transport must save €160.5m; Arts, Sport and Tourism €145.5m; Finance €97m; Justice €76m; Environment €62.5m; Foreign Affairs €32m, Defence €27m; Community, Rural and Gaeltacht €23m; Enterprise and Trade €10.6m; and Communications and Energy €9.3m.
The announcements coincided with a budget in which commentators saw nothing to stall further downward momentum in 2009 from the economy’s estimated 2.2% decline this year.
That will depend on international money markets, global economic growth and interest rates, but Budget measures are set to reduce consumer spending through the income levy, increases in excise duties and the 0.5% increase in VAT. So food purchases will fall, but more lasting damage to the food industry is likely from the funding cuts.
Our fragile beef industry will be affected most.
Although accounting for 25% of our agricultural output, cattle and beef production operates in the red on most of our farms.
We have about 65,000 beef cow herds with more than 1m cows, the breeding basis of our beef industry. But it is the single farm payment, disadvantaged area and REPS money that keeps them going. Last year, even among the more conscientious farmers who employ Teagasc advisers, keeping cows cost them money. Profits had slumped, primarily due to Brazilian beef swamping the EU market. Then-Agriculture Minister Mary Coughlan threw them a lifeline in 2007 by allocating €250m to a five-year scheme to improve the quality of Irish beef. Suckler cow owners who raised the standard of animal welfare and breeding would get €80 per cow per year. Now, with the stroke of a pen on Budget Day, funds for the scheme have been slashed. The €250m must last for five years, leaving €€40m-€€43m per year available for the final four years.
If the 53,000 farmers who applied stay in the scheme, they will get only about €€40 per cow for 2009, 2010, 2011 and 2012.
One thousand farmers have already pulled out this year due to the disruption to their farm routines in order to comply with scheme requirements.
The more who pull out, the more that can be paid per cow.
But every farmer who leaves is a setback for the beef industry. Not only will quality and output be reduced, but the Irish Cattle Breeding Federation’s efforts to improve Irish cattle will suffer; the scheme had made available an additional 850,000 calving records to ICBF’s data for maximising beef genetic merit.
Hopefully, a global scarcity of beef in 2009 will cushion the loss of incentives. But the chance may have been missed to expand production and exports at a time of strong global markets.
After the suckler scheme disappointment, it will be a long time before 53,000 farmers respond to a government incentive.
Many will have noticed that the Budget included a substantial climate change agenda, and will have heard Environment Minister John Gormley’s warning last week that the central role of cattle farming in Irish agriculture posed particular challenges, which must be met.
Cattle farmers will also be hit by a disadvantaged area payments cut in 2009. Those claiming the maximum payment will lose between €€900 and €€1,000. And they fear a €€30 extra charge per animal which dies, because the department’s funding of the Fallen Animals Scheme will be halved in 2009. Cattle farmers are being made to feel unwanted, just when our beef export factories need extra supplies for a world short of beef.
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