October 14, 2009
The other day, while travelling by train to an interesting conference organised by Network Ireland in Westport, I was struck by just how lush our country is. Field after field of well irrigated, arable land suggested that we are probably not touching close to our agricultural potential and that is despite the fact that agriculture is still our biggest indigenous industry.
Having spent much of this year in the dry arid desert of Western Australia and the intensively cultivated rural hinterland of China, where land and food supply are crucial to keeping the economic miracle fed, it seemed to me that agriculture will play a significant part in any recovery.
Think about it. The world’s population will increase to nine billion by 2050 from 6.8 billion today. Someone has to feed these people. Over the past few years the yields in agriculture have remained stable. Having exploded throughout the 1960s, 1970s and 1980s with the green revolution, and its intensive use of oil-based fertiliser, yields are now growing at only 1pc a year.
As we saw two years ago, when the price of oil rises, because we use so much oil-based fertiliser, the price of food rises too and in many cases very rapidly. This led to food riots in over a dozen countries before the financial crisis diverted our attention. But the link between food and oil prices hasn’t gone away.
For a few months, as the world faced a global meltdown, the price of oil collapsed simply because there was no demand and, technically, there was another issue because some of the hedge funds that had driven the prices through the roof had to sell, and sell quickly. But oil prices didn’t stay low for long. They are creeping back upwards now and the price of crude is $74 a barrel — nine times what it was a decade ago.
As the world economy recovers, this will once again become a dominant issue. This also means that, from a cost basis, the price of food, even without billions of new mouths to feed, will rise.
Now, superimpose the population forecast of the UN on this cost structure and we can see that the world is facing a new food crisis.
In fact, odd as it may sound to a generation used to pictures of starvation in Africa, Africa could feed the world in the next 50 years. If you doubt this, think of Ireland. In one generation we went from famine to plenty in this country. Clearly there were other factors at play, but increases in yields as well as depopulation played a role.
Around the world, there are a few huge growth areas, where investment could dramatically raise yields. The former breadbasket of Europe, Ukraine, has huge potential. The former Soviet Republic has 30pc of the world supply of chernozem soil, rated the most productive in the world. However, corruption and under-investment have caused chaos in Ukrainian agriculture in the past decade.
So what does this mean for Ireland? Well, it means the biggest industrial opportunity for decades for large Irish agricultural firms. We have the know-how, the technology and the connections with the rest of the world to create a giant agricultural multinational, which invests in land in places like Ukraine and Africa and helps the people of these countries.
Think about Africa, someone is going to invest there and reap huge financial as well as moral rewards, why not us? This is a chance to get on the right side of a huge opportunity which we now are certain will emerge and Enterprise Ireland could be well served focusing on agricultural companies as any others. Interestingly, the number of companies involved in agriculture and food featured in the Ernst and Young Entrepreneur of the Year this year has more than doubled.
In terms of what we are doing at home, although there is huge merit in focusing on small artisan farming as represented by groups like ‘Good Food Ireland’, the facts about the decline in farming can’t be overlooked. There are currently 138,200 family farms in the country, average size 32.3 hectares. But by 2015, it is predicted that there will only be 40,000 full-time farmers in the country — compared with 230,000 full-time farmers in the 1970s. And only 13pc of Irish farmers are under 35.
Future market needs will be for fewer, larger, more intensive farms. In 2008, agriculture accounted for 10pc of Ireland’s exports and 8.5pc of employment, so it is still a huge, if declining industry.
Recently the Green Party has suggested making Ireland GM free. While there are many who might see this as a positive move, one of the disadvantages of this is that we cut ourselves off from technological innovation, which might cause yields to rise.
The most significant point, as our farmers take to the roads again, is that they should be listened to. Far too much economic debate in this country has been focused on the next big thing. With the world’s population doubling, farming is part of “the smart economy”.
Ireland could be a player in this boom on an international level as our existing companies go looking for opportunity in Africa and beyond and we could do more to make our farmers here feel that there is a future in the game.
Once a farmer stops farming it is a very difficult thing to rediscover; skills are lost as are contacts and what many call, the “feel for the land”.
Just as the world is about to enter an agricultural boom, it would be a shame if we presided over the gradual strangulation of our agriculture. Then again, given the lack of foresight in this country, it would be typical of us to fail to see the opportunity and end up having no agricultural capacity, just when the rest of the world is crying out for it.