This month saw the publication of a couple of reports that go to the heart of the requirement for balance, both environmentally and economically, with regard to Ireland’s current political debate and proposed legislative actions around climate challenges and the impact on food production.
The first report, from the European Commission, forecasts Irish economy growth at 7.2%, but also suggests that this stellar performance is unlikely to make much of a dent in current Irish unemployment rates.
The surprise in terms of mainstream media commentary that Gross Domestic Product (GDP) growth does not mean more jobs in Ireland is, to me, the only surprise in this report.
Last year, while GDP contracted dramatically across the EU and globally, except for China, Ireland’s GDP growth was 3%.
This was remarkable at one level, given the Covid-19 pandemic impact, but not as great a performance at another level, when Irish unemployment reached 25% at the same time.
GDP growth is an unreliable measure of Irish economy activity and health.
Too much of what goes into ‘official’ Irish economy GDP figures is transactions between multinational companies, that have no or low footprint in the Irish economy.
We supposedly know this but we don’t seem to accept it.
For me, the biggest misrepresentation of the overstated GDP figure relates to the use of this figure to diminish the contribution of the agriculture sector in Ireland.
Agriculture’s contribution to GDP
Our friends in the Environmental Pillar, and indeed a couple of government departments, will often throw out as fact, that agriculture accounts for less than 2% of Ireland’s GDP.
They argue that given all of the environmental issues around livestock production, we wouldn’t really miss it. This is utter nonsense.
We know from Eurostat that while Ireland’s pass-through GDP figure of €340 billion ranks us as No.2 in the EU, actual income consumed (which removes multinational profits and transfer pricing), reduces this figure to €180 billion.
This ranks Ireland as 10 out of the 26 remaining EU countries at an income level of 95% of EU average (Eurostat GDP V AIC figures 2020).
Official Central Statistics Office (CSO) figures show that the agri sector supports 260,000 jobs across the Irish rural and regional economy – a much more relevant assessment of Irish agriculture’s true economic impact.
What the recent GDP-based reports also challenge is the wishful thinking that multinational growth is creating an endless supply of high income jobs in the Irish economy.
These jobs were expected to sweep up any collateral unemployment issues created by the legislative suppression of Irish agriculture.
Again, as I have previously noted, the clear evidence is that spectacular increases in Irish GDP don’t necessarily deliver regional jobs.
OECD / WHO report on food demand
The second report released this week was the Organisation for Economic Co-operation and Development (OECD) / Food and Agriculture Organisation (FAO) forecast of food supply and demand over the next 10 years.
The overall conclusion from the report is that both global demand and supply for dairy and meat products will increase significantly.
However, through a combination of mature consumption patterns in the EU and USA and, most importantly, increased sustainable production regulations, nearly all of the supply will come from less developed countries.
Taking the dairy sector as an example, the OECD report suggests that the increase in global milk supply will be mainly focused on India and Pakistan, countries where the recorded emissions from milk production at 3kg/L are 3-4 times the emissions from Irish milk production (see chart below).
The end result based on the OECD / FAO forecast is an increase in world dairy production of 1.7% per annum over the 10 years, with production reaching 1,020 million tonnes equivalent (MTE) versus 850MTE currently.
Unfortunately emissions from global dairy production will increase by 25% approximately, because increasing dairy demand is now going to be met from non-regulated and low-yielding dairy producers.
In terms of meat production and consumption, the pattern is similar (as per the chart below), with reductions in animal numbers and production forecast in the EU, and increased production in South America and Africa.
Global food demand
In overall terms, what the OECD / FAO report demonstrates is that food demand in global terms will increase as global population increases, and most importantly no amount of pious preaching or lobbying against dairy and livestock production will undermine the steady demand for increased nutrition globally.
It is also a reminder of the very clear principal set out in Article 2 of the UN accord i.e. ”increasing the ability to adapt to the adverse impact of climate change and foster climate resilience and low greenhouse gas [GHG] emissions, in a manner which does not threaten food production”.
To pull together the two reports from an Irish perspective, the core of current Irish agri policy, which is geared towards suppressing Irish agricultural output, is in danger of failing the Irish economy.
It is effectively contracting output, jobs and exports, while also failing the global environmental challenges.
Suppressed production from low carbon production Ireland, and other regulated regions, will be replaced by increased supply from non-compliant or simply non carbon-efficient regions.