Green Party TD Brian Leddin last week stated agriculture is such a small part of the Irish economy that its influence over policy is a case of the “tail wagging the dog.”
There is probably no accident in Leddin’s choice of words as both the president of the IFA and rural TDs such as Mattie McGrath have previously accused the Green Party of being in exactly the same position when it comes to Government policy.
Leaving the politics aside, it is worth looking at what Leddin said and whether it has much merit. The measure he used, according to reports, was that agriculture in Ireland accounts for 1% of Ireland’s Gross Domestic Product (GDP).
In the article on the right I go to some length to explain why GDP is almost completely useless when it comes to measuring Ireland’s real economy. Here I will explain why agriculture is so much more than more than just what happens inside the farm gate.
In order to get to the 1% of GDP number, agriculture has to be taken as nothing more than the sum of its primary outputs. The Central Statistics Office uses the NACE ( from the French Nomenclature statistique des Activites economiques dans la Communaute Europeenne) classification system for the breakdown of economic activity. Under NACE, the classification “Agriculture, forestry and fishing” only measures the growing of crops, raising of animals and activities which directly support those activities such as veterinary services and seed suppliers.
Processing
It does not measure the food processing industry at all.
Looking at quarterly breakdown for 2022, according to the CSO, the Agriculture, Forestry and Fishing sector of the economy contributed just over €3.5bn to the economy.
Also, in 2022, Ireland exported €18.7bn worth of agri-food – according the Department of Agriculture, Food and the Marine.
In 2022, the main dairy co-operatives in the country had a turnover of more than €8.5bn.
Obviously, the contribution of agriculture to Ireland’s economy far exceeds the €3.5bn stated by the CSO. Unfortunately, any activity beyond the farm gate falls into other sectoral classifications such as:
Manufacturing – for all food processing. Services – for any support service beyond veterinary.Retail – for all sales to farmers in support of their activities. Last year, the Irish Farmers Journal worked with KPMG to quantify the actual contribution of agriculture to Ireland’s economy as part of our annual AgriBusiness report. We found that the agri-food value chain (primary and processing) contributed approximately €21.1bn to national gross economic output in 2021. The CSO data for 2021 puts the contribution of agriculture at €3.1bn, which is approximately one-seventh of the actual contribution made according to our calculations.
There is another important point to be made here. A lot of the drive in policy from the Green party and the environmental lobby is towards lower intensity farming and, in some cases, payments to manage for nature rather than for production.
These policies will have the knock-on effect of reducing the multiplier effect from agriculture, and thereby doubly shrinking its contribution.
The example shown in Table 1 shows an almost €70,000 per year difference between what a farm managed for nature and one managed for production spends each year.
That the turnover for the more environmental farm is so much lower means a major shift to that farming method would have a devastating effect on the rural economy as so much spending would be removed.
Ireland’s agriculture sector’s contribution to the economy is far ahead of the 1% that Leddin suggested, but Green Party policy, if implemented, unquestionably could well do a lot to drive it towards that level.
Green Party TD Brian Leddin last week stated agriculture is such a small part of the Irish economy that its influence over policy is a case of the “tail wagging the dog.”
There is probably no accident in Leddin’s choice of words as both the president of the IFA and rural TDs such as Mattie McGrath have previously accused the Green Party of being in exactly the same position when it comes to Government policy.
Leaving the politics aside, it is worth looking at what Leddin said and whether it has much merit. The measure he used, according to reports, was that agriculture in Ireland accounts for 1% of Ireland’s Gross Domestic Product (GDP).
In the article on the right I go to some length to explain why GDP is almost completely useless when it comes to measuring Ireland’s real economy. Here I will explain why agriculture is so much more than more than just what happens inside the farm gate.
In order to get to the 1% of GDP number, agriculture has to be taken as nothing more than the sum of its primary outputs. The Central Statistics Office uses the NACE ( from the French Nomenclature statistique des Activites economiques dans la Communaute Europeenne) classification system for the breakdown of economic activity. Under NACE, the classification “Agriculture, forestry and fishing” only measures the growing of crops, raising of animals and activities which directly support those activities such as veterinary services and seed suppliers.
Processing
It does not measure the food processing industry at all.
Looking at quarterly breakdown for 2022, according to the CSO, the Agriculture, Forestry and Fishing sector of the economy contributed just over €3.5bn to the economy.
Also, in 2022, Ireland exported €18.7bn worth of agri-food – according the Department of Agriculture, Food and the Marine.
In 2022, the main dairy co-operatives in the country had a turnover of more than €8.5bn.
Obviously, the contribution of agriculture to Ireland’s economy far exceeds the €3.5bn stated by the CSO. Unfortunately, any activity beyond the farm gate falls into other sectoral classifications such as:
Manufacturing – for all food processing. Services – for any support service beyond veterinary.Retail – for all sales to farmers in support of their activities. Last year, the Irish Farmers Journal worked with KPMG to quantify the actual contribution of agriculture to Ireland’s economy as part of our annual AgriBusiness report. We found that the agri-food value chain (primary and processing) contributed approximately €21.1bn to national gross economic output in 2021. The CSO data for 2021 puts the contribution of agriculture at €3.1bn, which is approximately one-seventh of the actual contribution made according to our calculations.
There is another important point to be made here. A lot of the drive in policy from the Green party and the environmental lobby is towards lower intensity farming and, in some cases, payments to manage for nature rather than for production.
These policies will have the knock-on effect of reducing the multiplier effect from agriculture, and thereby doubly shrinking its contribution.
The example shown in Table 1 shows an almost €70,000 per year difference between what a farm managed for nature and one managed for production spends each year.
That the turnover for the more environmental farm is so much lower means a major shift to that farming method would have a devastating effect on the rural economy as so much spending would be removed.
Ireland’s agriculture sector’s contribution to the economy is far ahead of the 1% that Leddin suggested, but Green Party policy, if implemented, unquestionably could well do a lot to drive it towards that level.
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