Consumers will be paying less for their food in the year 2015 and agricultural income will take a significant drop as a result of a new world trade agreement, economists predicted yesterday.
An international team of experts believe Irish agricultural income could decline by as much as 11 per cent by 2015, representing a €200 million a year reduction in the sector.
The Food and Agricultural Policy Research Institute and Teagasc's Rural Economy Research Centre report said the sheep sector would experience a drop of 23 per cent in value.
The report illustrated that in practical terms, the elimination of export subsidies could mean a virtual end to exports of particular agricultural commodities from the EU in less than 10 years.
In addition, the current World Trade Organisation (WTO) negotiations could provide for a reduction of import tariffs that would further open up markets for agricultural goods to international competitors.
The team, which came up with accurate predictions on the impact of the last round of Cap reform, said there would probably be a 20 per cent decline in output from the dairy sector.
Cautioning that the WTO talks were still ongoing, the researchers said their models indicated the Irish beef herd could fall below 900,000 by 2015 as a result of the new agreement and Cap reforms.
Kevin Hanrahan of Teagasc said this would bring the suckler herd numbers back to a level experienced before the MacSharry reforms in the 1990s from the current level of 1.15 million beef-producing animals.
He said the removal of export subsidies from beef exports would require higher EU consumption and this implied EU prices would have to fall. "Market forces will determine this and the best way to encourage more consumption of product is to lower the price and this is likely to happen," Mr Hanrahan said.
The team, which used three different possible outcomes - a low, medium and high scenario - to arrive at its conclusions, said that in the beef sector, there could be an increase in live exports as there would be a demand for Irish calves on the continent.
Because of the drop in the number of beef animals, more carcases would be coming from the dairy herds and this would result in a drop in the average carcass weights at factories.
Overall, the total value of the sector's output would fall by nearly 14 per cent by 2015.
The report said there would be increased lamb imports from outside the EU because, unlike beef and butter, the EU had not designated sheepmeat as a "sensitive product" requiring protection.
Trevor Donnellan of Teagasc said there would be a demand for Irish lamb both here and within the EU and farmers would will be making a living from the sector by 2015.
The report said there would be little change likely in the cereals sector. However, while there would be only a minor impact on pig and poultry production and output, reductions in red-meat prices were likely to pull down poultry and pig prices as well.