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| Share of Agriculture in the GDP (%) | Employment in the Agriculture, Forestry, Hunting and Fishing Sector (%) |
|
| Belgium | 1.3 | 2.7 |
| Denmark | 2.6 | 4.4 |
| Germany | 0.8 | 3.3 |
| Greece | 7.3 | 20.4 |
| Spain | 3.0 | 9.3 |
| France | 2.0 | 4.9 |
| Ireland | 4.8 | 11.1 |
| Italy | 2.7 | 7.5 |
| Luxembourg | 0.9 | 3.7 |
| Netherlands | 2.9 | 3.7 |
| Austria | 1.1 | 7.3 |
| Portugal | 2.0 | 11.5 |
| Finland | 1.1 | 7.7 |
| Sweden | 0.4 | 3.0 |
| UK | 1.0 | 2.1 |
| EUR | 1.7 | 5.3 |
Source: CEC (1997a)
In the context of this report it is also important to note that the economic and social impacts on farming strongly influence the type of enterprises carried out and the intensity of land use, crop and livestock production and thus determine the type and magnitude of positive or adverse impacts on the rural environment.
3.1.1. Structures Data
The data used in this section are predominantly derived from original statistical information provided in the Statistical Compendium and the 1996 and 1997 Reviews by the Department of Agriculture and Food (1997a, b, 1998a), in the Farm Structure Surveys and Environment Statistics published by EUROSTAT (various years), in the Central Statistics Office (CSO) agricultural statistics series (various years), in the Commission of the European Communities' yearly report on ‘The Agricultural Situation in the European Union’ and by the UN Food and Agriculture Organisation (FAO, 1997).
3.1.2. Holdings
In 1995 there were approximately 153.400 holdings in the Republic (Eurostat, 1997a). There was a decline of almost 33% in the number of holdings between 1975 and 1995 while the average farm size increased by 26% from 22.3 ha in 1975 to 28.2 ha in 1995 (see Figure 3.2). These trends are in keeping with the general trend in the EU but, in terms of the decline in the number of holdings, are even more pronounced .
Figure 3.2 Number of Farms and Average Farm Sizes 1950-1997
There has also been a change in the numbers of farms in the different size categories, as shown in Figure 3.3. While the number of holdings with less than 20 ha AgriculturalArea (AA) has declined considerably since Ireland's entry into the EU, the number of farms with 50 ha and more agricultural area (AA) has increased slightly. Almost 88% of Ireland's agricultural area was owner-farmed in 1995 which was significantly higher than the European Union's average of 59% (Eurostat, 1997a).
Figure 3.3 Number of Farms ('000) by Size Classes of Agricultural Area 1975-1995
In 1995 almost all farms (96%) were engaged in livestock production with bovines (90% of all holdings) being most important, followed by sheep (31%) and dairy enterprises (28%). Pigs and broilers were only kept on 1.6 % and 1.3 % of holdings respectively. The focus on grass-based livestock production in the cattle and sheep sectors is reflected in the fact that 92% of all holdings had permanent grassland areas. Arable land (including forage crops) was recorded on 54% of farms. But only a very small number of these farms would have devoted more than one hectare to crops such as cereals, sugar beet and potatoes and that more than half of the arable area is used for forage crops.
In 1993 nearly three quarters of all holdings were located in Less Favoured Areas (LFA) under Directive 75/268 (EEC) where compensatory allowances are payable to farmers for the keeping of cattle, equines, sheep and goats (Eurostat, 1995). The breakdown in terms of the areas in different categories of less-favoured areas is as follows (Government of Ireland, 1995):
These areas are subject to reclassifications and appeals. In 1996 there were 105,619 beneficiary holdings, i.e. about 70% of all holdings, in receipt of headage allowances and they received an average allowance of 1575 ECU per holding. An average amount of 88 ECU was paid per livestock unit in LFA in 1994 (EC DG VI, 1997). At 23.5 ha the average farm size in the LFA was smaller than the national average of 26.8 ha
3.1.3. Areas and Land Use
The 1996 Central Statistics Office (CSO) Agricultural Statistics give a total agricultural area of 4.341.000 ha which is only three quarters of the area used at entry into the EU. About 190,000 hectares have been planted under forestry since 1980 and some land has been lost to industrial and housing development. In examining the various statistics presented in this chapter it should be noted that the 1991 census of agriculture removed approximately 500,000 hectares from the figure for ‘agricultural area’ (Department of Agriculture and Food, 1997a) for reasons not yet ascertained by the author.
An overview of agricultural land use in the regions and in Ireland as a whole is given in Figure 3.4. Agricultural land use is clearly dominated by grass-based production with 90% of the area farmed being devoted to pasture, silage, hay and rough grazing. Cereals were only grown on about seven percent of the area and the area under cereals has declined by a quarter since Ireland's entry into the EU. Other tillage crops, fruit and horticulture play a very minor role. The regional picture varies somewhat as tillage crops, fruit and horticulture are concentrated in the east and south-east while the largest percentage of rough grazing is found in the western regions. Land use changes will be addressed in Chapter 3.1.7.
Figure 3.4 Agricultural Land Use in Ireland
3.1.4. Economic Size
The economic size of holdings provides a better view of structural variations than average holding area, both at a national level and across the EU.
The economic size of a holding is an expression of their total standard gross margin and is thus an indicator of the potential net holding income which again is an important factor in terms of farm viability. It is determined by multiplying for each enterprise the area of production (in ha) or the number of LU by the relevant Standard Gross Margins (SGM). SGMs correspond to an average situation for each enterprise within a given region and are expressed in ECU/ha or ECU/LU. The total standard gross margin of a holding, expressed in ECU, is converted into European Size Units (ESU); in 1993 the conversion rate was 1 ESU = 1,200 ECU (Eurostat, 1995).
The average economic size of Irish holdings increased at a faster pace than the EU average in the late 80s and early 90s (Eurostat, 1995). Figure 3.5. illustrates that, on average, Irish agricultural structures were still ‘less developed’ than those in many other EU countries in 1993. The average economic size of Irish holdings was slightly higher the EU average in 1993, but French farms were potentially twice, British farms three times and Dutch farms more than four times as profitable.
Figure 3.5 Average Economic Size (in ESU) of EU 12 Farms in 1993
In 1994/5 there were approximately 1300 farms exceeding 100 ESUs, representing one percent of the classified Irish holdings (see Figure 3.6). At the other end of the spectrum, a third of all classified farms were in the smallest size class of 0-8 ESU, with a total average output per holding of ECU 5700 (CEC, 1997a). Such farms would hardly be viable, unless farm incomes were supplemented by direct income support, off-farm employment, or the small farmers unemployment benefit. This assessment is supported by the findings of Kinsella (1995) who examined the viability status of farm households in the Republic of Ireland. He classified only 50% of farms as being viable or potentially viable using a combination of economic and household characteristics.
Figure 3.6 Economic Size of Irish Farms 1994/95 in European Size Units (ESU)
In terms of farm types, the average ESU of mixed livestock farms, pig and poultry operations and tillage farms places them in the ‘large’ economic size category while the average ESU of specialist cattle-rearing and fattening enterprises places them in the ‘small’ economic size category (Eurostat, 1995).
3.1.5. Labour Use
Labour use is measured in Annual Work Units (AWU). An AWU is ‘defined as the labour input of a person employed full-time for a year for agricultural work on a farm holding (or a minimum of 2,200 hours)’ (Harley, 1990). This does not include forestry or other non-agricultural activities, but part-time or seasonal work is considered. The main purpose of such labour input statistics is ‘to express trends in and levels of agricultural branch income in relation to the trends in agricultural labour input. The need stems from one of the objectives of the CAP, which is 'thus to ensure a fair standard for the agricultural community, in particular by increasing the individual earnings of persons engaged in agriculture’ (Eurostat, 1997b). With the considerable degree of part-time work in agriculture it is more useful to base this analysis on the volume of work carried out (as expressed in AWU) rather than on the number of persons employed in the sector.
All the EU Member States have recorded a continuous decline in the volume of total agricultural labour. In Ireland the average rate of annual decline over the period 1979 to 1996 has been 2% which was a less severe decline than in many other EU Member States. The share of family labour input in total labour input was estimated at 91% in 1996, the highest rate in the EU apart from Finland (Eurostat, 1997b).
In the late 1980s 40% of all farms provided less than one AWU, demonstrating a considerable amount of under-employment on Irish farms, which was concentrated on farms of small physical and economic size (Eurostat, 1991). From 1987 to 1990 the average AWU per holding increased from 1.27 to 1.5, improving the situation with regard to underemployment. This change may have been due in part to the loss of a large number of small farms in that period (see Figures 3.2 and 3.3). In 1995 the average number of AWUs per holding in Ireland was approximately 1.45 . A third of Irish farm holder-managers pursued ‘Other Gainful Activities’ (OGA) in 1993 and for almost two thirds of these the OGA would have been their principal activity, the percentages being higher for holders of small farms of up to eight hectares in size (Eurostat, 1995). This again highlights the weak economic structure of small and medium farms, the problem of under-employment as well as the need for off-farm employment, alternative farm enterprises and/or direct income supplements. It is important to note in this context that 88 % of all farms were owner-farmed in 1995, the percentage being higher still for small farms. Therefore under-employment impacts directly on the economic situation of farmers. It is expected that a very high number of full-time farms will become part-time farms within the next decade, i.e. the farm holder and/or their spouse will have to seek part-time or full-time off-farm employment to achieve adequate household income levels.
3.1.6. Farm Types
The farm type of a holding in the EU definition for statistical purposes is determined by the relative contribution of the various enterprises to the total Standard Gross Margin (SGM) of the holding (Eurostat, 1995) . In terms of numbers, agricultural area and output the most important farm types in Ireland are cattle rearing and fattening followed by dairying and sheep farming (Eurostat, 1995; Department of Agriculture and Food, 1997a). These sectors also account for most food exports. Restructuring in the various sectors and enterprise substitution are discussed below.
3.1.7. Concentration and Specialisation of Production
The concentration and specialisation of production are two dimensions of agricultural structural change. Concentration is here understood as the extent to which production of specific products is concentrated on particular farm types (Harley, 1990). Specialisation is measured as the proportion of the total output of a farm or region accounted for by a particular product (Bowler, 1986).
The concentration of the production of certain commodities is the outcome of structural change as influenced by market and price policies, structural policies and extension or advisory services (see Buckwell, 1989). It is also linked to the process of intensification.
The percentage of the agricultural area devoted to different crops and the percentage of different livestock categories by farm type is shown in Appendix I. It can be seen, for example, that more than 90 % of the dairy herd was kept on specialist dairy farms. There is also a high level of concentration on specialist sheep farms and in pig units, while poultry production is concentrated on poultry, mixed pig and poultry units and on dairy farms. Almost a third of all land used for cereal production is held by specialist cereal growers and almost two thirds of fruit is grown on specialist fruit plantations.
With regard to the more dominant farm types, the process of concentration is particularly evident in the cereal and dairy sectors . Between 1980 and 1993 the number of specialist cereal producers decreased by approximately 66% while the area devoted to cereals on these holdings decreased by 46 %, indicating that larger areas were used for cereal production on the remaining farms. Furthermore, total cereal production declined by only 20% during this period, which points to more intensive production. A similar, but more pronounced change occurred in the dairy sector. While the number of specialist dairy producers declined by 38% between 1980 and 1993, the total area devoted to dairy cattle on these farms declined by only 14%, suggesting that the livestock density on the remaining farms increased significantly.
Developments within the beef and sheep sectors point to enterprise substitution
and specialisation rather than to concentration. The growth in the number
of specialist beef farmers was only slightly smaller than the growth of
the overall output of this farm type, i.e. the level of concentration
has changed only slightly. In the sheep sector the picture is more complex.
Following the introduction of the Ewe Premium in 1980 a process of specialisation
began with a sharp increase in the number of specialist sheep producers
in the mid and late eighties. While sheep numbers increased sharply between
1985 and 1992 the number of specialist sheep farmers began to decline
again in the late eighties. However, the total number of holdings keeping
sheep was on the increase during that time. These processes indicate enterprise
substitution and specialisation until the mid-eighties, followed by a
process of intensification, which lasted until about 1992. There are no
data available which would allow for a separate interpretation of the
trends in lowland sheep and mountain sheep production or in LFA and non-LFA
with their different subsidies for sheep flocks.
If concentration is seen in terms of the land as a productive resource increasingly being confined to fewer but larger farms (see Bowler, 1986), the aggregate picture of changes in the number of farms and farm size in Ireland indicates a level of concentration which is in keeping with the average trend in the EU as a whole (see Figures 3.2 and 3.3). However, such change has been much more pronounced in the continental EU Member States, particularly in Denmark, France, Luxembourg and Belgium (Eurostat, 1995 &1997a).
The aggregate picture given in Figure 3.2., however, masks the considerable changes within the various production sectors. Figures 3.7 to 3.9 show a considerable amount of restructuring in the cattle, dairy, sheep, pig and poultry sectors, with unit sizes increasing. In fact, in 1992 Ireland had the highest proportion of sows in units of over 100 animals in Europe. Almost one third of the national sow herd was owned by 12 individuals or corporate groups in 1995 (Lee, 1995).
Figure 3.7 Cattle and Dairy Herd Structure 1975-1995
Figure 3.8 Pig and Poultry Unit Structures 1975-1995
Figure 3.9 Sheep Flock Structure 1975-1995
The decline in numbers of holdings with dairy cows, pigs and poultry has been much more pronounced than the overall decline in farm numbers indicating a considerable amount of specialisation in these sectors, i.e. in the extent to which particular farm types specialise in specific products (see Harley, 1990).
Apart from the changes within the various sectors there has also been a general shift from farm types with mixed activities to more specialised types as can be seen in Figure 3.10 which shows the percentage contribution of the various EUROSTAT farm types to the overall Utilised Agricultural Area (UAA).
Figure 3.10 Change in percentage contribution to UAA by Farm Type 1975-1993
With regard to the most dominant sectors, the percentage of agricultural area devoted to specialist cattle production, dairying and 'other grazing livestock', i.e. predominantly sheep, has increased while the proportion of the area given to mixed cattle enterprises or mixed farms with crops and livestock has decreased. These changes again are indicators of the specialisation trends in farming. In interpreting these figures it must be borne in mind that the overall figure for UAA has decreased from approximately 5,000,000 ha in 1975 to approximately 4,280,000 ha in 1993. Some of this decline in UAA can be attributed to private and public afforestation which amounted to a total of almost 190,000 hectares between 1980 and 1995 (Department of Agriculture and Food, 1996). But notably the 1991 Census of Agriculture also removed approximately 500,000 hectares from the figure for Agricultural Area (AA).
The increase in the land area under forestry, particularly in the western regions, is an important factor in agricultural structural change. Much of the afforestation in the west is the outcome of the generally weaker economic structure of farming in these regions. Driven by economic incentives provided under the reformed CAP and previous national and EC afforestation schemes, there has been a strong increase in private planting by full-time and part-time farmers (see Department of Agriculture and Food, 1996). At the same time the selling of part or all of individual holdings to the state Forestry Board, Coillte Teoranta, has provided a final escape route for farmers whose enterprises are no longer viable. This conversion to another type of land use has repercussions for wildlife and the environment which have been addressed in the recent report to the Heritage Council entitled Review of Current Forestry Policy - The Impact on Aspects of Ireland's Heritage.
3.1.8. Intensification of production
Processes of intensification are quite closely linked to processes of specialisation of production, in that it is often economies of scale that make intensification worthwhile. Incentives for intensification were provided under the Farm Modernisation Scheme 1974-1985, the Western Drainage Package (1979-1988) , the Programme for Western Development 1981-1990 and the currently suspended Farm Improvement Programme (from 1986) all of which played a key role in the promotion and financing of larger scale holdings and farm improvements. It should be noted that there are still some outstanding measures to be carried out under the Farm Improvement Programme farm plans, as the plans remain active for a maximum of twelve years (Browne, pers. comm., 1998).
Suitable parameters for the determination of the intensification of agricultural production are the level of farm inputs (fertilisers, pesticides, compound feeds), mechanisation, trends in livestock density and herd structures, as well as the ratio of hay production to silage production. Trends in field size and the degree of farm improvements, e.g. drainage or reclamation, are also of interest. Not all these parameters can be addressed here due to a lack of baseline data and some aspects will be addressed in the section on agricultural impacts on biodiversity and natural resources.
The trends in herd or flock sizes in the cattle, dairy, sheep, pig and poultry sectors have already been outlined in the previous section. Relevant indicators of intensification linked to these structural changes are changes in aggregate number of livestock units (LU) in the country and in national figures for livestock units per hectare of agricultural area which are shown in Figure 3.11. The increase in aggregate livestock units can primarily be attributed to the significant increase in sheep numbers following the introduction of the Ewe Premium in 1980. However, the increase in aggregate pig and poultry LU are also notable as the agricultural area devoted to these enterprises is declining, i.e. an increasing number of animals is being kept on a decreasing area (see Figure 3.10) which has repercussions on nutrient inputs per unit area. This problem of the concentration of nutrients has, to some extent, been addressed by exporting pig and poultry manure from the holdings on which the animals are housed (see case study 5.3).
The countrywide figure for aggregate livestock units per hectare AA based on the June livestock enumerations has increased from 1.08 LU/ha in 1973 to 1.63 LU/ha in 1996. It should, however, be borne in mind that the 1991 census of agriculture removed approximately 500,000 hectares from the figure for ‘agricultural area’ which explains part of the sharp increase between 1990 and 1991. There is a strong variation of livestock density on farms. According to the 1990 Teagasc National Farm Survey more than 40% of grassland areas carried less than 1 LU/ha while 5% of grassland areas carried more than 2 LU/ha (Department of Agriculture and Food, 1996).
Figure 3.11 Aggregate Livestock Units and Average Aggregate Livestock Units per Hectare Agricultural Area (AA) 1973-1996
Associated with the increase in livestock numbers the production of compound feeds increased steadily between 1988 and 1995 (Department of Agriculture and Food, 1997a). While there was a further increase in pig compound production in 1996, overall production declined as a consequence of a number of factors including weather conditions, milk super levies in 1995 and the BSE crisis (Department of Agriculture and Food, 1997b). Between 1980 and 1995, cattle feed production increased by 85%, pig feed production by 26% while poultry feed production increased by 61%. The production of 'miscellaneous' feedingstuff has increased dramatically by 167% since 1980, reflecting among other things the dramatic rise in sheep numbers (Department of Agriculture and Food, 1997a). The breakdown of the usage of compound feeds by sector in 1996 is given in Figure 3.12, clearly indicating the high nutrient inputs in the pig and poultry sectors relative to the overall number of livestock units in these sectors as shown in Figure 3.11 above. Conversely the figures highlight the grass-based production structures in the cattle and sheep sectors. Usage of compound feedingstuff for cattle represents the greatest proportion of total production, with almost half of this being used in the dairy sector (Department of Agriculture and Food, 1997b).
Figure 3.12 Compound Feed Usage by Sector in 1996
Another important indicator of the intensification of production is the amount of fertiliser used. Figure 3.13 shows the trend in artificial fertiliser consumption in Ireland between 1961 and 1995. There was a strong increase in the use of phosphate (shown as P2O5) and potassium (shown as K2O) fertilisers in the 1960s and major fluctuation in the 1970s; since 1980 the inputs have been fairly stable. The use of phosphate fertilisers during the 1980s and 1990s was, on average, 15% lower than during the 1970s, while the consumption of potassium was about 10% higher on average. The use of fertiliser nitrogen (N) began to increase sharply after Ireland's entry into the EC. It increased more than threefold between 1973 and 1995. The use of fertiliser nitrogen per hectare of agricultural area increased more than fourfold from 22.9 kg/ha in 1973 to 96.8kg/ha in 1995. However, there is strong spatial variation in the levels of use. Generally higher input levels are associated with the south and south-east, due to the concentration of tillage cropping in these regions (Lee, 1986). Higher input levels are also associated with silage production and dairying.
Figure 3.13 Fertiliser Use in Ireland 1961-1995
With regard to pesticide use there are few data available. Figure 3.14 gives an indication of the national trend between 1965 and 1994 in relation to pesticide usage. There has clearly been a substantial increase in pesticide use, particularly in the use of fungicides. The increase for 'other pesticides' (most of them growth regulators) shown in Figure 3.14 can be attributed to the increased use of these substances on cereals (Eurostat, 1996). The average amount of pesticides used in 1994 was 0.56 kg active ingredients per hectare agricultural area which was the second lowest figure in the EU after Sweden. The low level of pesticide usage in Ireland would seem to reflect the relatively small proportion of arable land and permanent crops which tend to be the areas receiving most pesticide applications. It can reasonably be assumed that there is a strong spatial variation in the levels of pesticide usage in Ireland reflecting the uneven distribution of land use types (see Figure 3.4).
Figure 3.14 Consumption of Pesticides in Ireland 1965-1994
Another indicator of intensification is the increase in yield per unit area (to which both artificial fertiliser and pesticide use levels are, to a certain extent, linked). The yield of major arable crops per unit area increased considerably between the late sixties and early eighties and kept pace with overall yield increases in the EC during that period (Lee, 1987).
The ratio of hay production to silage production is a further indicator of intensification. Grassland, including meadows, pasture and rough grazing, accounted for 90 % of the area used for agriculture in 1995. Hay and silage comprised about thirty percent of the total agricultural area. Since 1970 there has been a steady increase in silage production, accelerated by a series of wet summers in the mid-eighties. The production of silage has increased from 0.3 million tonnes in 1960 to over 20 million tonnes in 1990 (Government of Ireland, 1997). Silage making is generally associated with more intensive management than hay production. The intensity of management varies between regions, depending on the general level of intensification of production (see Mayes & Stowe, 1989).
Farm income is an important indicator of the viability of farms, as well as of the availability of disposable income for investments, e.g. in pollution control. Figure 3.15 compares the incomes of European farmers on the basis of net value-added per Annual Work Unit (AWU) for 1994/95 (CEC, 1997a). It shows that the average return per AWU on Irish farms is below the EU average and well below those in the UK, Benelux and France.
Figure 3.15 Farm net value-added per Annual Work Unit 1994/95
An examination of the figures for farm net value-added per AWU by sector indicates that the low figure for Ireland can be mainly attributed to the weak performance of drystock farms. Tillage, mixed crop and livestock farms exceeded the EU average, while dairy farms on average performed just below the EU average. No figures were available for the ‘granivores’ farm type, e.g. pig and poultry farms, in Ireland (CEC, 1997).
A pre-CAP reform study of farm incomes in Ireland (Caskie et al., 1991) showed that there was a serious low income problem in Irish farm households, which was ‘mainly associated with households on small farms and medium-sized farms, with a high drystock component, where agriculture is the main source of income’. There were considerable income disparities between regions and between farm size and farm type categories. The highest income levels were associated with dairying on farms of over forty hectares. In the 1970s and 1980s the risk of relative poverty of farm households was consistently two or three times higher than that in the self-employed non-farming sector and it was seven times that of employees.
The real agricultural income index increased steadily between 1992, i.e. the year of the CAP reform, and 1995 following a significant decline in 1991. Although present income figures remain significantly lower than those of the late 1970’s the fact that the numbers engaged in agriculture have decreased means that a higher level of per capita farm income is being achieved. The total income from self-employment in agriculture has increased by about 15% during the implementation years of the CAP reform, i.e. up to 1996 (Department of Agriculture and Food, 1997a). Since the number of holdings has decreased the average income per farm would have increased even more substantially than this. While figures for 1996 were not available there are indications that farm incomes in Ireland fell slightly in that year (Eurostat, 1997c).
A substantial proportion of the increase in total agricultural incomes can be attributed to the continued application of the 1992 CAP reform which included the introduction of new types of compensatory payments as well as the upgrading of certain types of existing aid (see Chapter 2). The contribution of direct payments to income from self-employment in agriculture in Ireland between 1980 and 1996 is shown in Figure 3.16.
Figure 3.16 Contribution of Direct Payments to Income From Self-Employment in Agriculture 1980 - 1996
The level of subsidies earned by the agricultural sector has continued to rise significantly and constituted 42% of the total incomes in 1996. These payments are important in maintaining farm incomes in the disadvantaged areas of the West, particularly on farms with mainly cattle and/or sheep enterprises (Caskie et al., 1991). Direct payments to farmers are made through a number of schemes (see Chapter 2) and these can be grouped into three main categories:
The recent CAP reform proposals as part of the AGENDA 2000 will have a major impact on farm incomes and their composition. The European Commission proposes to deepen and extend the 1992 reform through further shifts from price support to direct payments and these payments are to be set at an appropriate level while avoiding overcompensation (CEC, 1997c). It has been estimated that direct payments are going to increase from their current level to about 60% of net farm income (Varley, 1997). The Commission further proposes the introduction of an individual ceiling covering all direct income payments granted under the Common Market Organisations. Member States would be authorised to modulate direct payment per farm within certain limits and relative to employment on the farm (CEC, 1998). These differentiation criteria also refer to a potential modulation of direct payments by farm size. The EU Agricultural Commissioner pointed out that, “This issue is gaining more and more importance, not least from the point of view of social cohesion. However, a differentiation of agricultural support according to farm size is not easy to put into practice since a family running a small farm may draw a large income from off-farm activities and, on the other hand, a large farm may provide employment for a number of farm workers. In my view, Member States or regions should be allowed to introduce differentiation criteria within commonly agreed limits” (CEPS, 1997).
Some aspects of this complex problem will be addressed in Appendix II of this study, where the current distribution of direct payments relative to total household income and by farm type will be explored.
| I. | Agriculture is one of the major economic activities in rural Ireland and it plays a fundamental role in the national economy in terms of direct and downstream employment as well as in terms of its contribution to GDP and the trade balance. |
| II. | Almost two thirds of Ireland's land area is classified as being used for agricultural purposes. Agricultural structural change is strongly influenced by market and price policies, structural policies and extension or advisory services. Agricultural structural change in turn influences the type and magnitude of positive or adverse impacts on the rural environment which will be discussed in Chapter 3. |
| III. | There has been a significant decline in the number of farm holdings in the past thirty years while the average farm size has increased. The decline in the number of farms has been most pronounced in the size class of less than twenty hectares. |
| IV. | Agricultural land use is clearly dominated by grass-based production with ninety percent of the area farmed being devoted to pasture, silage, hay and rough grazing, while cereals and field crops are grown on less than ten percent of the agricultural area. |
| V. | The average economic size of Irish holdings, measured in European Size Units, increased at a faster pace than the EU average in the late 80s and early 90s and was slightly above the EU average in 1993. As is the case in all the other EU Member States Ireland has recorded a continuous decline in the volume of total agricultural labour. |
| VI. | The analysis of agricultural structural change shows that there are increasing levels concentration, specialisation and intensification of production in Irish farming. There are, however, strong regional variations and major differences between farm types. The process of concentration of production is most evident in the dairy, sheep, pig, poultry and cereal sectors. In all livestock sectors there has been a considerable amount of restructuring with unit sizes increasing. There has been a general shift from mixed farm enterprises to more specialised production. |
| VII. | There has been an increase in the aggregate number of livestock units in the country of approximately fifteen percent since Ireland's accession to the EU, which can be primarily attributed to the significant increase in sheep numbers following the introduction of the Ewe Premium in 1980. Since agricultural land has also been taken out of production, the average stocking density per hectare has increased by approximately 50 percent during this period, albeit coming from a low base. |
| VIII. | The use of fertiliser nitrogen (N) has increased more than threefold between 1973 and 1995 while the use of phosphorus (P) and potassium (K) has remained relatively stable since the late seventies. There has been a dramatic increase in the production and consumption of compound feeds which - together with the increase in overall livestock numbers and increased fertiliser inputs - has lead to a major increase in nutrient inputs per unit area. |
| IX. | Further indicators of the intensification of agricultural practices are significant increases in silage production, increasing field sizes and mechanisation, and a sharp increase in the use of pesticides. |
| X. | Farm incomes are important indicators for the viability of farms, as well as of the availability of disposable income for investments. The average return per Annual Work Unit on Irish farms was below the EU average in the mid 1990s and well below income levels in the UK, Benelux and France. The real agricultural income index increased steadily between 1992 and 1995. Although present income figures remain significantly lower than those of the late 1970s the fact that the numbers engaged in agriculture have decreased means that a higher level of per capita farm income is being achieved. The level of subsidies earned by the agricultural sector has continued to rise significantly and constituted 42% of the total incomes in 1996. |
| XI | . The recent CAP reform proposals as part of the AGENDA 2000 will have a major impact on farm incomes and their composition. The Commission proposes to deepen and extend the 1992 reform through further shifts from price support to direct payments. Direct payments may be more closely linked to environmental conditions and may also be modulated by farm size with individual ceilings covering all direct income payments granted under the Common Market Organisations (see also Chapter 9). |
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