Losses of €4.5bn related to emissions reductions to be compensated by CAP

A 55% reduction in emissions from the agriculture sector would result in a 40% reduction in farm output value, reducing operating surplus by almost €2bn and jobs in the agriculture industry by almost 75,000, according to Teagasc analysis in the Climate Change Advisory Council (CCAC) report.

The report estimates a worst case scenario of €4.5bn fall in output if the 55% target were implemented.

The economic analysis within the report comprehensively estimates the investment required for the green transition in the energy sector.

The economic analysis deals only with the potential income losses

However, no such estimates are provided for reducing emissions within the agriculture sector or for the sequestration activities that landowners, primarily farmers, will undertake in the the land use, land use change and forestry (LULUCF) sector.

The economic analysis deals only with the potential income losses and appears to infer that farmers will be compensated through CAP funding.

CAP funding

While the economic analysis in the report makes for stark reading, the report appears to suggest that CAP funding delivered to farmers under the Government’s CAP strategic action plan would represent climate justice, that is compensate those that suffer economic losses associated with green transition.

If this were the case, it would represent a real policy divergence vis a vis the fossil fuel sector that has received substantial EU funding under the EU Just Transition fund.

It states: “The Department of Agriculture Food and the Marine is currently preparing its strategic plan for the Common Agriculture Policy for Ireland 2023-2027. This is very relevant to achieving ambitious mitigation while respecting climate justice.

it is reasonable to ask if farmers are being treated differently to other sectors, such as energy in the current context and fisheries in the past

“In its annual review 2020, the council recommend that income support payments from the Common Agricultural Policy should better support and encourage farmers to reduce emissions and/or use their land more profitably while providing additional positive environmental outcomes.”

Faced with a likely requirement to reduce livestock numbers and operate much more extensive farming systems, it is reasonable to ask if farmers are being treated differently to other sectors, such as energy in the current context and fisheries in the past, where the need to decommission was appropriately compensated.

Economic consequences

Each of the four scenarios detailed in the CCAC report include livestock reductions and result in losses in output value, operating surplus at farm level and job losses throughout rural Ireland.

Farm output value declines by €700m at 20% emissions reductions leading to losses in operating surplus of €300m and job losses of almost 6,000 in the wider industry.

A 40% reduction in agricultural emissions results in a €2.5bn reduction in output value, leading to a €1bn reduction in agricultural operating surplus and a loss of 21,000 jobs

At 33% emissions reductions, farm output value falls by almost €2bn, resulting in a €900m cut in operating surplus and a loss of 9,500 jobs in the wider industry. A 40% reduction in agricultural emissions results in a €2.5bn reduction in output value, leading to a €1bn reduction in agricultural operating surplus and a loss of 21,000 jobs in the wider industry, according to Teagasc analysis.

The CACC report notes that the total output value shocks for the agriculture sector will differ given the presence of other agricultural activities where opportunities for diversification should be explored.

Farm families share the concerns of all other citizens with regard to climate change

The significant losses, both economic and jobs, detailed in the report will be of enormous concern to farm families and business in rural Ireland. They will have an impact on SMEs that both directly and indirectly rely on a ?buoyant farming sector.

They will weigh on those that are embarking on or imagining a future career in farming.

Farm families share the concerns of all other citizens with regard to climate change and will certainly share the costs borne throughout the economy.

Farmers will see little in this report that convinces them that the individual social and economic sacrifices they will be asked to make, some to ultimately exit farming, will be adequately valued and compensated.