Specific Details
National Risk Assessment 2024
Intended results
To welcome the opportunity to contribute to the 2024 National Risk Assessment.
1) Geopolitical Risks - Future Direction of the EU
The end of the 2019-2024 European Mandate was marked by multiple Farmer led protests across many member states due to disillusionment with the level of environmental regulation on agricultural policy.
To retain cohesion among farmers across Europe and Ireland, it is of major strategic importance to develop policy that supports farmers in their production rather than hindering the development of their enterprises which have also come under threat from increasing market volatility and input price shocks, of key importance to this are a workable Common Agricultural Policy and the maintenance of Irelands Nitrates Derogation post 2025.
Common Agricultural Policy
The 2023-27 CAP programme proposed and implemented a number of compromising policy decisions for Irish farmers including elevated levels of convergence, unworkable levels of cross compliance and delayed payment schedules which created cash flow issues on many Irish farms.
The next EU mandate must build further on the recent simplification of the Common Agricultural Policy to retain the strategic position of Agriculture within the European Economy of which Ireland plays an essential role. The next CAP Programme will run from 2028-2032 and will align with a new Multi Financial Framework in the EU.
It is essential that a larger financial allocation is awarded to the Agriculture sector within the next MFF if farmers are to retain a decent standard of living, along with delivering environmental objectives.
Based on the IFAC Irish Farm Report for 2024, 34% of Irish tillage farmers and 31% of beef farmers stated they were unsure if they would still be farming in 5 years. A financially robust and workable CAP is essential to retain the strategic output of these sectors along with social cohesion in rural areas.
The 2021 – 2027 MFF reduced funding by 5% in CAP and 5% in Cohesion funding, this translates to a reduction of 12% in real terms relative to the previous MFF. It is therefore essential that Member States secure an increase in the CAP budget for the next programme period to secure a strategic future for all farmers.
The issues which have persisted for farmers in this mandate have culminated in the development of the Strategic Dialogue on Agriculture launched by Commission President Ursula Von der Leyen in 2024. This emphasises the importance of prioritising agriculture as a strategic sector in future policy developments which should be replicated in Ireland.
Irelands Nitrates Derogation
Ireland holds a significant competitive advantage in milk production compared with other EU member states or the UK. The key differential between Ireland and other EU countries is our grass-based system. Therefore, it is imperative this is protected at all costs. This also highlights the vital 3 IFA Submission – National Risk Assessment 2024 importance of retaining a nitrates derogation at an EU level.
Removal of the derogation will, overnight, eliminate the cost advantage we currently enjoy. It is likely to lead to more intensive system which relies more on imported feed and a higher fixed cost base thus reducing our environmental sustainability. It will also have highly negative effects on the Irish land market, inflating prices and creating increased competition among farmers for rented land.
However, it is likely that the milk price disadvantage that currently impacts Ireland will continue. A drift away from a grass-based system will lead to a significant loss of competitiveness, a parameter which has been recently highlighted that Europe must improve on overall. This can also be related to the high cost of doing business in Ireland due to high labour and energy costs relative to other Member States.
At the foundation of Ireland's competitive advantage is the Nitrates derogation which allows Irish farmers to maximise pasture utilisation. Any move away from this grass-based system will not only erode our competitive advantage but will likely place us at a competitive disadvantage compared to other countries. This can also be related to Irelands dairy processing sector which is designed to accommodate a seasonal supply pattern which the potential loss of the derogation threatens significantly.
Looking to the medium-term, the outlook for a demand/supply prospective for dairy product is positive. Future milk supply is likely to be curtailed mainly due to environmental policy restrictions being imposed in Europe and beyond. Given how sustainable Irish dairy is across a range of categories, it is illogical to impose restrictions that stifles its competitiveness. It behoves all stakeholders within the industry to do their utmost to protect the sector and its associated competitiveness.
It is of major strategic importance that the Nitrates Derogation for Ireland is sustained post 2025 and that stakeholders are consulted in all dialogue with the Commission in regards to the state of play on the Nitrates Derogation moving forward.
2) Economic Risks - Disruption to a Secure and Sustainable Energy Supply
The agriculture sector has experienced price shocks in the supply of electricity and other fuels following Russia's invasion of Ukraine. This creates income volatility in the sector which must be strategically stabilised moving forward to mitigate other issues such as food price inflation.
While currently starting from a low infrastructure base, Irish agriculture is in a unique position to contribute effectively to Irelands energy security moving forward if the policy framework and capital investment are mobilised to support the sector. It is also a strategically important opportunity to help manage income risk on Irish farms as well as diversifying enterprises and meeting climate goals.
Investment in Agri-Photovoltaics can reduce the energy dependency of farms but can also to allow farmers to contribute to overall energy independence goals which has become a key strategic priority following Russia's invasion of Ukraine. There is massive capacity for micro-generation on Irish farms that needs to be heavily promoted through government policy.
Farms need capital grants to invest in solar panels but must also be allowed to gain an economic return from the electricity generated. The CAP can play a role in this but further capital grants for solar investment are required. Rules surrounding EU competition law should be revised to allow farmers contribute further to national energy security whilst still receiving capital grants.
Anaerobic digestion capacity of animal manures and other feed stocks like grass silage and tillage crops need to be massively scaled to help further reduce external energy dependencies. The planning law system needs to be conducive to the construction of farmer led bio-digestors and capital investment needs to be allocated to allow for farmer led projects.
As well as contributing to energy security, this system if established could help address external fertiliser dependencies, contribute to increased income security for farmers in more volatile markets and improve environmental parameters like water quality
A more strategic development plan must be developed for both Agri-Photovoltaics and Anaerobic Digestion in Ireland to promote these industries as the sectors currently lack a supportive fiscal policy framework to stimulate development. These frameworks are already common place in many EU Member states putting Ireland on a competitive backfoot. Examples of policy developments which would aid in facilitating AD would be set feed in rates, strike prices and dedicated capital allocations.
Ireland should utilise the extended EU Temporary Crisis and Transition Framework for State Aid allocations to invest in Anaerobic Digestion as has been done by multiple member states including France, Czechia and Italy.
There is a major external dependency on fertiliser in Ireland but also at an EU level, this issue was emphasised upon the invasion of Ukraine by Russia when fertiliser prices sky rocketed. Due to sanctions and elevated energy prices in Europe the price for farmers remains elevated. There is also the potential for market management and oligopoly structures within the EU fertiliser manufactures which must be investigated.
The EU anti-dumping levy applied to fertilisers should be removed to increase competition on the EU market just as the US removed this levy in 2022 to help lower prices for farmers.
The recent proposed revision of the Nitrates Directive to allow for 100kg/Ha of RENURE Fertiliser to be spread in addition to the 170kg/Ha organic stocking rate must be optimised for Ireland. Essential to this is scaling the number of Anaerobic digestors, the digestate produced from these facilities should qualify as RENURE and be allowed to be spread by farmers who wish to reduce their inorganic fertiliser load on the condition that digestate has been nutrient quantified
Overarchingly, environmental policy must be carefully developed and adapted to recognise the economic pressures Europe is facing in the face of geopolitical uncertainty. Strategic autonomy in essential resources such as energy and fertiliser must be prioritised and farmers can play a role in attaining this.
3) Concentration of Irelands Agricultural Enterprise Mix
Fruit and Vegetable Production
The number of field vegetable producers has dropped from 400 in 1998 to currently only 60 field vegetable producers in the country. International Vegetable and Fruit imports are a massive concern from a competition perspective as they reduce the viability of domestic producers. 83% of Irelands fruit and vegetables are imported but we know than 29% of them could be grown in Ireland for the Irish market if the position of Irish farmers was strategically improved within the supply chain.
Seasonal imports of fruit and vegetables that can be grown domestically make up 29% of total imports potatoes (18%), apples (5%), and soft fruits (6%), according to a report by UCD. Any further decline of domestic production in horticulture must be prevented which will decrease Irelands overall food security. Imports, labour supply and energy costs are major challenges within the horticulture sector that must be strategically accessed.
The powers of the Agri-Food Regulator office should be increased through the 2025 revision of the Unfair Trading Practises Directive to further improve the position of farmers within the supply chain and prevent any further concentration of commodity production within the agriculture sector which will increase risk within the sector.
Other EU member states have a more powerful Agri- Food Regulator office when compared to Ireland and any actions which can increase transparency in the supply chain should be adopted with severe repercussions for breaches of the UTP Directive.
Tillage Sector
The area devoted to tillage declined by 16% between 2012 and 2020. A 6% recovery was recorded between 2020 and 2023 but 2024 is likely to see a further reduction in the area. Without urgent policy action, it is not inconceivable that the overall tillage area could decline by up to 11% in 2024 due to very low levels of autumn planting, tight availability of spring seeds and widespread negativity amongst growers.
This potential decrease comes on top of the 7% drop in the cereal area recorded in 2023 and a 26% reduction in overall volume produced (CSO). A double figure decline in area in 2024 could set a dangerous precedent for further declines into 2025 and beyond. Furthermore, the likelihood of achieving the proposed tillage area target of 400,000ha by 2030 as outlined in The Climate Action Plan is now extremely slim.
The effects of a declining tillage area indicates a strategic risk for the future of this sector and policy supports must be directed towards sustaining and growing the sector moving forward. The sector is essential to the distilling and malting industries in Ireland which are of major economic importance and the export market. The value of Irish drinks exports in 2022 was €2bn.
A reduction in the area of crops grown on the supply of fodder for the livestock sector must also be considered. Poor weather and a lack of supply for the 2023/24 period directly effects the economics of the livestock sector in terms in terms of inputs. Sustaining and growing the tillage area is of paramount importance for the continuity of a domestic supply of fodder and feed.
Increased international imports of straw which may contain Black Grass or other invasive species are both a biodiversity and phytosanitary risk to Ireland which must be minimised. The immediate announcement of a Tillage Survival Scheme with a robust payment per hectare is of essential strategic importance for preventing any further decline in this area
Land Market Disruption
IFA has continually highlighted the potential market disruption which may occur from any further reduction in Irelands Nitrates Derogation moving forward. It is imperative to consider the effects that the loss of the derogation may have on the mix of Irelands agricultural enterprises.
The modelling below conducted by IFA analysis indicates that derogation farmers would require approximately 81,135 additional hectares of additional land to comply with the reduced organic N level of 170 kg/ha. To put this in context, this is an area larger than the county of Carlow which has c. 70,209 hectares of utilisable agricultural area (CSO).
This scenario would result in highly inflated land market prices and the potential loss of land by lower income farmers particularly in the beef and tillage sectors resulting in a concentration of the enterprise mix in rural Ireland stimulating further economic uncertainty.
Third Country Trade Deals
Whilst Irelands Agriculture sector is largely export oriented, competition on International and EU markets from third country imports due to trade deals from other large agricultural producers threaten the viability of Irelands rural enterprise mix moving forward. Irish farmers have made consistent strides to valorise their products in a sustainable manner through the uptake of environmentally friendly practises and high animal welfare.
Evidence of this can be seen in the trust of consumers internationally and the granting of a Protected Geographical Indicator for Irish beef in 2023. The uptake and maintenance of high environmental standards in Ireland often comes at a cost for farmers and they can struggle to compete with international imports from countries with lower environmental restrictions and economies of scale.
It is essential to protect Irish produce from cheap agricultural imports that depress market prices. Future EU trade deals with MERCOSUR and Australia should be approached with caution from an agricultural perspective to protect the economic viability of Irish farms to ensure the enterprise mix of rural Ireland does not become homogenous.
Other EU member states have begun to take steps towards protecting the enterprise mix of their rural areas such as the Agricultural Sovereignty Bill recently passed by the French Government to ensure Agricultural Viability is sustained and optimised moving forward.
4) Protectionism and Deglobalisation
Irelands agriculture sector is highly export oriented which is essential to the economic success of the sector. Any threats to current trade pathways must be minimised to preserve the economic drivers of this success which play a role in other aspects of strategic importance like rural development and employment. 90% of Irish Dairy, Beef and Sheep Meat are exported and thus any barriers to trade in these sustainably produced commodities must be counteracted.
Animal Feeds
In 2022, 6.5 million tonnes of animal feed were imported into Ireland, there is a significant reliance on Canada and Brazil for maize meal and on the UK for cereal grains. External to this was 3 million tonnes of high protein animal feeds which was imported to Ireland, around 75% is coming from outside the EU, this includes the USA, UK, Brazil and Argentina. Barley, Wheat and Maize Meal imports all increased in 2022.
There is an EU wide objective to increase the production of Protein Crops in Europe which is strategically important and incentivised in Ireland via the Protein Payment under the CAP. This should be further optimised through better crop varieties and understanding of the nutritional qualities of Irish produced protein crops. The maintenance of a high per hectare payment for protein crops is imperative to promoting protein autonomy.
Europe struggles to produce high protein quality crops that can be essential for modern animal nutrition and welfare, a compromise needs to be determined in relation to the EU Deforestation Regulation which may impact the import of these essential protein feeds. This could have significant price impacts for farmers paying for animal feeds that must be minimised to prevent further income volatility.
Live exports
The live export of cattle (including calves) is of critical importance to the Agricultural livestock sector in Ireland. In 2022, Ireland exported 282,293 live cattle of which 151,735 (53.7%) were calves under 6 weeks of age. Our main export destinations in Europe are the Netherlands, Spain and Italy while outside the EU, a much smaller number of cattle are traded with Libya, Turkey and Northern Ireland.
Live exports constituted a value of €230 million in 2022, 6% of the overall €4 billion generated by the Irish meat and livestock export sector which forms an important corner stone of Irish rural economies.
One of the core benefits of being an EU member state is the ability to trade goods freely across the EU. This continuity of trade extends to the movement of animals. Unfortunately, because of Ireland's peripheral island location in Europe long distance travel is inevitable if we wish to export live cattle to mainland Europe.
The maintenance of an understanding to reflect our necessity to move cattle by sea is critical, so as to not discriminate Ireland against an ability to trade freely with other EU member states within the single market and not to distort competition. Long journeys can add stress to livestock and so we must continue to adopt measures that minimise any stress endured that are economically feasible.
If the Regulation currently governing livestock exports is revised to exclude Ireland from exporting animals due to decreased journey times, it may not be consistent with Article 36 of the Functioning Treaty of the European Union, which states ‘prohibitions or restrictions shall not constitute a means of arbitrary discrimination or a disguised restriction on trade between member states'.
The European Council Directive 98/58/EC (Protection of Animals kept for Farming Purposes) states that distortion of competition arising from different animal welfare provisions applied by the EU and some other non-EU countries must be eliminated. It is of essential strategic importance to preserve the live export link Ireland currently utilises into the future especially in the context of a revision of Animal Transport legislation which is expected in the next European Parliament mandate.
Carbon Border Adjustment Mechanism
Ireland has no domestic fertiliser production facility and the inclusion of fertiliser and other farm inputs like steel in the Carbon Border Adjustment Mechanism (CBAM) has the potential to inflate input prices for farmers upon its full implementation in 2026.
If there is no increase in the price paid by processors or retailers for farm produce, farmers will pay the cost for this trade mechanism. Stringent monitoring must be enforced on the effect of the Carbon Border Adjustment Mechanism (CBAM) on farm inputs to prevent further increases in input cost volatility for farmers.
Dairy and Meat Exports
Irelands competitive advantage in sustainable meat and dairy product production must be preserved in order to compete on highly globalised markets with lower environmental standards. As emphasised in relation to Irelands strategic retention of a Nitrates Derogation, European and National policy should not hinder the economic stability of these sectors in relation to exports. Since 2015, over €2.2bn was invested by dairy farmers and over €1.3bn invested by milk processors in the sector.
This investment has had knock-on benefits to the broader economy. Crucially, for every €1 of dairy product exported, 90c is spent within the Irish economy. In contrast, 10c per euro exported by the multinational sector is reinvested in the Irish economy. In 2022, dairy exports amounted to €6.8bn.
As traditional dairy and beef markets for Ireland begin to scale their own production as well as EU dairy production expanding eastwards, it is strategically important for Ireland to explore other trade avenues for exports to retain the economic importance and viability of these sectors. Irelands role as a major exporter of sustainable animal-based products may be further compromised by labour constraints, market volatility and higher environmental standards.
It is important to recognise that global demand for protein is estimated to grow by up to 78% by 2050. In 2023, Rabobank has identified that if lower margins in dairy production run parallel with compromising environmental targets, milk production in North Western Europe may decline by up to 20%. Coherent policy development, strong trade development and product marketing will be essential for Irelands Dairy and Meat sectors moving forward to reaffirm their position on competitive global markets.
5) Environmental Risks - Extreme Weather Events and Natural Disasters
Farmers are at the frontline of climate change and the effects are felt directly on the operation of their businesses. In combination with mitigation and prevention measures, separate state aid funding must be adequately and quickly distributed to farmers in times of economic need due to the increasing pressure of unpredictable weather. Strategic funding should be allocated to national crisis reserves that can help improve cash flow for farmers during times of need.
Food Safety and Security
Food safety is a heavily regulated component of European Health Policy which is directly related to how food is produced at farm level. Irish crop production for both human and animal uses is observed stringently for mycotoxins which can cause major disruption if they enter the food chain. Plant protection products are essential to controlling these toxins and any policy which prevents their use must be strategically evaluated.
The increasing evolution of pesticide regulation at an EU level has also begun to discourage the activity of the European Biotechnology industry who develops pesticides for agricultural use within the EU. The average time frame in which it takes companies to develop new pesticides has increased to an average of 11.4 years and the rate of new actives reaching the market has decreased from 4 in 1995 to 1.4 in 2014.
This is largely due to the high cost of development and testing which now requires over €215 million euro to get an active ingredient to market, representing an increase of 11.7% from 2005 costs alone. At the end of 2021 there was 215 active substances listed for the renewal process in the EU yet only 158 applications had been submitted, signifying that at least 60 of the 476 approved substances in the EU would not be renewed.
By the end of 2018 there was also a list of 100 potentially new active substances that were required to be tested under the regulatory framework that remained shelved due to the incoherency in the substitution system.
This irregularity in policy not only results in actives being retracted with no substitution, but exemplifies the grievances plant protection companies and farmers have with the Commissions regulatory process which has downstream effects for farmers wishing to protect their yields and income.
It also identifies a clear weakness in the Commission's proposals for new biological plant protection products to replace current chemistry as the regulatory framework is inhibitory to their ability to reach markets for farmers.
Irish crop production operates in a high disease pressure environment and if farmers are to access emerging human value chains for crops, they require plant protection products to ensure they are not hindered by Minimum residue levels for mycotoxins which are becoming increasingly stringent.
It is strategically important to communicate this food safety requirement when developing potential pesticide control policies. Minimisation of the number of actives farmers can access is also a poor anti-resistance and integrated pest management strategy.