The changing nature of agricultural production in Ireland

Abstract

The law of the land When I was a boy my brothers and sisters had to leave the land, because it couldn't support them. Neighbours were scarce. So my father and I, we had our breakfast, dinner, and tea, working in that field without a break in our work. And my mother brought us the meals. One day, my father sensed a drop of rain in the air and got my mother to help us bring in the hay before it was too late. She was working one corner of the field, and I was working in the other. About the third day, I saw her fall back, keel over so to speak.

Full text

1
The
changing nature of a
gricultural
production in
Ireland
Dr. Simon Stephens
, Letterkenny Institute of Technology, Donegal, Ireland
The law of the land
When I was a boy my brothers and sisters had to leave the land, because it couldn't support them.
Neighbours
were scarce. So my father and I, we had our breakfast, dinner, and tea, working in that field without a break in
our work. And my mother brought us the meals. One day, my father sensed a drop of rain in the air and got my
mother to help us bring
in the hay before it was too late. She was working one corner of the field, and I was
working in the other. About the third day, I saw her fall back, keel over so to speak. I called my father … I run to
her. My father kneeled beside her. He knew she was d
ying. He looked at me, and he said, "Fetch a priest." Fetch
a pries
t
... And I said, "Let's
-
let's bring the hay in first. Let's bring the hay in first." My father looked at me with
tears of pride in his eyes. He knew I'd take care of the land.
The Bull
McCabe in John B Keane’s The Field
Introduction
In Ireland like other OECD cou
ntries economic development has been
characterised by
gradual structural change. In
the
early 1900s the initial stages of economic development
were driven by
agriculture
which
accounted for the bulk of
Gross Domestic Product (
GDP
)
and employment.
Post World War 2 Ireland began to export in great volume and this
development was boosted by Ireland joining the European Union in 1973.
During the
1980
s
industrialisation intensified a
nd
the share of agriculture in economic output
and
employment declined
an
d the manufacturing sector grew as
Multinational Corporations
(
MNCs
)
came to Ireland to
produce
pharmaceuticals, medical devices and IT components.
As
a result
Ireland
has developed
f
rom a largely agricultural economy with many smal
l farms to
a mixed economy. H
owever
,
agriculture remains
important to the Irish economy.
E
uropean
U
nion (EU)
funding and polic
ies have helped
agriculture in Ireland
to develop
and to
embrace
the use of new t
echnologies
and
focus on sustainable agricultural practices.
Although
Ireland is a comparatively small country
(population of circa 4.2million)
it
has a
relatively large presence in EU
food
markets with
a strong reputation for
quality in meat and

2
dairy products.
T
he Common Agricultural Policy (CAP)
h
as supported the modernisation of
farming techniques and increased mechanisation
.
Smyth
et al.
(2012) explain that in recent
decades, the traditional style of extensive farming has been increasingly rep
laced with more
commercial, intensive farming
.
As a result there are now many big
factory
style farms
employing staff rather than the traditional model of one farmer (and their family) farming a
small farm.
Agriculture and food production in Ireland are m
anaged by
the Department of
Agriculture, F
ood and Fisheries (
DAFF
).
As
the
agriculture
sector
has
changed
there has been
an increased focus on
how
agriculture can
protect and enhance the natural environment.
There is also a focus on the potential of agri
-
b
usiness to
provide competitive advantage
driving exports and providing employment (unemployment is currently 14.8%).
Key facts
/statistics
about
Irish agriculture
1.
There are approximately 139,800 family farms in Ireland with an average siz
e of 32.7 hectares per holding
(CSO, Census of Agriculture 2010)
.
2.
The total land area of Ireland is 6.9 million
hectares of which 4.2 million hectares
is used
for agriculture
(DAFF
2011).
3.
Close to 80% of Ireland’s farmland is in pasture, hay and grass silage, 11% is rough grazing and 10% is
used
for
crop production
(DAFF
2011)
.
4.
The agri
-
food sector accounts for 9.8% of Ireland’s exports and 7.5% of em
ployment
(DAFF
2011)
.
5.
In 2011, I
rish agri
-
food and drink exports inc
reased by an estimated 12% to
€8.85 b
illio
n (Bord Bia 2011).
6.
The UK was the main destination for Irish agri
-
food and drink exports in 2011 accounting for 41% of all
exports. 34% of exports went to EU markets while the remaining 25% went to international markets
(Bord Bia
2011).
7.
A
verage farm income (excluding o
ff
-
farm income) increased by 46% in 2010 to
€17,771
. Full
-
time farms had
an average farm income of
€41,624,
while the part
-
time equivalent was
€7,554 (
Teagasc, 2010)
.
8.
In
51% of farms the holder an
d/or spouse had an off
-
farm job
.
79% of farmers and/or their spouses had an
off
-
farm source of income
either from employment, pensions or social assistance
(
Teagasc, 2010)
.
9.
In 2012 dairy products and ingredients account for 30% of exports. The export value of prepared foods
represents
17% of Irish agri
-
foods exports
. Beef
represents
20% or
€1.8 billion of exports, a 15% increase on
2010, while beverages increased by 6% to represent 14% of agri
-
food exports at
€1.2bn (Bord Bia, 2012).

3
The European Union and the Common Agricultural Pol
icy
The origins of the CAP stem from a need for a reliable supply of affordabl
e food for Europe
as well as the need to protect
farming
livelihood
s. The CAP
was originally negotiated
in the
1960s.
Ireland has benefited from the CAP receiving nearly
€54 billion between 1973 and
2012.
The
original goal of the CAP was to offer
farmers financial incentives to increase
levels of productivity. This was
to some extent
successful in allowing the EU to move
towards self
-
sufficiency. However,
the CAP was undermined by two
significant problem
s
;
over
-
production and surpluses.
The result was food mountains, wine lakes and general
wastages as farmers produced without quotas. Therefore
,
in 1992 the EU Commissioner
for
Agriculture Ray McSharry
(an Irish politician)
introduced a series of reforms that controlled
the level of production
through a quota system with penalties for farmers who exceeded
their quota
. The impact on small farm owners was significant. In Irelan
d many small farmer
holders became uncompetitive and so began a migration away from the land.
In some cases
larger farmer owners bought up land and where small farms remained their owners took up
additional employment.
Further changes were implemented
unde
r the
Agenda 2000
reform process.
In Agenda 2000 the
emphasis
was
on sustainability and environmental
protection.
These changes challenge the farming community to reduce the use of
pesticides, fertilisers and growth enhancers. The subsequent changes in far
ming practices
have had a positive impact on food quality and helped restore consumers’ perceptions of
the agricultural sector.
At present c
hange
is driven by world food shortages resulting in the end of arable set
-
aside
and
the need for
quotas.
Furthermore
, d
irect payments to farmers
have been
reduced and
the money transferred to the Rural Development Fund
(
www.environ.ie
). The
re
a
llocation

4
of funding will be used to tackle challenges
including climate
change, the need for better
water management, the protection of biodiversity, and the production of green e
nergy.
Ireland currently receives
€1.8 billion of the EU’s €59 billion annual agricultural budget
(40% of the total EU budget)
. Irish farmers receive
funding through the Single Payment
Scheme.
Payments to
Irish farmers’
are
higher
than the EU average payment. Indeed
Ireland and the rest of the “
original
” twelve
EU states still benefit disproportionately from
CAP funding. Less than 20% goes to the 'new'
Member States.
The a
gri
-
food sector
in Ireland
Most sectors of the Irish economy have experienced severe contraction during the present
recession. However, one sector has managed to main
tain growth during the downturn;
the
Irish agrifood sector.
The
employment
boom in
Ireland
was driven by
financial services and
the construction sector but post boom
the agrifood sector is now one of the main drivers of
recovery.
The
agrifood sector account
s
for 10% of GDP and employs 160,000 people
(down
from 600,000
in the 1960s)
. The sector has grown from an indigenous
production based
industry into one with a global outlook and customer base
for value added products
. The
sector now accounts for
€8 billion in exports (75% within the EU) and over 85% of Irish beef
an
d dairy products are exported. Although the global economic
crisis
has reduced
consumer
spending
the demand for food on global markets remains strong
.
Furthermore, changes to
the CAP mean that
increasing production
is now possible. In this regard
Ireland
has
a natural
advantage
over competitors i.e.
a
low cost grass based seasonal system of production.
DAFF
in
its
Food Harvest 2020 report
optimistically
envisages a 50% increase in production by
2020.
(DAFF
2012, p. 6)
report that t
he international outlook for food availability and prices
is underpinned by the need for global food production to increase by 70% to meet expected

5
population demands by 2050. Global food production is further complicated
by the issue of
climate change and
the transfer of crops to fuel production
.
The food industry sector in
Europe
provides
14% of all the manufacturing jobs in the EU
as well as providing 14.5% of
total manufacturing turnover
. The
industry consists mainly of small and medium sized
enterprise
s (SMEs) which need support to grow and develop
so that they can
compete on
the world market.
The a
gri
-
food sector in
Ireland
can be characterised as being largely primary production
based, with the majority of farmers involved in livestock production or
dairying. Processing
or other forms of value
-
adding
we
re generally regarded as underdeveloped
. This is changing
and
Irish
agri
-
food companies now account f
or 20% of the companies listed on the Irish
stock exchange (
www.ise
.ie
).
The biggest
agri
-
food
group is the Kerry Group
(
www.kerrygroup.com
)
with an annual turnover of
€5 billion making it one of the world’s
leading food and ingredient companies. While it has a sizable number of
lea
ding brands
including Denny,
Dairygold
, Galtee and Innocent
it is in ingredients and flavours that
Kerry
Group is
a world leader
.
The Kerry Group has manufacturing facilities in twenty three
countries employing 20,000 people
(the North American location
is Beloit, Wisconsin)
.
Company profiles
1.
C&C
a beverages group
which has seen it’s flagship Magners cider spread to a global audience
(
www.candcgroupplc.com
).
2. Lakeland diaries
which is one of Irelands
largest Farmers co
-
operatives. They employ circa 550
people and process in excess of 700 million litres of milk annually. The vast majority of revenue is
generated from the export of powdered milk (
www.lakeland.ie
).
3. Largo foods
produce a ranges of savoury snacks. The company’s turnover is
€90 million. They
export to 20+ countries (
www.largofoods.ie
).

6
4. Coolmore Foods
started in a farmhouse in Co. Cork and now sells it’s ra
nge of c
akes to a global
market. It bega
n by selling direct to delis and upmarket food retailers and now sells 15,000 cakes a
week in the UK
(
www.coolmorefoods.ie
).
5. Connaught Gold
has a diversified business p
ortfolio dealing in Food and Dairy Ingredients,
Agribusiness, Livestock Marketing, Property Management, Timber Processing and local radio
enterprise (
www.connaughtgold.ie
).
Armstrong
et al
. (2005)
propose
that meeting the requirements of consumers
is
central to
developing the agri
-
food sector.
In Ireland
Bord Bia
is
the government agency whose remit it
is to
develop export markets for
Irish food, drink and horticulture suppliers
. The e
xport
performance
of t
hese suppliers
i
s
being boosted by strong
glob
al prices
. 2012 was the third
y
ear in a row
of growth in
export
s
with an overall increa
se of 30
% since 2009.
DAFF (2012, p.
55) report that a
ll major categories rec
orded increased export revenues with the
stron
gest
growth in Dairy, which
increased by
17
%
.
Meat and livestock exports
a
re
up
€275 million
since 2009 and
prepared foods
recorded growth of 12%
.
Dairy Co
-
operatives such as
Lakelands and
Connaught
Gold are benefiting from booming global sales and the fact that
Ireland via Pfizer
-
Wyeth, Abbott and Danone now produces 12%
of the
world’s
infant
formula.
Ireland’s beef sector is also growing with producer
s
switching from the export of
commodities to v
alue added products which go st
raight to supermarket shelves.
Bord Bia
and Enterprise Ireland
(government agency responsible for the development of Irish
enterprises in world markets)
are working to help hundreds of small producers to break into
new marke
ts. Among the
growth areas are confectionary; ready meals; and organic food.
DAFF
(2010, p.
31) propose that for the food and drink industry, there is now a clear need to
harness the powerful environmental messages that Irish food and drink products can
convey. Furthermore, DAFF recommend the creation of an umbrella brand for Irish food and

7
drink. For Irish food and drink exporters, the challenge is to develop the level of market
knowledge necessary to build sales in key categories and to maintain a stron
g focus on
meeting emerging customer and consumer needs. The future success of Irish companies in
this sector relies to a large extent on their ability to be part of a market
-
led food retail
sector (DAFF, 2010 p.30). Therefore,
DAFF has funded research int
o the
potential for
development in the agri
-
food sector exploring: consumer awareness; and key influences on
consumer perceptions/attitudes and purchasing behaviour.
Consumers and agri
-
food
The consumer’s lack of understanding of the link between food an
d farming has Duffy
et al.
(2005, p. 18) explains resulted in a mismatch between many people’s perception of the way
food is produced and the realities of modern agriculture, processing and manufacturing
.
T
his disconnectedness is an unintended, but
inescapable, consequence of mass
-
produced
food products and the globalised food ec
onomy (Morris and Buller, 2003). Therefore,
i
mproving the image of
Irish
agriculture and the link between consumers and the food chain
has become a priority for many organisa
tions within the industry.
The t
raceability of food
through
out
the entire
food production chain is essential for a number of reasons: to provide
consumer assurance about the sources and safety of food; to allow identification of the
source of infected or s
ubstandard product; for disease control;
and
to satisfy
labelling
regulations
(Leat
et al.
,
1998)
.
Existing literature on marketing and Irish consumers (McCarthy
et al
.
,
2006; Campbell
et al
.
,
2009; Kelly
et al
.
,
2010) indicates that consumers will only c
hange their purchasing
behaviour if the brand is credible and the message has clarity. DAFF propose
six
key steps
necessary to progress the development of
Brand Ireland
.
The steps are:

8

Research clarifying the consumer relationship with issues including but
not limited to:
quality; trust; transparency; credible; and clarity.

Industry
-
academic development of market knowledge which will help expand market share
in key locations.

Support processors in building strategic partnerships along the supply chain, part
icularly with
retailers.

Investigate possible linkages with tourism agencies in the marketing of the agri
-
food sector.

Identification of target markets and access opportunities.

Develop a strategy to support the integration of current marketing activities (‘Ireland, the
Food Island’, ‘Love Irish Food’, etc.) with the proposed
Brand Ireland
as well as how to avoid
dilution of strong existing brands.
Bell and Shelman, (2010, p
.
8)
explain that h
igh margins in the
agri
-
food
sector
usually come
from innovativ
e products and/or strong brands
. Ireland has very few large global food
brands with Guinness
, Jameson and Baileys
being exception
s
.
Few Irish companies benefit
from branding in ex
port markets. This is
due to the
high level of
investment necessary to
compete through advertising
.
Perhaps
Irish
agri
-
food companies need to consolidate
to aid
the development of strong brands that would have better opportunities
for
success
especially
in
export
s
markets
.
Another
possibility is that
Irish
agri
-
food companies
can
build
on
the
Bord Bia
concept of
Ireland the Food Island
, such as strategy could help distinguish
Irish agri
-
food products in the global marketplace.

9
Looking Forward
Smyth
et al.
(2012)
conducted a large scale survey of the farming community in Ireland.
They found that the majority of older
farmers
in Ireland
feel
there is not enough of an
incenti
ve for young farmers, due to low
incomes and dissatisfaction with the current s
tate
of farming
.
However, most of the
younger
farmers
surveyed
indicated that farming is very
important to them and that they would continue farming the land
.
Boyle (2009) explains
that
in the future Irish agriculture will constitute
two contrasting farm t
ypes: large
-
scale full
-
time
factory
farms and small
-
scale part
-
time farms.
The
majority of Irish farms are family
owned and
so
entry
in
to the industry through channels other than inheritance is rare due to
the limited availability and high cost.
I
n recent
years, Ireland has experienced
unprecedented urbanisation and landscape fragmentation due to
the
construction
boom
driven by the
National Development Plan
(
www.ndp.ie
) and the unprecedented demand for
new housing
. This has
affected open countryside as well as villages and towns in all parts of
the country.
In the future g
rass
-
based dairying will have fewer but generally larger farms
producing twice the volume of high quality milk. Grass will provide the basis for a signific
ant
beef industry. Sheep farming will remain an important enterprise on part
-
time farms and on
some mixed large
-
scale farms and will provide a landscape management function on hills.
Tillage farming will
continue to be
dominated by a relatively small number of large scale
growers.
Given the changing nature of world demand it is likely that more land will be used
for
tillage crops and energy crops
(Boyle, 2009 and Smyth
et al
2012)
.
The prospects fo
r Irish food and drink
exports are
positive
.
There is still strong global
demand for products, but prices have
stabilized and consolidated. DAFF (2012) predict
l
ong
-
term growth in global demand
which will
underpin
the future development of food markets.

10
Irish farmers can expect
further pressure on margins as input costs remain high. A Bord Bia
survey (December 2011) shows continuing optimism in the food and drink sector. 85% of
exporters viewed the prospects for their business in 2012 as good or very good. New
customers and new
markets are among the main reasons given for this optimism.
Indeed
69% of respondents
surveyed by
Smyth
et al.
(2012)
stated that they had increased their
sales forecasts for the year ahead. But
many are finding it increasingly difficult to pa
ss on
increas
es in input costs as c
ustomers are still focusing very much on value for
money.
Chapter s
ummary
1.
Agriculture in Ireland has changed from small labour intensive farming to large
factory style farms with sophisticated mechanisation.
2.
The CAP initial provided income subsidies but limited growth through market
distorting quota and payments.
Changes
to CAP have brought a renewed focus on
sustainability and offer opportunities for growth with the removal of quotas.
3.
The
Celtic Tiger
period
and subsequent housing boom led to people leaving the land
and land being used for economic development. The current recession has resulted
in the return of land to agricultural production.
4.
Agricultural is slowly moving from beef production to tillage and
the lucrative dairy
market.
5.
The agri
-
food sector has emerged as a strong source of employment and exports.
Irish companies have developed international production facilities and customer
bases.

11
Questions for Review
1.
What are the s
trengths and weaknesses
of the a
gricultural sector in Ireland?
2.
What role has the EU and the CAP played in changing the
a
gricultural sector in Ireland?
3.
How significant is changing consumer prefer
ences to the branding of Irish a
gri
-
food
products?
4.
How cab government agencies help Ir
ish food and drink exporters
to develop the
level of market knowledge necessary to build sales
and meet
consumer needs
?
5.
How do the companies
profiled differ from the main a
gri
-
food companies in your
country?
6.
Where will the
a
gricultural sector in Ireland b
e
in twenty years?
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12
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-
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13
Appendix 1
Agricultural Regions in Ireland
Aalen
et al.
(1997
, p. 18
)