The Great Divide – Dublin versus rural Ireland

I LISTENED to a panel discussion this morning about the supposed divide between Dublin and rural Ireland on The Tubridy Show on RTE Radio 1. Perhaps the biggest perpetrators of this divide, if it really exists, could be the sons and daughters of farmers brought up in modest circumstances on family farms, but who are now infatuated with the charms of Dublin and the allure of the ‘knowledge economy’, according to one of the contributors. 

One of those contributors was Mairead Lavery, a journalist with the Farmers Journal.  She stated fairly categorically that the output of agriculture and its ‘spin-offs’ was €11 billion and responsible for 220,000 jobs.  That would be wonderful if it were remotely accurate and defensible and it stimulated my curiosity to check the underlying facts. It is a pity to have weakened the credibility of an interesting debate by exaggerating accomplishments!

My own view is that rural life in Ireland has an authenticity and candour that simply cannot flourish in the clutter of an urban environment.  A close friend of mine showed me photographs this weekend of a recent visit to Newport, Co Mayo which featured street musicians at pubs and cafes as well ‘characters’ neighbours and ‘old-timers’ from the town all totally at ease in each others company.  The warmth and friendship that was so abundantly evident was infectious. No identity crisis here!  That, I believe, transcends  economic dimension of rural Ireland. 

Income

The CSO published the National Income and Expenditure Accounts for 2008 last week. Table 4 shows that the gross added value of agriculture, forestry and fisheries in 2008 was €3.95 billion and that this level of added value was stagnant since 2005 when it amounted to €4.27 billion.  That is well short of the €11 billion suggested by Miss Lavery. 

The food and drinks processing sector, some of which is connected to agriculture, claims exports of €8 billion, another figure that has stagnant over several years when the economy was vibrant.  The 2003 annual report of An Bord Bia, whose purpose is to market Irish food overseas, stated that the estimated value of food exports in 2003 was €6.67 billion.  It would seem, therefore, that Irish food has not made a major tantalising impact on the human palates of the universe since then.

There are 128,200 farms in the country and only 22,700 of these are of 50 hectares, or more.  Over 65% of Irish farmers are over 55 years of age.  There were 141,500 at the turn of the 21st century.

The remuneration of employees in agriculture in 2008 was €542 million, a figure that has increased by 24% since 2003. 

The income of independent traders allied to agriculture in 2008 was €2.65 billion according to these official figures.  When the remuneration of employees is combined with the earnings of independent traders connected to agriculture, we learn that the ‘toil of the soil’ actually accounted for 2.7% of the personal incomes of households an non-profit institutions in the state.

Farming continues to contract as a component of the Irish economy and there must be questions about its viability.  Weak commodity prices imply weak bargaining power – an experience that, for example, eludes the oil producers of the world.  They squeal and we say ‘how much?’

Employment

The total Irish labour force at the end of March 2009 was 2.18 million, of which 222,800 were unemployed.  Agriculture accounts for 101,500 of the 1.96 million people that were in employment at that time. Farms employs 15,200 non-family workers.  Over 60% of farmers had off-farm employment in 2007.  Before the economic downturn an estimated 50,000 persons worked in the food industry.  The maximum number that agriculture, food and fisheries could therefore claim to employ is closer tot 150,000 directly and indirectly, rather than the 220,000 suggested by Miss Lavery.

 

Public Expenditure and overspending

When Dublin people think of rural Ireland the image of subsidies is never far from their mind!

	2008	2004
European Agriculture Guarantee Fund	€1,457.34M	€1,399.39
Department of Agriculture, Fisheries and Food	€1,800.70M	€1000.64M
Administration	€303.86M	€254.35M
Total Public Expenditure	€3,561.90M	€2,724.41M

 

When the Exchequer Statement for July 2009 was released it revealed that there was a shortfall in tax income of €575 million against a target set 3 months ago.

 

It also revealed that while most of the government departments had lower spending for the January-July period in 2009 and as a consequence overall spending was €161 million more than it ought to have been, the Department of Agriculture, Fisheries and Food had spent spent €219 million more than it did a year earlier.

 

I’m not an expert on agriculture but New Zealand farmers are citizens of an island nation that share many characteristics with Ireland.  They have not had subsidies since the 1980’s when they recognised that paying subsidies generated inflation in New Zealand.  To what extent can Irish farmers continue to be subsidised and at what cost to whom?

 

An Bord Snip

 

A lower number of subsidised schemes are the headline recommendation and a rationalisation of the network of DAFF and Teagasc locations combined with a corresponding rationalisation of the 6,264 staff by eliminating 1,140 jobs.  The proposed full-year savings are projected to be €305.1 million, 6% of the €5 billion overall savings necessary to keep Anglo Irish Bank with sufficient capital.

 

Savings Measures

 

	Annualised savings	Staff reductions
Agriculture, food and fisheries policy and development	€51.3M	450
Food, animal, plant safety and consumer welfare	€83.3M	340
Rural economy, environment and structural change	€87.5M	150
Customer service and payment delivery	€73.0M	100
Corporate services	€10.0M	100
Total current savings	€304.1M	1,140