A new study by the University College Dublin shows the importance of agriculture and food to the Irish economy, and the crucial role of direct payments in underpinning production, jobs and economic activity.
Speaking at the launch of the study in UCD last week, IFA President John Bryan said Government support for the sector provides value for money and delivers a real return to the economy.
The IFA-commissioned study, The Importance of Agriculture and the Food Industry to the Irish Economy, identifies a significant impact on the rural economy, with the sector sustaining production and jobs in every town and parish across the country.
Among its findings are that the Irish food industry supports employment for 15% of the national workforce.
In addition, the primary agricultural sector, with its high output multiplier, creates much greater economic activity than other manufacturing sectors. Every €100 of agricultural output produces an additional €73 of output, creating €9.25bn in the Irish economy. It also has a low-import content and makes a strong contribution to National Income, with each €1 of output generating almost €1 of GNP.
The authors, Professor Jim Phelan and Dr John O’Connell, highlight the importance of direct payments in supporting agricultural production and farm incomes. The payments account for over 30% of Gross Agricultural Output, as well as supporting the provision of non-market public goods, including environmental protection and animal welfare standards.
In an exercise carried out for the study, it was shown that a 20% cut in direct payments would lead to a fall in farm incomes of between 9% and 39%, depending on the farm enterprise.
There would be a knock-on effect on production and wider economic activity. For example, output in the cattle and sheep sector alone would fall by €450m, with an economy-wide loss of €780m.
John Bryan said, “In the context of the ongoing CAP and EU budget negotiations, and decisions on the public finances, the Study demonstrates the importance of direct payments and Government support for schemes in underpinning agriculture’s contribution to the economy. As outlined in the report, there is huge potential for the sector to expand. It is vital that all existing supports are maintained to achieve the growth and export targets for agriculture and the food industry set out in Food Harvest 2020.”