There is a danger that upland farming areas will be abandoned, because market returns from hill sheep production are not economically justifiable without income supports, which may be lost due to land ineligibility.
Introduction of Locally Led Agri-Environmental Schemes could bring new ways to sustain livestock farming in the uplands.
Livestock numbers have been falling for 15 years on upland commonages.
And if the warning by experts that vast tracts of commonage will become ineligible for EU direct payments, due to their low levels of farming activity comes to pass, hill farming in these areas could literally fall off a cliff.
At the recent hill farmers’ conference in Killarney, a report by Teagasc and UCD researchers warned that commonages must be actively farmed in order for farmers to qualify for the Basic Payment Scheme, Greening, Green Low-Carbon Agri-Environment Scheme (GLAS), and Areas of Natural Constraint (ANC) scheme.
They are likely to be deemed ineligible for future payments unless farming practices change.
However, there is even more than these payments at stake.
According to the report, there is a danger that these areas will become completely abandoned, because market returns from hill sheep production are not economically justifiable in the absence of income supports.
The environment will also be damaged, because agriculture is acknowledged as the only way to sustain uplands socially, economically, and environmentally.
Overall sheep numbers in Ireland have been growing in recent years.
The annual census in December 2015 showed a 5% growth in numbers over the previous year.
But the increase of only 3-4% in the mainly hill sheep counties of Donegal, Galway, Mayo, Kerry, and Wicklow, shows the proportion of the national flock reared on the hills continued to shrink.
There are two major problems in hill sheep farming. One is economic. The other is environmental.
Lets start with the economic.
Teagasc calculates output, profit margins, and incomes in its annual National Farm Survey. In 2015, it indicated the average income earned on hill sheep farms was €14,743, or €283 per week.
The average income earned by lowland sheep farmers in 2015 was estimated at €16,582, or €319 per week.
Another economic problem faced by hill sheep farmers — and by many other drystock farmers — is their extremely high dependency on subsidies.
The hill sheep farmers with average income of €14,743 got subsidies of various kinds amounting to €18,301.
This means that their farming operations lost €3,568, on average.
Lowland sheep farmers fared slightly better. Their average subsidy received was €17,403, indicating an average farming loss of €821.
The subsidies received by an average hill sheep farmer include decoupled payments of €16,856, of which €10,385 came from the Basic Payment Scheme (BPS); €2,289 from agricultural environment schemes, including GLAS; €3,060 from ANC (formerly disadvantaged areas) payments; and €1,122 from other payments such as environmentally sensitive area and organic payments.
It is worth noting that farmers can receive BPS and Greening on commonage land even where they don’t have sheep, provided the land is maintained in good condition.
The average hill sheep farmer’s coupled payments of €1,445 include €618 related to forestry, €277 to sheep and €550 to cattle.
Their income data for 2016 will be published probably in May, but forecasts made in December suggested sheep farmers’ incomes increased marginally in 2016, and the dependence on subsidies would have increased.
These subsidies will be up for review, and are likely to come under pressure in the coming years.
Firstly, because the withdrawal of Britain from the EU will reduce significantly the overall size of the EU budget.
Secondly, one of the periodic “reforms” of the Common Agricultural Policy is scheduled for the next few years.
When we joined the “Common Market” 44 years ago, Governments had no embarrassment about direct subsidisation of farming.
But things have changed, and pressure from the urban consumer and various environmental lobbies have led to a dramatic change in the nature of the subsidies, with an increasing emphasis on payment for “environmental goods”.
This trend will probably continue in the next review, and every subsidy will be analysed to see if it can be justified to consumers, environmentalists, and taxpayers.
A new system for designating ANC eligible areas must be finalised in 2018.
But any impact on farmers would be softened by the provision in the programme for Government for a €25m ANC funding injection.
They also benefited from the last reform of the CAP. The result in Ireland was that by 2019, all basic payment entitlements will have a value of at least 60% of the national average value.
This will result in large increases in money paid to farmers with upland areas, where payments were traditionally low.
How much can these positive factors do to arrest the decline in hill sheep farming?
Overall, if we look a few years ahead, there are probably more positives than negatives in the outlook for the hill sheep sector.
The increase in subsidies, to at least 60% of the national average value, arising from the changing CAP, is likely to be the biggest factor.
But will farmers be able to comply with the regulations for payments only in areas kept in good condition, which effectively requires sheep to control the vegetation?
Another positive is that sheep is one of the few agricultural sectors in Ireland which could benefit from Brexit.
Britain has a traditional market in France for significant quantities of lamb.
If trade barriers are erected to interfere with this, there could be improved French market opportunities and higher prices for Irish sheep farmers.
© Irish Examiner Ltd. All rights reserved