AGRICULTURE MAY be a declining industry but it still makes a significant contribution to the Irish economy.
In 2007 the agri-food sector accounted for 7 per cent of national output, one-tenth of all exports and involved 8 per cent of the workforce. With 130,000 family farms and 640 food companies in the sector, a balanced regional spread of employment has also been achieved. Minister for Agriculture, Fisheries and Food Brendan Smith, in presenting his department's annual review and outlook earlier this week, reported solid progress for last year and offered an encouraging preview of agricultural prospects in 2008 with cattle prices likely to remain strong and dairy markets firm. At a time of global economic weakness, the robust performance of agriculture offers welcome consolation and reassurance given the difficulties that other parts of the domestic economy are struggling to overcome.
Dairy farmers and cereal producers were the main beneficiaries of a buoyant agricultural sector in 2007 thanks to strong demand in international markets and soaring prices for some commodities. Aggregate farm incomes rose by 12 per cent last year to €2.6 billion. Cereal producers saw their incomes rise by two-thirds while higher milk prices greatly boosted the income of dairy farmers.
The wider public may regard farming's gains as something of a mixed blessing. Price gains for farmers have cost consequences for consumers. Domestic food price inflation was well below the overall inflation rate in 2007. This year, some exceptional factors have helped reverse that. And food prices are now fuelling inflation. Many reasons help to explain the change. Globally, low stocks and supply constraints when allied to strong demand from India and China and increased competition for agricultural land for biofuel production, have all combined to push up world food prices.
Irish food exports to Asia rose by 50 per cent last year, with the dairy sector accounting for two-thirds of the €400 million in exports to the region. Overall, total agricultural exports rose some 5 per cent. It was, as Mr Smith said, "an excellent result" and was achieved in a very competitive environment, against a backdrop of higher energy costs, and with the euro strengthening against the dollar and sterling. On the basis of this solid performance, Irish agriculture seems well equipped to meet any reasonable challenge that agreement at the WTO negotiations may present - notwithstanding the IFA's fears and reservations.