Are CAP subsidies making Irish farmers less productive?

COMMENT: Over the course of the year we have seen many strong arguments for maintaining and/or strengthening European Common Agricultural Policy (CAP) subsidies.

A recent study of long-standing EU CAP subsidy beneficiary countries highlights both the positive and negative impact of CAP subsidies on farm productivity. The study, entitled CAP Subsidies and the Productivity of EU Farms, was published in March 2013.

A key statistic of concern for Ireland is the finding that overall EU subsidies are reducing farm productivity by 0.59 per cent per annum. According to the survey, Ireland is one of only five countries in the survey experiencing such a negative impact.

Looking at other data sources over a longer time period we see similar patterns that make uncomfortable reading.

The 2011 Economist, Pocket World in Figures publication notes ranks Ireland at the 8th lowest country in the world for agriculture growth, noting a -3.4 per cent decrease in output between 2000 and 2008.

The value of Irish food and drink exports continues to show positive upward growths. Bord Bia figures for food exports for the first six months of 2013 shown impressive growth compared to the corresponding time period over the previous years. Performance was noted to be strong across many categories, including beef (+15 per cent), prepared foods (+15 per cent), pigmeat (+9 per cent) and dairy (+4 per cent).

The ongoing growth of Irish agri-food export successes could quickly run out of steam if sustainable on-farm productivity gains cannot match expected demand.

By Tom O’Callaghan

Tom O’Callaghan has 15 years of global experience in the agri-food sector, including dairy, meat, consumer package goods, bio-fuels and farming-owned co-operatives. He is currently focusing on emerging area of improving efficiency through agri-analytics and is advising on agri-food and farm efficiency expansion across Eastern Europe and former Soviet Union countries. He is also the ex-ceo of ICOS.