Sheep farming: The theory is that as the numbers of farmed animals fall, prices to farmers will increase to create market stability, writes Seán MacConnell.
It would appear that farmers here are ploughing on with their lives regardless of what will be the biggest change in agriculture since we joined the EU. Beef farmers have been paying large prices for replacement stock and have put their beef-producing cows in calf, while dairy farmers have not reduced their number of dairy animals.
The same is true in the sheep industry, where farmers are still paying as much as they did last year for young breeding ewes despite a Teagasc-FAPRI (Food and Agriculture Policy Research Institute) report predicting a 12 per cent drop in the national ewe flock over the next six years and a 12 per cent reduction in lamb production.
The sheep sector provides the evidence that all farmers know about the future - expand or get out as gently as you can.
There has been a considerable drop in the number of breeding ewes for which farmers have been claiming in the last 11 years and a corresponding drop in the number of sheep flocks in the State.
In 1993 there were 52,955 flocks of sheep made up of 5.3 million breeding ewes, but this had dropped to 41,177 flocks in the millennium year with 4.4 million breeding ewes. The numbers for 2004, according to the Department of Agriculture, show that there are only 34,821 recorded flocks in the State with 3.9 million ewes.
The number of ewes per flock has been climbing slowly since 1993 with the average flock size this year of 113 compared with 100 11 years ago. The predictions made by the research institute indicate that this will continue following decoupling next year.
Of the 35,000 or so flocks in the State, approximately 13,000 or 37 per cent have fewer than 50 ewes. Many of these small flocks are managed by elderly or part-time farmers and the likelihood is that these will leave sheep-production, post decoupling.
The basic theory behind decoupling is that when numbers of animals being farmed fall, the prices being paid to farmers will increase and over a 10-year period, there will be market balance and stability.
Irish sheep farmers have had some sense of this already. In 2001 when foot-and-mouth broke out, there was a huge demand for Irish sheepmeat in France and Britain. The industry has been buoyant since then.
However, an in-depth examination of the sector by the Teagasc rural development unit has found that Blackface Mountain sheep-production is in almost loss-making now and many people involved in it will leave the business.
In tillage, one in three farmers was advised last year to leave before reforms.
Ms Fiona Thorne, a Teagasc economist, said that unless the members of this group, who are the least efficient of the cereal sector, increased productivity or diversified, they would be better off taking their €365 per hectare and quitting.
Her analysis showed these farmers were currently making a loss in the marketplace and were "eating into" their annual entitlements from the EU to cover production costs. She warned that with no changes in production patterns, the average tillage farm income would drop by 7 per cent by 2012.
The greatest problem facing tillage farmers in 2005 is the possibility of changes in the sugar beet production regime which could leave many of them in a difficult position because of changes in the world trade negotiations.