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Farmers in west, mid-west and midlands 'set to be worst hit by Brexit'

70% of Irish farms are heavily reliant on direct payments, a new analysis has found.

Image: Shutterstock/lonndubh

THE IMMINENT RISK of damaging consequences from the UK leaving the European Union is looming large over Ireland’s farming sector, compounding long-running concerns over low incomes.

A fresh analysis by Central Bank economist Dr Thomas Conefrey shows that beef and sheep farms, which make up about 70% of Irish farms, face significant viability challenges and are heavily reliant on direct payments.

Direct Payments are part of the EU’s Common Agricultural Policy (CAP), with the money allocated by the EU to Ireland on a yearly basis. In 2019, Ireland’s annual ceiling for direct payments is €1,211,066,000.

In Ireland, the agri-food industry accounts for 8.6% of employment, and 10.3% of exports.

The analysis found that one in every three Irish farms are classified as economically vulnerable and the sector as a whole was found to be at risk from any negative economic development – even one less significant than Brexit.

The research found that the impact of Brexit will not be distributed evenly across the sector, with the west, mid-west and midland regions set to be worst affected due to the greater dependence on low-margin beef farming.

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The south-east and south-west of Ireland have the highest proportion of specialist dairy farms – which is the most viable type of farming.

Nearly 25% of farms in the south-west are dairy farms. This figure comes in stark contrast to the situation in the west, where around one in forty farms are dairy farms. 

Despite it facing considerable challenges, beef farming accounts for over half of all farms, making it, by far, the most common type of farming pursued in Ireland.

Dr Conefrey’s economic letter notes that the average income on cattle-rearing farms last year was just over €8,300, around one-eighth of the income on dairy farms.

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Direct payments made up more than 100% of combined income on all beef farms, indicating that many of these farms made a loss on their farming activities.

Because of this vulnerability, risks such as Brexit could potentially further expose the viability challenges facing many Irish farmers, said the report.

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Despite falling by almost a third compared to 2017, dairy farms had the highest family farm income last year. The average farm income came in at €61,446, with tillage farms coming in second highest, at just under €41,000.

The economic letter says that options should be explored that would have the dual benefits of safeguarding the incomes of farmers while also delivering reductions in Ireland’s greenhouse gas emissions.

“Low profitability in certain sectors and high reliance on direct payments are weaknesses in the sector that should not be ignored,” Central Bank director Mark Cassidy said.

It provides the context in which all other risks facing Irish agriculture should be considered. With this in mind, risks such as a no-deal Brexit or other negative shocks have the potential to exacerbate existing challenges facing some farmers.

Tánaiste Simon Coveney will give cabinet a situation update on Brexit today. A key part of the memo relates to ongoing Brexit awareness public outreach and steps to take for small to medium enterprises.

It is understood that the ploughing championship is being treated as a key platform for Brexit information, with several Brexit seminars happening across all state agencies and in the government of Ireland village. 

With reporting by Christina Finn.

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