Prior to EU membership, Irish farmers were paid world market prices or below for their produce, while European prices were significantly higher. Access to the Common Agricultural Policy (CAP) and its price support mechanisms saw Irish farmers receiving much higher prices for their output.
That led to what many look back on as a golden age for Irish agriculture during the 1970s – not that it was without its challenges.
“The first decade was transformative and delivered huge benefits to farmers,” says Teagasc head of economics and surveys, Trevor Donnellan. “It was an inflationary time overall but there were massive increases in farm incomes. Farmers were getting much higher prices for what they produced, and this allowed agricultural incomes to converge much more towards industrial incomes.”
That saw a lot of farmers borrowing to increase output to take advantage of the higher prices. “The 1980s brought very high interest rates,” Donnellan adds. “Some farmers had expanded quite aggressively and built up very substantial debts. That looked fine while interest rates were low, but they got caught with much higher debt repayments in the 1980s.”
And there were changes at EU level as well. The price support mechanisms which delivered those higher incomes also produced huge food surpluses, with butter and beef mountains and wine lakes becoming headline news. Farmers across Europe were paid a guaranteed price for their output with no limits on production. When there was a surplus on the market, the EU bought the products into a scheme known as intervention to prevent the excess supply creating downward pressure on prices. This resulted in massive overproduction in sectors such as dairy.
There are some cultural and language differences, of course, but in theory an Irish food company can sell in Slovenia as easily as it can in Sligo
— Paul Kelly, Food Drink Ireland
This led to a slow reform process. A milk quota regime was introduced to put a ceiling on dairy output and eliminate butter mountains. The aim was to achieve a gradual convergence with world market prices. The quota regime was abolished in 2015 and farmers could again produce as much as they wished, as long as they had buyers for it.
There was also a decoupling of supports from production. Instead of paying a subsidy per unit of output, the Single Farm Payment scheme supports farm income on a per hectare basis. This reduces the potential for price distortion.
Those changes were not always welcome, as evidenced by farmer protests in Ireland and across Europe over the years. But the overall impact of EU membership on Irish agriculture has been positive, according to Teagasc director Frank O’Meara.
“Irish agriculture is very, very different now to what it was 50 years ago and generally in a very positive way,” he says. “The amount of food produced has increased, the standard of that food in terms of quality and its health and safety aspects is much higher. And the variety of food produced has improved greatly. Farm structure has been transformed. We now have bigger and far more mechanised farms. And the level of education of people coming into farming is also much higher.”
The story for Ireland’s food industry of EU membership has been overwhelmingly positive, according to Paul Kelly, director of Ibec trade association Food Drink Ireland.
“One of the areas you always have to look at is exports,” he says. “Food and drink exports from Ireland reached €13.5 billion in 2021. Roughly one third to the EU26, one third to the UK, and the remaining one third to other markets including the US and so on. We are exporting €4.5 billion worth of food and drink products to the EU26 every year. We have seamless access to that market. There are some cultural and language differences, of course, but in theory an Irish food company can sell in Slovenia as easily as it can in Sligo. Without EU membership we would be left with an internal market of 5 million people instead of 440 million.”
Forestry will grow and organics will grow. Ireland is very competitive at grass-based milk and meat production. That’s where our competitive advantage lies
— Frank O’Meara, Teagasc
That access has given the industry an outsize presence on international markets. “Ireland accounts for 5.7 per cent of all EU food and drink exports,” Kelly points out. “For a country with slightly over 1 per cent of the EU population, that’s an incredible achievement. Ireland also has access to markets around the world where the EU has free trade agreements, including the Trade & Co-operation Agreement with the UK.”
There are challenges ahead, however, particularly those relating to sustainability. The EU Farm to Fork Strategy aims to accelerate the transition to a sustainable food system that will, among other things, have a neutral or positive environmental impact, help to mitigate climate change and adapt to its impacts, and reverse the loss of biodiversity.
A look ahead to 2023
This will see farmers reducing fertiliser and pesticide use and adopting other measures to lower emissions and improve biodiversity. “The next phase of the transformation is to deliver on all of this without compromising food security,” says O’Meara. “It will hurt some sectors more than others. Forestry will grow and organics will grow. Ireland is very competitive at grass-based milk and meat production. That’s where our competitive advantage lies. A lot of our land is not suitable for tillage. Tillage and crop production requires scale. Also, the demographic of our farmers probably means they are not going to switch, even if they had the money, due to their stage of life.”
On the other hand, agriculture will continue to benefit from our thriving food industry. “Ninety per cent of Ireland’s agricultural output is purchased by food industry companies,” Kelly points out. “This compares to the EU average of 70 per cent. Food and drink manufacturing accounts for half the economic expenditure of all manufacturing. That has a multiplier effect with the money flowing back into the economy, particularly in rural areas.”
