Teagasc Director’s Address at to the ASA conference 11th September 2009
11 September 2009
Good morning ladies and gentlemen,
We live in interesting economic times and we have had many reports in recent months focussing on different aspects of the Irish economy. Reports on reducing government spending, reports on taxation etc. But the task now, and it is not an easy one, is to take all of these contributions and mould them into some sensible decisions that will help our economy to recover and not contribute to any further deterioration in the economic situation. This is the difficult part, and no one envies the job facing those whose responsibility it is to make these choices.
What I want to talk to you today about is the agriculture and food industries and what they contribute to the economy, and impact that some of the proposed changes might have on the sector and its ability to contribute economically to Ireland’s recovery.
From the outset I think it is worth stating, that there is a lack of appreciation in some circles of the critical economic importance of the agri-food and wider bio-sector to Ireland’s economy. I think it is also worth saying, and I know this audience will concur, that the Agricultural industry did not contribute to the current difficulties facing the Irish economy or the global economy. This has to be remembered as we search for solutions to help recover from the current downturn. It is critically important that we do not damage the strengths in the Irish economy, and the sectors and industries that have been built up in a sustainable way over generations. The agriculture and food industries have never been short term or “quick fix” businesses. The industry has grown, based on family farms, and the processing sector has evolved from a co-operative based model, where businesses have been established carefully over time. They didn’t roar with the Celtic Tiger, which now seems like something prehistoric from our past, but equally I believe that the farming and agriculture industries will be among the first sectors to begin to emerge from the current downturn. The sector, which we all work in, is the potential engine of economic recovery in Ireland. In the medium-term there will be opportunities to exploit our comparative grass based dairy production systems to increase milk production and there is the potential to exploit the demand for bio-fuels, bio-energy and functional foods.
That might sound like wishful thinking at the moment, with milk and grain prices where they are, and farm families facing unprecedented difficulties in relation to farm incomes and indebtedness. But the point I am making is that Irish farm businesses are inherently sustainable businesses that have been nurtured and built-up over generations, and they will be there for the next generation. Farmers themselves believe this, otherwise we would not be seeing the dramatic increase in the number of students choosing agriculture as a career, and we would not have seen the massive on-farm investments that farmers have made over the last few years. Teagasc has seen its student intake increase by 83% since 2006, a fact that seems to have been overlooked in the recommendations of some commentators.
Everyone accepts that difficult decisions will have to be taken to address the imbalance in the public finances. We in Teagasc have already taken some difficult decisions, with a far reaching change plan for the organisation agreed last March. The budget for the organisation was reduced for 2009 by €13 million. To manage that significant reduction we have had to close advisory offices, we have had to exit from research facilities and we have had to remodel how we deliver our educational service. The implementation of that rationalisation plan is well underway.
Further difficult decisions are going to have to be taken. We accept that. But it brings me back to my earlier point. It is important as we strive to correct the mistakes made previously in the wider economy that we don’t compound the difficulties facing the country by making wrong choices now. Agriculture is a sustainable industry, generating economic activity particularly in rural areas, where there are few alternatives and it supports a significant number of jobs both directly and indirectly. The most recent estimates I have seen, suggest that the total number of jobs supported is of the order of 14% of the work force in Ireland. Maintaining people in employment has to be a priority for the decisions makers as they pick and choose from, and interpret the various reports published. Agriculture should not be asked to carry disproportionately higher burden than other sections of the economy.
Teagasc as an organisation is unique in that it is an integrated research, advisory and education organisation. Having all three functions working together allows a more rapid transfer of the knowledge and technology generated from research and tested in applied situations, to flow out for the benefit of the farming community and the food industry.
However I must warn that some of the reductions being mooted for the Teagasc budget would simply leave the organisation in a position where it would be unable to deliver its services with any kind of effectiveness and credibility. If the cuts are too severe then long term damage will be done not just to Teagasc, but also to the farming and food industries here. We are changing the way we do our business, and we continuously evaluate the effectiveness of our activities. We have found that our programmes deliver economic returns comparable with international norms and substantially in excess of the recommended rates of return laid down by the government. In the long term research delivers and I believe that the maintenance of an effective research programme is essential to ensure a competitive Irish agri-food industry.
Our advisory team provide an excellent service to 44,000 farmer clients, many on a one-to one basis. Significant reductions in staff numbers and office locations are being suggested by some commentators. The numbers being put forward are wholly unrealistic in my view. As part of the Teagasc change plan, the number of office locations is being reduced by 18 in the first phase, and some of those have already closed this summer. But the number of locations now being suggested in some quarters would compromise the organisation’s ability to deliver a national advisory service. Wise decisions are now required.
As I mentioned earlier we continuously asses the effectiveness of the services we provide. One recent piece of work based on information in the Teagasc National Farm Survey showed that farmers who have contact with Teagasc generated a higher Family Farm Income per hectare than those with no contact. The Family Farm Income per hectare on farms with contact with Teagasc was €579 per hectare on average, while the figure for other farms was €343 per hectare. This applied across the range of farm enterprises.
I hope that over the last few minutes I have impressed upon you how important the agri-food industry is to the economy in Ireland and how wise counsel is now required as the critical decisions to reignite our economy are taken. The agriculture and food industries should not be asked to carry a disproportionate part of the solution.
Thank you very much for your attention.