Two important agricultural conferences took place this week: the Department of Agriculture’s Food Wise 2017 and Teagasc’s annual review and outlook. Both served to highlight the opportunities and challenges facing Irish agriculture.

It was unfortunate that Brexit negotiations prevented An Taoiseach Leo Varadkar from attending the Department’s conference but, nevertheless, his commitment to the sector, as he outlined in last week’s Irish Farmers Journal, is welcome.

As Paul Mooney reports, the Teagasc conference focused on the estimated financial performance of the various sectors in 2017. The past 12 months certainly brought mixed fortunes for Irish farmers, with both the dairy and pig sectors delivering a net profit that dwarfed all others.

Fuelled by strong demand from China, the pig sector saw margin over feed increase to €0.58/kg, or 26% ahead of the five-year average of €0.46/kg. Typically, this equates to a net margin of €260 per sow.

On dairy farms, Teagasc figures show net profit to have doubled to a record level of €1,800/ha. In both sectors, the increases come on the back of what was a difficult 2016.

At the opposite end of the spectrum, suckler farms made an average loss of €10/ha, with tillage farms making a net profit of €100/ha.

Interestingly, the far less capital-intensive sheep sector is now significantly outperforming both the tillage and suckler/beef sectors with average net margin estimated to be €280/ha for 2017.

The divergence in income trends presents challenges and opportunities for the industry. At a national level, there is clearly a need to maximise the potential of our dairy sector. The abolition of quotas has given a large cohort of farmers the opportunity to improve the financial viability of their farm business, either through conversions or growing existing herds.

The opportunity to grow output after 30 years of quotas has contributed significantly to production costs per litre reducing by 21% since 2013. It is no surprise that when benchmarked on the basis of costs as a percentage of total output, the Irish dairy model is shown by Teagasc to be one of the most competitive globally. It is therefore logical that we should be creating the environment that allows for further growth in the dairy sector, provided the direction of travel remains focused on exploiting the grass-based model.

However, this freedom to grow cannot be taken for granted – that was one of the clear messages to come from the Food Wise 2017 conference. Several speakers over the course of the day warned about the need to bring all parts of society on the growth journey. The strongest warning in this regard came from European Commissioner for Agriculture Phil Hogan, who highlighted environmental challenges in the Netherlands alongside the need to ensure EU member states act in concert to manage the supply side.

Both are valid issues to raise at EU level. However, at national level, it is not the responsibility of Ireland to curb the potential of an economically sustainable production model to manage an EU market.

There is clearly work to be done from an environmental perspective to ensure that Brussels fully understands that the growth taking place in the Irish dairy industry is not being driven by intensive production models that prevail across the main dairy-producing regions of the EU.

However, that is not to downplay the importance of ensuring Irish agriculture continues to play its part in meeting environmental challenges. There is no doubt that given the income disparity, attention is focusing on the potential for the national suckler herd to limit growth in dairying. But the idea that one less suckler cow creates an opportunity for an additional dairy cow is flawed on a number of fronts – mainly on the basis that much of the land under suckling is not suitable for dairying and that fragmentation restricts conversion potential.

Instead, the argument should first focus on developing a strategy that removes beef progeny from both the dairy and suckler herds at a younger age and further promotes carbon efficient practices at farm level.

Ultimately, what the Teagasc figures show is that it is crunch time for the tillage, suckler and lowland sheep sectors. If the decision at national level is to maintain a diverse agricultural industry, then there is a need to address the income disparity. In the absence of any action, the suckler and sheep sectors will slowly dwindle. The collapse of the tillage sector will be much more rapid due to land type and exposure to the land rental market. The current trend of a 5% year-on-year decline will quickly accelerate.

The ongoing reform of the CAP and increased flexibility at member state level provides an opportunity to help address the issue. While maintaining the necessary volatility tools to support growth in dairying, more targeted CAP payments for productive farmers in the low-income sectors are clearly needed.