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Irish farming sector facing uncertain outlook as Brexit looms

Written by Robert McHugh, on 23rd Sep 2019. Posted in Agriculture

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An Economic Letter by Central Bank economist Dr Thomas Conefrey published today examines the recent economic performance of Irish agriculture in light of the sector’s current challenges.

Its findings suggest that the imminent risk of a damaging Brexit outcome looms large over the sector and has compounded long-running concerns over low incomes.

The analysis shows that beef and sheep farms (around 7 out of every 10 farms) on average face significant viability challenges and are heavily reliant on direct payments. Around one third of all farms are classified as economically vulnerable.

The Central Bank say any future negative shock – even one less material than Brexit – would further expose the underlying weaknesses in the sector.

In relation to Brexit, the research suggests that the negative impact on Irish farming will not be evenly distributed. With a greater dependence on low-margin beef farming, the West, Mid-West and Midland regions are both less resilient, and more exposed, than the South and East. 

The agri-food sector generated just over €13bn in exports in 2018, around 10% of Ireland’s overall merchandise exports. Primary agriculture along with food processing and the manufacture of beverages employed 153,000 in the first quarter 2019, or just under 7% of all jobs.

Specialist beef production is the most common farm type or activity, accounting for over half of all farms in 2016 (78,300). Specialist dairy and sheep farms account for just under 12% (16,000 farms) and 11% (15,000 farms) of all farms respectively.

Commenting on the research, Director of Economics and Statistics at the Central Bank, Mark Cassidy said, "Agriculture makes a significant contribution to the Irish economy and also has important distributional effects in the economy. However, low profitability in certain sectors and high reliance on direct payments are weaknesses in the sector that should not be ignored. It provides the context in which all other risks facing Irish agriculture should be considered."

He added, "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."

Source: www.businessworld.ie

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