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‘The real issue at the present time is a matter of money’

In a two-part article, Tadgh Quill-Manley, BA Economics (UCC), General Council – Munster Agricultural Society, explores misinformation & money power: its impacts on the agricultural sector

Throughout the course of the COVID-19 pandemic, we became accustomed to seeing a clamp-down on coronavirus misinformation, so serious in its manner that it did not discriminate between either innocent repetition or sinister motives.

Many popular websites added an automatic warning to any content which referred to the virus, acting decisively on crushing falsehoods.

Yet, when I watched a recent BBC news feature on banking, filmed by two Bank of England representatives in their gold storage basement, incorrect information on the functions of money and credit, noticeable to anyone with any form of training in economics, was broadcasted to millions of viewers, by a source regarded as authoritative by that demographic.

Why is it that we utilise a ‘no-tolerance’ approach towards COVID-19 misinformation, a temporary pandemic, when something which permanently affects our daily lives and livelihoods does not come under the same amount of scrutiny?

Family farm incomes

In 2021, the Teagasc National Farm Survey 2020 revealed that almost 45% of Irish farms earned less than €10,000 per year.

This included the fact that the average family farm income rose by 9% in Ireland that year to €25,662. Almost half of the 93,000 farms surveyed, which earned less than €10k per year, were placed in a vulnerable position in terms of future viability.

In addition, it showed that there was a stark contrast between farm systems. For example, less than 61% of suckler farms earned less than €10,000 per year, but only 5% of dairy farms did so.

This disparity continued further, with 0.57% of suckler farms on an income of between €70,000-€100,000, compared to 21% of dairy farms.

The average dairy farm income in this most recent report was €74,236, thanks in part to an increase in milk price and a slight 4% increase in milk output per farm.

However, costs in the dairy sector were higher than in other farm sectors, with average overhead costs coming to €58,853 and direct costs at €87,695.

Additionally, dairy farms utilised unpaid family labour to keep costs down and Emma Dillon, an economist with Teagasc, claimed that this work was usually done by a spouse, and/or the proposed farm successor.

Teagasc research officer Trevor Donnellan pointed out that this could include work by the farmer themselves.

‘Cattle other’ systems, which includes beef finishing farms and store cattle, averaged an income of €14,813, suckler farms averaged an income of €9,037, sheep averaged an income of €18,383, and tillage received an average income of €32,525.

These average incomes were calculated on a gross basis and subsidies were used to cover operating losses.

Direct payments

Direct payments continue to play a huge part in farm incomes. On average, the total direct payment received per farm in 2020 was €17,850.

Dataindicating that market income is less than zero on dry- stock farms.

The average suckler farm, with direct payments of €14,207, spent €5,170 of those direct payments over the course of the year to cover the farm’s operating loss.

The majority of farm-related debt was classified as medium to long-term in 2020 (76%), with a further 16% relating to hired purchase or leasing.

The remaining eight per cent considered to be short-term debt, with debt to income ratios as high as 3:1.

In February 2022, the extremely poor prices received by pig farmers, combined with relatively high input costs, incentivised the government to pay out €20,000 to approximately 300 finisher pig farmers who were registered members of the Bord Bia quality assurance scheme.

The sector, which supports up to 8,000 jobs, had been absorbing steep losses on production for several months prior.

Living wage

The Living Wage & Family Income paper from Ireland’s Living Wage Technical Group for the same year paints a dark picture.

Take, for example:

  • One parent who is employed full-time;
  • Assume the other parent, as depicted in the above examples, is working unpaid);
  • Supporting two young children; one of pre-school age, and the other of primary school age
  • Assume children avail of free education;
  • Family is eligible for a full medical card, and social transfers;
  • The gross annual salary must be at a minimum of €20,740.

Referencing this document takes several liberties, as it focuses on regular personal consumption, which is not reflective of the additional costs of running a farm.

The position of those farming commercially in today’s Ireland is clearly untenable. In fact, the majority of farmers have a second job to supplement their income.

Although engaging in commercial farming clearly shows poor returns to the farmer, the value of Ireland’s food, drink and horticulture exports increased by 4% to a record €13.5 billion in 2021, despite the impact of Covid-19 and Brexit on trading.

The dairy sector, which was worth more than €5 billion that year, remains the largest element within Irish food and drink exports.

Meat and livestock, which generated over €3.5 billion in export sales, is next, followed by prepared consumer foods.

It was worth more than €2.5 billion. In 2021, the value of pig sector food exports was €930m.

If the financial situation of individual farming enterprises is so poor, yet their products are so valuable in exports to the state’s aggregate economic output, what can be done to rectify these problems and improve the economic outlook of the farming sector as a whole?

The real issue at the present time is a matter of money.

Although this may appear to be obvious to anybody who had endeavoured to read the preceding paragraphs of this article, it is our understanding of the nature and purpose of money, and its role in the modern economy, which ought to be revisited and overhauled to develop a thorough and adequate remedy to this sector’s most pressing problems.

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