Economists looking at how much business countries do with each other developed a concept called the Gravity Model of International Trade. Fundamentally, the model says that the bigger countries are and the closer they are together, the more they trade with each other. The model shows there is overwhelming evidence that trade falls with distance.

While it is generally used to examine trade between nations, the gravity model can also be kept in mind when looking at trade within countries. A farmer is more likely to sell cattle to his local processor. People are more likely to work and shop close to where they live. Service industries will set up where there are sufficiently large anchor industries to serve.

This year’s Irish Farmers Journal/KPMG Agribusiness report can be viewed through that lens. The five towns we looked at – Ballyhaunis, Cavan, Charleville, Cookstown and Enniscorthy – show the gravity model at work with agriculture as the anchor industry.

It might seem obvious to say, but farms can’t move. The land is where the land is, so all the industry that is based on farming has to position itself so it is close to the land. That’s where our towns come in.

Symbiotic relationship

They developed organically over generations serving the needs of the surrounding farms, eventually becoming part of the symbiotic relationship we see today where the farms need the towns every bit as much as the towns need the farms.

The success of this relationship may also be something of a disadvantage for the towns. Because so much of the trade that occurs happens between close neighbours – the gravity model – the effect for the wider economy across the island can be less visible.

This is where this report comes into play. The economic impact assessments for the five towns shows what a huge amount of value they add to the national economy. With national impacts running to the billions of euros and employment in the tens of thousands, any reader will be left in no doubt as to how critical this industry is. In this handful of towns alone there is industry based around farming that amounts to several Intels worth of employment and whole-number percentage of national income.

Looking beyond the numbers, there is plenty of qualitative data in the report. As part of the survey, respondents were asked what they saw as the biggest challenges facing agriculture and what policy supports they felt were key for continued success. Considering what 2022 has brought, it is no wonder that rising input costs were seen as the biggest challenge. This is closely related to the third-biggest, which is stagnant prices for farm products.

Solution

The solution to these, should the spike in inputs prove transitory, is probably a round of Government supports for the hardest-hit sectors. The survey suggests that’s what respondents think too, with calls for improved CAP payments and extra tax allowances to take account of the uneven nature of farm incomes across years.

The second biggest challenge seen by survey respondents is one which they offer little in the line of solution for. Fifty-six per cent highlighted adapting to climate change and meeting sustainability targets as the major issue facing the industry. Again, money can help here with capital grants for environmental infrastructure. There was also an emphasis put on the need for further education and training.

The climate challenge is a longer-term one for agriculture, and it is critical for the industry to meet it in a way that is sustainable for both itself and wider society. What that solution looks like is not clear and is something which will have to be worked out with all stakeholder interests in mind.

The multiplier effect from agricultural activity is what keeps the towns in the survey, and almost all of rural Ireland, economically viable. In highlighting and quantifying how large that effect is, this report will help policymakers design solutions to current and future challenges the industry faces which can take account of how much there is to protect.