Fewer Viable Farm Businesses Predicted After WTO Reform

A new study indicates that WTO reform could leave just 6 percent of cattle farms and 17 percent of tillage farm businesses economically viable in Ireland by 2015. Furthermore, up to 13 percent of cattle producers and 35 percent of tillage farmers could increase their income by using their land only to claim decoupled payments. This increase in the number of people involved in "entitlement farming" could account for in excess of 200,000 hectares of land nationally.

These statistics emerged from a Teagasc analysis of the implications for farmers of a possible WTO reform. Researchers at the Teagasc Rural Economy Research Centre used the FAPRI model to analyse the effect of the abolition of export subsidies and a reduction in import tariffs for the main agricultural commodities.

The results showed severe consequences for the farming sector which is already under pressure after recent policy changes. Dr Fiona Thorne said "In the cattle farming and tillage sectors, approximately 13 percent and 35 percent of producers respectively will be unable to return a positive gross margin in 2015, when export subsidies are abolished. These farmers would find it more profitable to retain their land only to claim their decoupled payments."

The abolition of export subsidies has serious consequences for dairy farmers and the price of milk. Dr Thia Hennessy said "the average gross margin per cow is expected to fall by over 40 percent as a result of WTO reform and this is likely to have serious consequences for producer numbers. The RERC/FAPRI farm level model predicts that economically viable dairy farm numbers could fall to less than 8,000 in 2015, following the abolition of export subsidies."

However a large number of the economically non-viable businesses may be sustainable due to the presence of other income in the farm household. It's predicted that 70% of cattle farmers and nearly half of tillage farmers will have an off farm job by 2015.

But there will be a significant number of farming households which willbe economically vulnerable because the farm business is not viable and there is no other income source in the household. This could be as many as 15 percent of dairy farming households, 21 percent of cattle farming households and 27 percent of tillage farms.