In my previous opinion piece, I aimed to summarise the evolution of the Common Agricultural Policy (CAP), and in particular, its metamorphosis from an intervention-driven price support system in the 1970s, to a largely income-support-focused CAP in 2023, with some greening and environmental add-ons.
At the core of all of this policy evolution has been the principal of delivering on the economic advantages of a single European market.
The underlying philosophy behind the completion of the single market is that a free trade, economic construct of 27 countries and 500 million people has the economies of scale to deliver a competitive, economically efficient consumer-driven super state, not unlike the United States of America.
Back to the aspirations for Ireland on joining the EU – a hope at that time was that Ireland’s comparative advantage in beef and dairy production would see Ireland increasingly becoming the ‘go-to’ source of supply in these market categories.
As our economy evolved, an additional key to our economic success has been the access to the EU that Ireland provides to US multinationals, with all of the complexity that this involves.
A concern in agricultural circles across the EU since the early 2000s has been, that while the EU still supposedly prioritised its single market, EU policy had positioned access to its agri-food single market as the giveaway in meeting its international trade commitments.
This was both in terms of multilateral negotiations in the past, and even under current bilateral discussions and negotiations.
Here again, economic philosophy (car bumper sticker economics, I would suggest), has played a part.
EU CAP evolution
The lazy thinking was that the EU, as a developed economy, had moved up the value chain and become a service-based economy, and thus less dependant on locally-sourced food which, the story goes, could be more competitively produced in emerging economies like Brazil.
Hopefully this delusional view of the natural order of economic evolution has been banished; not least by the huge turbulence caused by the undermining of EU energy policy caused by the Russia/Ukraine war and the subsequent rethinking of the need to have some capability in self-sufficiency terms.
A key question is whether this recent experience in the energy sector will now better inform the next CAP.
Not simply because the energy policy was not well thought through, but because food production and distribution, and thus consumer food prices, are heavily impacted by energy costs.
Clearly, into this current reassessment of EU policy must come the consideration of the impacts of climate change and the requirement to decarbonise EU food systems.
Intergovernmental Panel on Climate Change (IPCC)
Returning to the context of Ireland’s aspiration to become the ‘go-to’ supplier/topper-up of beef and dairy products to the EU single market, the question of how IPCC accounting and the realities of comparative economics interact must be teased out.
The concern here is that the IPCC accounting and the evolution of economic competition both indicate that Ireland has a sustained advantage in grass-based beef and dairy production versus the broad spectrum of EU countries.
On the one hand, the IPCC accounting that puts agricultural emissions at 35% of all Irish economy emissions is an endorsement of the historical economic structure of the Irish economy.
But the urgency for this 35% figure to require immediate and dramatic reductions in Irish beef and dairy output, is not coordinated with an EU CAP or single market policy, that based on economic efficiency, would expect that more and more of EU milk and beef will be produced in the country that has the sustainable capability to produce it.
This is not just a clash of ideologies or different systems, I would argue.
EU policy has been very clear that any attempts, through taxes or subsidies, to distort the single market will not be tolerated.
The direct concern here is that sectoral carbon budgets and other licence to produce taxes/constraints on Irish beef and dairy production, will undermine Ireland’s comparative advantage.
Indeed, it is a huge concern, not just in Ireland but across the EU, that a one-dimensional approach to the next CAP, which ignores comparative efficiency capabilities and nutritional science, is a reversion to the lazy misplaced economics of the early 2000s.
Those economics attempted to place EU food production as a giveaway in World Trade Organisation (WTO) deals.
There is a solution here that can reflect the symbiosis between economic and sustainable food-system-based efficiencies.
It speaks to a pragmatic approach that looks at our 35% figure for agricultural emissions on an informed basis and pursues a solution focused on reducing emissions per animal to reduce climate impacts, without losing sight of the requirement to sustain economic competitiveness.
This thereby would continue to sustain the 220,000 jobs in the Irish economy which the agri sector supports and continues to promote the sustainable efficiencies intended under the EU Single Market Act.