Teagasc Report on Prospects for Agriculture and Food
Issued 6thApril 2001
The Irish agriculture and food industry would suffer significantly more than the EU agri-food sector as a whole from a complete elimination of EU export refunds under the next World Trade Organisation (WTO) agreement, according to an analysis carried out by Teagasc.
In a report published today, Teagasc economists say that Irish farm incomes would drop by 15% by 2010 if EU export refunds were eliminated. The beef and dairy sectors, which account for over 70% of Irish agricultural output, would be the biggest casualties as they are the largest beneficiaries of the export refund regime.
The economists say that a reduction in export refunds similar to that in the last Uruguay Round, which saw a cut of 21% and 36% respectively in the volume and value of export refunds, would have much less impact on prices and incomes. The dairy sector would suffer most from a further reduction with relatively minor impact on other sectors.
The analysis is contained in the Teagasc Outlook 2001 report which provides analysis of the prospects for the agriculture and food sector from 2000 to 2010. It uses the latest projections of the world and EU food sectors produced by the Food and Agricultural Policy Research Institute (FAPRI) in the USA and includes the possible impact of BSE, the UK foot and mouth outbreak and the forthcoming WTO negotiations.
The report shows that BSE remains the main long-term problem for the Irish beef sector.
The economists say that even with no further BSE set-backs in the EU, the beef market is likely to remain difficult and volatile for the next three years, with consumption depressed and pressure on prices together with significant build-up of intervention stocks. They forecast a return to more stability in beef consumption and prices from 2004 onwards.
However, beef margins at farm level will be significantly cushioned by an increase in direct payments and by increased participation in the Rural Environment Protection Scheme (REPS) which is projected to see an increase in the number of farmers participating from 45,000 at present to 70,000.
The Teagasc economists say that steady growth in real incomes in Europe should provide a strong basis for domestic food demand. Also, solid growth projected for Russia and much of the developing world should provide increased food trade opportunities. Rapid growth in consumer incomes in China could provide a boost in world cereal markets.
Looking at the immediate prospects for agriculture in Ireland, the economists say that, provided we can continue to keep foot and mouth at bay, losses due to the BSE crisis in 2001 will be offset by an increase in direct payments to beef farmers and by gains in other sectors, resulting in little change in overall farm incomes.
The Outlook 2001 report is available from the Rural Economy Research Centre, Teagasc, 19 Sandymount Avenue, Dublin 4, phone 01 637 6090, email: athomas@hq.teagasc.ie
