Monthly Archives: November 2015

WHAT IS THE ROLE OF THE IRISH FARMERS’ ASSOCIATION?

Even given recent revelations, my judgement about joining the IFA would still be based upon an assessment of what tangible benefits IFA membership could bring.

As a farm management economist, I end up using cost-benefit analysis for this kind of decision. Cost-benefit analysis is as simple a concept as you will find; what are the benefits and what are the costs and when one is greater than the other you have your answer.

The complicated part is, however, identifying what the benefits are. The total costs are relatively transparent [even if the break-down of those costs has been scandalously opaque]. Evaluating the benefits are, nonetheless, a whole different issue.

It is to the difficult-to-quantify benefits that I will turn my attention because, as a lobbying organization, the IFA should be judged upon what it genuinely achieves for its members. It is not about spin, it is about benefits that can be clearly linked by members to the IFA’s activities.

Now I am not a historian and it is not for me to pass judgement upon the 60 years of the IFA.My concerns are more immediate; they are about where rural Ireland and its family farms find themselves now. It is recent history that concerns me and for that, I suspect I have researched my subject as well as anyone. As I said I am an analyst and analyzing swiftly and in-depth is what I do. It is a skill I have honed over three decades. I also learnt from and taught alongside the best.

As a lobbyist, the IFA has a major role in both in Dublin and in Brussels. By most accounts it is an effective lobbying organization. Lobbying can be about rules and regulations, it can be about supply-chain relationships but it is very much about how much Irish tax payers’ money is transferred to the Irish farming sector, either directly or indirectly via the Common Agricultural Policy’s mechanisms.

I say Irish tax payers money because, after 40 years as a net beneficiary, Ireland is now a net contributor to EU coffers. It is an interesting point because, looking forwards, Irish tax payers will want to see greater clarity about what they get in return. The same can be said for all EU taxpayers. So expect to see this vast population group doing some cost-benefit analysis of its own. In this context a strong lobbying organization [or organizations] will be a necessity for the Irish farmer.

Then again, one needs to recognize that the EU tax payer should be the primary market for Irish farmers and one does not want an antagonistic relationship with one’s customers! If Ireland’s future is as a premium-market supplying, consumer-orientated food nation, it needs to listen to those customers and aggressive, producer/production-focused lobbying may not be the best way forwards; not least when it comes to the current gamut of environmental issues.

My view is that Ireland needs to gain a greater affinity for what premium-paying EU [and international] consumers want as the country has to move from commodity production for the ‘global’ market to premium-quality foods. To do so means becoming far more attuned to what that consumer wants. The future has to be a lot different from just satisfying the needs of Ireland’s dominant processor-exporters. But more on the need for that sea change later.

So what other issues would I consider? Here are a few that I would be thinking about.

FIRST and foremost, is it clear that the standard of living in and welfare of rural Ireland and its family farms is of absolute, paramount importance to the Association?

At the farm level, it should be about improving farm incomes. This can be through farmers achieving quality-driven higher prices, raising production levels and/or becoming more efficient [or all three].

It appears, however, that the second and third are prioritized over the idea that farm-gate quality differences and, therefore, prices can be linked through to consumer preferences, consumer-recognized quality and consumer-paid premiums. Is this potential benefit being neglected?

In the context of the Irish family farm, just how much effort is focused on enhancing farm incomes by adding value to the farm’s produce? Not a great deal as the debate is dominated by how to supply more raw materials ‘efficiently’ [a euphemism for cheaper] to a few, dominant supply-chain partners’ industrial-scale processing units. It appears to be all about the latter’s economies of scale.

The idea that local, rural-based food processing could enhance farm incomes by linking farm produce to a higher-value supply-chain has largely gone by the by. Further, the importance of off-farm income to the sustainability of the traditional family farm appears to barely register and especially so within the context of local, artisan-style, premium-foods creation generating employment and, hence, a possible further income stream for the family-farming household.

SECOND, how did the IFA perform in the Food Harvest 2020 strategy preparation?

Clearly FH2020 was seen as a directional document of great importance and especially so in the run up to the end of the EU milk quota regime. Nevertheless, the author still asks if sufficient analysis of the proposed strategy was undertake before it was agreed by its committee and published? One could argue that the Committee represented many varied interests but the IFA carried the greatest responsibility to the Irish farmer. Hence, did the IFA do a detailed analyze of FH2020 in terms of its impact upon farm incomes? If not, why not? Was it considered another’s responsibility or was it just not done by anyone to the extent that it should have been?

It is interesting to note that for Food Wise 2025, the IFA was far more forthright in saying that the strategy had to deliver in terms of farm incomes but was that a case of shutting the door after the horse had bolted? All such strategies should be developed on the basis of how they impact upon all the players involved and, not least, those players who are the foundations of the industry and, crucially, control the industry’s main productive asset, its farmland. If not, the strategy is flawed.

THIRD, how well has the IFA defended the farmer’s position within the supply chain?

Given the food industries out-of-kilter trading relationships should this be a front-line priority? If not, for just how long can off-farm incomes [as often as not the salary from the distaff side of the family], prop up those farming enterprises that are only about supplying raw materials to large processors?

The supply-chain structure in Ireland has evolved from distant-to-market beginnings where producing longer-life commodities was a necessity. This used to be of concern but that concern was quietly placed under the carpet in recent years. China and population growth would mean that producing commodities was fine and the prices derived would be sufficient to sustain Ireland’s, cheap [on a variable- cost measured basis only] grass-fed farming systems.

On a full-cost basis Ireland cannot compete with New Zealand, the USA, Australian and other dairy exporters on a cost-of-milk only basis. It was known about in 2011 [courtesy of a Teagasc report into international dairy competitiveness] but was it of concern to the IFA? It should have been and it should have been shouted about. Was it?

Was the IFA just going with the flow? Did it rock the boat or question if the agri-food strategy was suited to its own foundations, its farmers? Investment followed the strategy and that has led to too many Irish farmers being tied into supply-chains to which they are not suited. Many have also had to enter long term by supply agreements as they lacked any other option. Just how much effort was made to give farmers options and, therefore, a competitive environment into which to sell?

Have too many farmers now become, to coin a phrase, supplier-pawns that have no alternative sales options and they sink or swim according to how ‘their’ processor performs? Can many now only survive at the whim of the bank or for so long as their farm-household-income-supporting family lets them? It is a tragic situation and is it one that too many farmers have been waltzed into, undefended and poorly represented? Reversing the situation will now take vision and great leadership.

FOURTH, where does the IFA stand on the marketing of Irish farming and its food products?

Does the IFA see understanding the food markets as being within its remit or does it acquiesce to Bord Bia when it comes to such? If it is the Irish farmers’ lead lobbyist and it is one that is focused upon farm incomes, should it be active in overseeing the marketing of the industry’s products?

A number of issues can be raised within this context but to mention but three:

First, significant farming resources have been dedicated to quality assurance schemes. Has this led to a net benefit to farmers? Have the quality assurance schemes been effective in promoting Irish produce overseas or are they only visible in the Irish market? Are they really only about meeting the demands of businesses [i.e. Tesco] for due-diligence quality-assurance with the supply-chain? If so, has this translated into price premiums for Irish farmers? Can they when QA is increasingly becoming a standard, business-to-business, trading requirement? Are they a market entry ticket rather than a premium-price generator; at least as far as the farmer is concerned?

Providing ‘sustainability’ credentials for what is sold into a supply-chain is likely to go the same way. It has become a necessity for those selling beef to say McDonalds in France as McD’s developed their own agroecological strategy in 2010 “to significantly reduce the environmental impact of our main agricultural products while ensuring economical sustainability along supply chain, products quality and food safety, regular and assured supplies”. Apparently Ireland has developed the systems to jump through this particular corporate hoop but will the quality assurance so generated, actually improve farm-gate beef prices? Or is it again just about market access?

Second, in one of my previous postings, the recent beef crisis was described as a “marketing failure”. The UK is Ireland’s main export market for beef and it is Europe’s premium-priced market. Within this market the last decade has seen significant specification changes; not least among which has been the rise of ‘British’ [fueled in part by ‘horse-gate’]. These changes have led to the large, current price differential between Irish and British-origin beef and this has not happened overnight.

Should one be asking it the transmission of market information between consumer, retailer, processor and farmer has been less than adequate? Has this led to a failure to develop products to meet consumer demand and to counter the nationalization of the UK beef market [an issue that will not happen in the UK alone]? Is Irish beef now chasing its tail in terms of the UK market?

In terms of the IFA, was it active enough in ensuring that there was a complete understanding of what was happening in the market or was it easier to ‘delegate’ responsibility to others?

Third, should the IFA be more vigilant when it comes to how the products derived from raw materials produced by its membership are marketed? Just how many farmers are aware of how poor the product presence of Irish food products in the UK? One fears that most consider that Irish food products are as visible in the key UK market as they are in Ireland. The opposite is the case and the IFA should be asking serious questions about how a country that has claims to be a food nation is so poorly presented on the retails shelves of its neighbouring, high-income-consumer market?

FIFTH, has the IFA been successful in ensuring that government been effective in terms of supporting Irish farming and the rural Irish economy?

Is anyone asking if the government is making wise investments [via the Rural Development Programme or otherwise] in the rural economy or is it mainly providing funds to farm cash-flows to prop up the raw material supply-base of processors within a supply-chain where the final commodity price does not sit comfortably with the scale of the raw-material supplier?

A similar question can be asked about research funding; who is the ultimate beneficiary, the supply-chain partner or the small-scale, family farmer? If it is the former, should the IFA be asking whether this [and not to mention marketing spend] be funded by the processors themselves; not least when they are often multi-nationals in their own right?
Should the IFA be heavily scrutinizing just how so-called farmer-support funds are being utilized?

Further, did the IFA question whether the FH2020 was a sufficiently holistic strategy as far as rural Ireland is concerned? Was the expansionist strategy going to deliver for rural Ireland in terms of family farm incomes and rural employment? A key reason for FH2020 was to provide a strategic road map for government expenditure but did it include sufficient focus on supporting the development of locally-processed, premium food products that could provide local employment and alternative routes to markets for Irish farmers who wished to opt out of the ‘grand’ scheme?

SIXTH, does the IFA have a strategy to make rural Ireland and its family farms sustainable?

One hopes that the IFA already recognizes that supporting family farms is about being so much more than a lobbyist or provider of telecom and insurance services? To do this one would like to see it initiate the creation of a broadly-focused rural development plan [independently of government] that is totally orientated towards delivering an improvement in the standard of living for farming families and the rural communities within which they live. It is then about lobbying hard for the plan’s deliverance and especially with respect to ensuring that all government expenditure targeted at food, farming and rural issues is co-ordinated and in tune with the achievement of such a goal.

To put it simply, can the IFA operate as an organization that provides leadership through first analyzing the problems, then identifying solutions and finally driving through their implementation? As they say, it is easier to talk the talk than walk the walk and it is more of the latter that I would like to see.

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