I feel a bit hypocritical following the research I did for my Cutting Through The Bull article which focuses on the impact of our choices in clothing.
When considering its environmental impact, I had to accept that this is an area where I most definitely overconsume relative to what I need.
In June, the retailer Penneys, reopened its doors and enormous queues formed outside. An inadvertent market signal that life was returning to normal and that we should shop.
I recently recorded a podcast with Con Lucey, former chief economist of the IFA. During his 40 years with the organisation he analysed and helped form policy around each CAP reform.
The individual farmer could decide their level of production, based on the market signals
He explained how the early 2000s reform came as the EU faced Word Trade Organization pressure on direct payments which were seen as trade-distorting. So from 2005 the EU supports changed to a decoupled system.
Payments were changed to the land area farmed, rather than the number of livestock. Con said: “The individual farmer could decide their level of production, based on the market signals.”
In its simplest form, market signalling is any communication that provides information beyond the mere form of a message. An easy example is price (or subsidy etc). The same applies to consumer choices – we are led by signals. Penneys uses the price point market signal particularly well.
Last Sunday, I opened the Sunday Business Post and read the headlines.
“State to class data centres as strategic infrastructure” caught my eye. Data centres are necessary, they are the physical storage centre for everything that happens online, but EirGrid’s analysis shows that data centres could account for 27% of all energy demand in Ireland by 2029.
This seemed at odds with the page-three story about the energy price squeeze or the story related to a potential energy bill tax break for those working from home – that will not bridge the gap. Market signal: go to the office.
Newstalk presenter Dr Ciara Kelly is popular among farmers following an impassioned “save the national herd” tour de force on her radio show last week. She said that she believes in producing goods in countries most environmentally suited to those goods. By this logic, we should have cows and data centres.
These servers heat up, so it’s critical for them to be sited in a country that has consistent cool temperatures
The latter popped up in this country because they got the right political signals, but also because we have a suitable climate. These servers heat up, so it’s critical for them to be sited in a country that has consistent cool temperatures. Water is important too as they are cooled by water, millions of litres every day. Market signal: come to Ireland.
To conclude my point on market signals and bring us back to agriculture, I will reference a presentation by Teagasc economist Kevin Hanrahan on the dominance of grassland in Irish Agricultural land use. His concluding slide read: “Land use is about people reacting to societal signals (commodity prices, taxes and subsidies).
The CAP is not to blame, our demand for meat and dairy has driven our land use
Grassland dominance is not a modern phenomenon. The CAP is not to blame, our demand for meat and dairy has driven our land use. We [consumers] are to ‘blame’ – farmers have responded to us”. Farmers need new signals to respond to desired changes in production, the same as consumers need signals to respond to required changes in consumption.