September 25, 2014
Tech industry looks good on paper - but agriculture is the lifeblood of our economyPosted in Irish Independent · 23 comments ·
The N80 outside the Talbot Hotel in Carlow was jammed at 6.45am as hundreds of headlights blurred into one, all going in the same direction. A tailback of trucks, vans, 4×4′s and dozens of Toyota Corrollas snaked its way relentlessly towards Stradbally.
This annual pilgrimage to the “Ploughing” is the Haj for people who have their dinner in the middle of the day. From all over the country, they descend on this three-day celebration of Irish farming, agriculture, food and trade.
Folk who don’t see each other from one end of the year to the next, commune at the Ploughing.
At 8am, it wasn’t looking good.
Evelyn Cusak’s optimism was cursed as dark, heavy, bluish-grey clouds menaced. Her Indian summer promise couldn’t be wrong, could it? It was cold to boot and the whole place could easily turn into a Glastonbury without designer Wellies if the heavens opened.
But they didn’t, thank God. By 10 o’clock, the place was heaving under murky whitish skies, which we all know pose no immediate threat. It could stay that way for hours without a drop. Foreigners might beg to differ, but we Irish know our clouds and these were amateurs. The crowds built and the stalls, selling everything under the natural sun, were thronged.
The Ploughing is Irish agriculture, crucial to the economy, to the fabric of Irish rural society and it is still the biggest indigenous industry in the country.
Despite the problems with beef prices this year, Irish farming has the capacity to grow rapidly. There is real value in land, food and farming. The global demand for food is constant and growing.
After all, if the world population is exploding to 7 billion, someone has to feed these people. Who will provide milk powder to Chinese infants following the scandal of melamine-tainted milk formula that killed at least six babies, leaving the Chinese wary of any Chinese milk products? It will be Ireland – one of the world’s natural milk producers. Already, tiny New Zealand has achieved the remarkable feat of becoming China’s biggest dairy supplier. Why couldn’t we follow suit? The elimination of milk quotas next year will certainly help.
And the change in the Asian diet is not limited to dairy.
It is a well-known economic fact that when less-well-off people get richer, the first thing they change is not their iPads, their smart phones or their cars as you might expect; people on the move upwards change their diet. When they have a few more shillings, people shift to eating more meat.
We are already seeing this in both India and China, where the new middle classes have dropped their traditional diets and are adopting Western red meat to indicate their higher, more Westernised, social status.
There is an enormous global opportunity for efficient Irish farming in a world of growing populations and changing diets. And the figures in Ireland for agriculture bear this out.
For example, despite all the hipster hype about hi-tech, start-ups and Silicon Dock in Dublin, agriculture is still Ireland’s biggest indigenous sector, contributing €24bn to the Irish economy, almost 10pc of all exports and 7.7pc of all employment. (According to Teagasc, this figure rises to 10pc when all agricultural subsections are included.)
Yesterday, US President Barack Obama declared he wants to prevent companies he described as “corporate deserters” using Ireland to avoid paying legitimate US tax. At a time like this, we would not be wise to favour one industry over another, particularly if the ones we favour might be the target of the US government’s wrath.
Logic suggests that national industries with real value added are precious because retaining every single euro invested is precious.
It is essential that investment doesn’t “leak” out of the country as soon as it is committed. Take some of the multinationals which Obama mentioned: many are using Ireland purely as a tax haven, so money is leaking out of the country in fictitious profit figures driven exclusively by tax shenanigans. Even when this mightn’t be the case, most multinationals import much of their materials, assemble the product in Ireland and re-export it straight away. This looks great in terms of Ireland’s export figures, but how much money actually stays in the country? Where is the true value added?
Farming is different because most of the materials are local: the workers, the land, the crops, the fertilizer and the animals. As a result, according to a recent UCD study, every €1 investment into Irish agriculture leads to a €4 return in the economy.
We can see this by the gap between farming output, which is just above €4bn and agricultural and food output, which is €24bn. This implies a massive €20bn in value is added from farm to export market.
This economic ratio, which measures how much €1 circulates in the local economy, is called the multiplier. It explains how each euro spent can be amplified. For example, I buy from you, you employ my friend and pay his wages, he buys something with his wages from me and I employ someone else who, with new wages, buys from you. In economics, your spending is my income and my spending is your income.
The more local the trading, the more this applies and this is what the Ploughing is all about.
Agriculture and food is local. Raw materials are local. Employment is local and sales are local. Over 70pc of farming raw materials are locally sourced, as opposed to just 44pc for domestic manufacturing companies and much less for multinationals.
If our farming industry is going well, the money changes hands with the local economy and everyone benefits.