• An Econometric Model of Irish Beef Exports

      Hanrahan, Kevin (Teagasc, 2001-01-01)
      This report summarizes research that the author undertook as part of his doctoral studies in the Department of Agricultural Economics at the University of Missouri- Columbia.† The policy environment within which the Irish beef sector operates is changing such that the demand for Irish beef will increasingly be of a market rather than a policy determined nature. This changing environment makes knowledge concerning the demand for Irish beef important to understanding the economic prospects of the sector. The objectives of this research were thus two fold. The first objective was to investigate the demand for Irish beef in the UK. The second objective relates to how such consumer demand models are econometrically estimated. The empirical results show that the demand for beef in general in the UK is not price elastic and that the demand for Irish beef in the UK is price inelastic. The expenditure elasticity of demand for beef in the UK is also inelastic. The implications of this result for the Irish beef industry are as follows Decreases in the price of beef in the UK will not lead to large increases in British demand for beef. Increases in expenditure on meats will see expenditure on beef increase but to a lesser extent than other meats. Increases in the price of Irish beef relative to the prices of other beef products on the UK market will not lead to a large decrease in the market share of Irish beef. The relative insensitivity of demand for Irish beef in the UK to changes in its relative price also implies that attempts to increase the Irish share of the UK beef market will require very large reductions in the price of Irish beef. Given the current dependence of the Irish beef industry on subsidized exports to non-EU markets, the results of this research imply that attempts to re-orientate the Irish industry more towards servicing EU beef markets will require either large price decreases, with the consequent impacts on the market based revenue of the Irish beef industry and farmers, or alternatively, a movement towards the production of beef products that appeal to the non-price concerns of EU consumers and away from the production of a commodity product.
    • Econometric modelling of the EU agri-food sector through co-operation with partners in the EU-AG-MEMOD Project

      Donnellan, Trevor; Hanrahan, Kevin; Riordan, Brendan (Teagasc, 2005-04-01)
      This research project set out to build an EU agricultural policy modelling system involving participants from right across the enlarged EU. Policy Analysis is conducted at an aggregate commodity level for the main sectors of EU agriculture. The work summarised here took place over the period 2001 to 2004. The implementation of the Luxembourg Agreement and the Enlargement of the EU will lead to significant changes to the way in which agriculture operates in the EU25. Under the reform, direct payments that have been linked to production are to be decoupled to varying degrees across the Union. Enlargement will mean that agriculture in several New Member States (NMS) will come under the EU system of payments, supply constraints and market price supports for the first time. In light of the above, the most common current approach to agriculture commodity modelling and policy analysis - that which treats the entire EU as a single entity - faces a considerable challenge. Given the heterogeneity of EU agriculture and agricultural policy across the enlarged EU, it is increasingly the case that ‘the devil is in the detail’. From a scientific perspective, country level policy analysis is important in order to capture the consequences of this heterogeneity. Moreover, at a political level, policy makers realise that policy proposals either sink or swim on the basis of the perception of their expected future impact at a national level. Hence, it is important to be able to inform and facilitate a debate on the relative merits of particular reform proposals by having national (or even sub-national) level analysis to hand. The case for national level modelling across the EU is easily made, but few practitioners have taken up the challenge it presents.i Key problems include funding constraints, the absence of reliable national data sources, difficulties in agreeing and co-ordinating a consistent modelling approach and, perhaps most importantly, the absence of an integrated network of economists with knowledge of local level agriculture and agricultural policy across the enlarged EU.
    • Economic Analysis of Policy Changes in the Beef and Sheep Sectors.

      Binfield, Julian; Hanrahan, Kevin; Henchion, Maeve (Teagasc, 2001-06-01)
      The work reported in this document commenced in 1997 under the auspices of the FAPRI-Ireland Partnership. It documents the development of aggregate commodity level models for the beef and sheep sectors, and their subsequent simulation under different policy and macroeconomic environments. Companion reports document the development of similar models for other commodities, and of farm level models.
    • Economic Analysis of Policy Changes in the Dairy Sector

      Donnellan, Trevor; Fingelton, William (Teagasc, 2001-04-01)
      This study examines the effect of changes in agricultural policy and other important economic factors on the outlook for milk production in Ireland in future years. The analysis is conducted at an aggregate milk and dairy commodity level. A companion report provides similar detail on related farm level work. Following an initial period of development, the analysis summarised here took place over a period of three years. The potential effect of the European Commission’s proposed changes to the Common Agricultural Policy (CAP) under Agenda 2000 are examined, as is the eventual Agenda 2000 Agreement produced in Berlin in March of 1999. The implications for the dairy sector of differing future euro/dollar exchange rate paths are also analysed. A series of interlinked economic models capable of projecting key price and output variables were built for the main Irish agricultural commodities, including the dairy sector, and these in turn were linked with models for the EU and the World. It was thus possible to estimate the implications for the Irish dairy sector of supply, demand and policy changes at a world and EU level. It was found that the reform of the CAP in the dairy sector would lead to a reduction in the Irish milk price of 11 per cent relative to the outcome if the reforms were not introduced. However, increases in quota and the availability of compensation following from the Berlin Agreement should offset much of this decline. The effect of the future exchange rate between the euro and the US dollar was of significant importance. Other things being equal, a weaker euro made EU dairy exports more competitive outside of the EU, resulted in less pressure on the CAP budget and ultimately would produce more favourable milk prices than would be the case under a stronger euro. The analysis shows that a difference of 20 per cent in the euro/dollar exchange rate would result in a 7 per cent difference in milk price.
    • Economic aspects of the production and marketing of hardy nursery stock

      Maher, M.J.; Roe, G.; Twohig, D.; Kelly, P.W. (Teagasc, 1999-01-01)
      A census of the Nursery Stock industry, carried out in autumn 1997, valued the sales of plants produced by the industry in 1996 at £18.8m. In the period since a previous census in 1994 field production of nursery stock expanded by 17% while the production of container plants shifted towards the greater use of protected cultivation. Employment in the industry rose by 28% to 912 full time equivalent jobs. Kildare was predominant in the production of containerised plants while Tipperary was the most important county for field production. Together, these two counties produced nearly half the value of the industry. Together with Cork, Dublin, Kilkenny and Wicklow they accounted for three quarters of the value of the industry. The industry was concentrated in that the largest 10% of the nurseries produced 59% of the value of the industry. As nursery size increased, the value of sales output per person rose sharply. Larger nurseries were also more productive per unit area. Exports were valued at £3.45m and imports at £2.22m. The main lines exported were ornamental shrubs followed by liners and deciduous trees. Two thirds of the exports were destined for Great Britain with the remainder going to Northern Ireland. Exporting was even more concentrated than production with the largest 10% of the nurseries providing 83% of the exports. The main imports were deciduous trees and liners. Two thirds of the imports originated from the continent and the remainder were from Great Britain. Small nurseries reported that capital and profitability were the principal factors limiting expansion of their nurseries. Larger nurseries however placed the availability of suitable staff as the main limiting factor. The most common difficulty reported by exporters was the cost of transport and a number of problems relating to the difficulties that individual nurseries or small groups have in supplying a large, discerning and relatively distant market. This underlined the need for increased co-ordination and co-operation in the future.
    • Economic Impact on Irish Dairy Farms of Strategies To Reduce Nitrogen Applications

      Lally, Breda; Riordan, Brendan (Teagasc, 2001-11-01)
      Economic research reported here analysed the likely impact on farm incomes of policies aimed at reducing nitrogen (N) applications on farms. Three types of policy were considered. First was a restriction of the intensity of livestock production to control amounts of organic nitrogenous material going on the land. That in the EU Nitrates Directive of 170 kg N per hectare was used (equivalent to 2 dairy cows per hectare). To this was added a restriction on the total amount of nitrogen applied of 260kg N/ha reflecting rules in the Rural Environment Protection Scheme (REPS). The third measure considered was a 10 percent tax on sales of manufactured nitrogenous fertilisers. These measures to address nitrate pollution are under discussion in Ireland as the concentration of nitrates in waters in some areas has increased significantly. Particular attention was paid to estimating the impact of the three constraints on specialist dairy farms, as they were most likely to have to restrict applications of N to comply. Many of these farms were in the five Munster counties selected for the study, namely Cork, Kerry, Limerick, Tipperary and Waterford. In these counties 39 percent of specialist dairy farms would have been affected both by Nitrates Directive restrictions on applications of nitrogen as organic material (animal wastes) and REPS rules on the total amount of nitrogenous material spread on farm land. A further 30 percent of these farms would be affected only by the restriction on total applications of N, as in the REPS rules. The remaining 31 percent of the specialist dairy farms would not have been affected by restrictions on N use under either the Nitrates Directive or REPS rules. The potential economic impact of policies to constrain nitrogen use was simulated for a sample of specialist dairy farms in Munster. All of these farms started with levels of N applications in excess of one or both of the restrictions being considered. This policy simulation was carried out using individual farm Positive Mathematical Programming (PMP) models. The results showed that compliance with restrictions on N use would reduce income on all of the selected farms. The results also indicate that these farms could partly or wholly offset the loss by increasing the efficiency of N use, or by increasing milk production per cow. However, the more a farm was above the regulation 2 Livestock Units (dairy cows) per hectare the larger the potential loss of income and the more difficult it would be to make good this loss. Farms starting with fewer than 2 LU/ha but applying in total more than 260 kgN/ha (REPS rule) would find that meeting this target would cause a lesser reduction in income. This loss would also be easier to offset by efficiency increasing measures. With regard to the third scenario of imposing a 10% tax on sales of manufactured N fertilizers, the results showed this to be very ineffective in reducing the amounts used. In some cases the imposition of a tax would have no effect whatsoever on the amount of N used yet would slightly reduce incomes on all of the nation's farms
    • Economic Performance in Irish Sheep Production

      Connolly, Liam (Teagasc, 2000-04-01)
      The objectives of this project were to identify and quantify the factors affecting the profitability of the main systems of sheep production; to identify the factors responsible for the wide variation in output between sheep farms and to assess the impact of EU policy measures on Irish sheep production.
    • Economic Projections for the Dairy and Pig Sectors

      Donnellan, Trevor (Teagasc, 2002-12-01)
      This study examines the effect of changes in agricultural policy and other important economic factors on the outlook for milk and pig production in Ireland in future years. The analysis is conducted at an aggregate commodity level for the dairy and pig sectors. Companion reports provides similar detail on other agriculture sectors (including beef, sheep and cereals) and for the outlook at farm level. The analysis summarised here took place in 2001 and 2002. The potential effect of a change in international trade policy under the World Trade Organisation (WTO) agreement is examined. Specifically, the analysis assumed two different possibilities for the reduction and the elimination of export subsidies. Subsequently, the impact of a change in the EU’s extensification regime is examined. A series of interlinked economic models capable of projecting key price and output variables were built for the main Irish agricultural commodities, including the dairy and pig sectors, and these in turn were linked with models for the EU and the World. It was thus possible to estimate the implications for the Irish dairy sector of supply, demand and policy changes at a world and EU level. The Baseline analysis showed that under a continuation of current policy that by 2010, the Irish milk price is projected to decline to just over 25 euro per 100 kg. It was found that relative to the Baseline outcome for 2010: • a reduction in EU export subsidies in the dairy sector equivalent in scale to those introduced in the Uruguay Round Agreement would lead to a reduction in the Irish milk price of seven per cent by 2010 • an elimination of EU export subsidies in the dairy sector would lead to a reduction in the Irish milk price of 20 per cent by 2010 The Baseline analysis showed that, under a continuation of current policy, by 2010 the Irish pig sector value was projected to decrease by four per cent relative to its 2000 level. It was found that relative to the Baseline outcome for 2010: • a reduction in EU export subsidies in the agriculture sector equivalent in scale to those introduced in the Uruguay Round Agreement would lead to a reduction in Irish pig sector output value of less than two per cent • an elimination of EU export subsidies in the agriculture sector would lead to a reduction in Irish pig sector output value of eight per cent The implications of a reform of the extensification regime were not substantial. It was found that they fell for the most part on the beef and sheep sectors. The effect on milk and pig production was negligible.
    • Economics of Cattle Production Systems Post CAP Reform.

      Dunne, William; O'Neill, Ronan G.; McEvoy, Oliver (Teagasc, 2001-01-01)
      The radical reform of the Common Agricultural Policy (CAP) in the early 1990’s impacted directly and indirectly on most of the farm enterprises in Ireland. The direct focus of the reform was largely confined to the cereal and beef enterprises. The reforms consisted of: • A phased reduction in the institutional support prices for cereals and beef of the order of 30 per cent • A phased switch to a direct payment system of farm income support to compensate for the product price reductions. Most farms in Ireland have a cattle enterprise, either alone or in combination with other land using enterprises. Therefore, the reforms of the CAP affected almost all the farms in the country either directly or indirectly. For cattle farmers, the potential consequencee of these changes could be far reaching in terms of their magnitude and their permeation into the details of the husbandry practices of the production system(s) themselves. These changes clearly impact on the economic efficiency of beef systems without necessarily affecting technical efficiency of the systems. The economic optimum cattle production systems would thus be achieved by using the best mix of feed resource costs, carcass values and direct payments. The purpose of the study was to: • determine the economic impact on the cattle enterprise of the switch to: • lower EU prices for beef • lower EU prices for cereals and as a consequence a lower price for concentrate feeds • the direct payment system of income support • identify the economic optimum cattle production system(s) that would arise from these changes • quantify the sensitivity of the economic optimum system to key policy, economic and technical production variables.
    • Estimation and projection of costs and margins in crop enterprises in the Republic of Ireland

      Thorne, Fiona (Teagasc, 01/01/2007)
      This project reports on the farm level crop economics research conducted in the Rural Economy Research Centre (RERC), Teagasc during the period 2003-2006. The research conducted made current estimates and one year ahead forecasts for margins in each of the major crop enterprises in the Republic of Ireland. The enterprise specific information was based on information from the Teagasc National Farm Survey (NFS), supplemented by projections of price, cost and policy information from a variety of other sources. Yield projections were based on past trends and incorporate estimates of expected variability. In addition, the distribution of profitability amongst the population of crop farms has been examined to gain further insights into the farm level situation and outlook for tillage farms based on the results from the NFS data.
    • The Estimation of Policy Impacts on Farms.

      Hennessy, Thia (Teagasc, 2001-06-01)
      The purpose of this project is to examine the impact of the Berlin agreement on EU agricultural policy reform at farm level and to estimate how farmers are likely to respond to new policy changes. Eight Representative farms in the cattle and dairy sectors are developed in order to analyse the different sectors of the farming community. Linear programming models are constructed to estimate how these farmers are likely to respond to the changing policy. Estimates of farm income are also produced. The impact of Agenda 2000 on these representative farms was analysed. The key findings showed that all farms will be subjected to a price-cost squeeze over the next ten years. By responding to policy changes farmers will be able to maintain farm net margins and in some cases increase them modestly. The key to success for dairy farmers is expansion of milk quota. Purchasing of currently leased quota and additional quota, where possible, allows larger dairy farms to maintain profits. However, smaller dairy farms, 20,000 gallons of quota or less, are pushed and pulled out of farming. Rising production costs, static milk prices and unaffordable quota push them out, while attractive sale prices for quota and potentially high off farm incomes pull them out of dairy farming. In relation to cattle farming, results show that the key to success is the maximisation of direct payments. Small and part-time farms will find extensification schemes increasingly more profitable over the coming years. While larger farms can expand operations following the changes in premia limits set out in Agenda 2000. Off farm employment will continue to be a major issue for cattle farmers to consider. It is projected however, that margins can be maintained at a sufficiently high level on large cattle farms to keep them in business.
    • European Network of Agr & Rural Policy Research (Enarpri)

      Donnellan, Trevor; Hanrahan, Kevin (Teagasc, 31/12/2006)
      The economic impact of trade policy reform receives less attention than the impact of trade policy on the environment. In part this may be due to the secondary importance attributed to environmental issues when economic consequences take centre stage. However, another consideration may be the difficulties of bringing together models which examine the economic impact of trade policy reform and models which can provide measures of environmental indicators. This study combines a partial equilibrium economic commodity model with a model for the estimation of agricultural input usage and GHG emissions. The paper examines one aspect of the relationship between trade policy and the environment, namely that between agricultural trade policy reform and indicators relating to emissions of Greenhouse Gases (GHG) from agriculture. The paper examines the impact of agricultural production levels and production practices on the level of GHG emissions from agriculture in Ireland under a Baseline of the recent reform of EU agricultural policy and an alternate scenario where trade policy reforms resulting from a future World Trade Organisation Doha Development Round agreement to reveal the extent to which there are significant environmental impacts which should be considered in addition to the conventional economic considerations.
    • Evaluation of supply control options for beef

      Dunne, William; O'Connell, John J.; Shanahan, Ultan; Drennan, Michael J; Keane, Michael G. (Teagasc, 01/07/2009)
      The incomes of Irish cattle farmers benefited greatly from the reform of the CAP for beef and cereals in 1992 and more recently under Agenda 2000. In both of these reforms the institutional support prices were reduced and direct payments (DPs) were used to compensate farmers for the price reductions
    • An Examination of the contribution of off-farm income to the viability and sustainability of farm households and the productivity of farm businesses

      Behan, Jasmina; Carroll, James; Hennessy, Thia; Keeney, Mary; Newman, Carol; O'Brien, Mark; Thorne, Fiona; Department of Agriculture, Food and the Marine, Ireland (Teagasc, 01/01/2007)
      The number of farm households in Ireland participating in the off-farm labour market has increased significantly in the last decade. According to the National Farm Survey (NFS), the number of farm households where the spouse and/or operator is working off-farm has increased from 37 per cent in 1995 to 58 per cent in 2007. The important contribution of non-farm income to viability of farm households is highlighted in the results of the Agri-Vision 2015 report, which concluded that the number of economically viable farm businesses is in decline and that a significant proportion of farm households are sustainable only because of the presence of off-farm income. Research conducted by Hennessy (2004) demonstrated that approximately 40 percent of farm households have an off-farm income and that almost 30 percent of the farming population are only sustainable because of off-farm income. Clearly, the future viability and sustainability of a large number of farm households depends on the ability of farmers and their spouses’ to secure and retain gainful off-farm employment. The Department of Agriculture, Fisheries and Food (DAFF) have recognised the importance of off-farm income to the sector and they have recommended that future policies focus on farm household viability in all its dimensions, including farm and off-farm income sources (2000).
    • An Examination of the Implications of Milk Quota Reform on the Viability and Productivity of Dairy Farming in Ireland

      Hennessy, Thia; Shrestha, Shailesh; Shalloo, Laurence; Wallace, Michael; Butler, Anne Marie; Smyth, Paul (Teagasc, 31/12/2008)
      The aim of the project was to produce quality, scientific based policy advice on the most efficient means for the transfer of milk quota between dairy farmers. The main objective of the project was to identify milk quota transfer mechanisms that would ensure the viability of the maximum number of farmers in Ireland while still supporting an internationally competitive agricultural sector. During the course of the project the Irish Department of Agriculture introduced a new milk quota transfer scheme. The milk quota exchange scheme was launched in November 2006. At this stage the objectives of the project were altered to be more policy relevant. Rather than exploring the efficiency of various milk quota transfer models, the aim of the project was redirected to explore the efficiency of the scheme as it was operated in Ireland. The rationale for this change was to provide relevant and timely feedback to policy makers on the operation of the new scheme. While the MTR agreement guaranteed the continuation of the EU milk quota regime until 2014/15, it also made provisions for a review of the milk quota system to be conducted in 2008. Clearly any changes to EU milk quota policy would have implications for farmers in Ireland. A second objective of this project was to explore some policy scenarios that may transpire from the milk quota review and to estimate the implications for farmers in Ireland.
    • An Examination of the Productivity of Irish Agriculture in a Decoupled Policy Environment

      Carroll, James; Thorne, Fiona; Newman, Carol (Teagasc, 01/09/2008)
      The Single Farm Payment (SFP) scheme came into effect in the EU from the first of January 2005. This scheme replaced the many ‘coupled’ livestock and arable aid schemes available to farmers and was heralded as a significant move towards decoupling. This thesis explores the initial effects of this policy on total factor productivity (TFP) and its components (technical efficiency change, technical change, and scale efficiency change) in the main farming sectors in Ireland.
    • Examining the Relative Competitiveness of Irish Agriculture (1996 – 2003/4)

      Thorne, Fiona (Teagasc, 2007-01-01)
      This paper examines the competitiveness of Irish agriculture compared to that of other EU and non-EU countries. The analysis was based on two main data sources – the Farm Accountancy Data Network (FADN) for years 1996-2003 and the International Farm Comparisons Network (IFCN) for 2003 for beef production and for 2004 for milk production. Results showed that the Irish competitive position compared to other EU and non-EU countries was positive when total cash costs were considered indicating a positive outlook for Irish milk production in the short to medium term. However, as the opportunity costs of owned resources are not included in ‘cash cost’ calculations, total economic costs which include imputed charges for owned resources were considered to examine the longer term outlook for the competitiveness of the sector. Using this measure, the competitive ranking for Irish agriculture slipped relative to the other countries. It was found that the main reason for the relatively high economic costs on Irish farms was due to the high imputed land and labour costs. These findings could be considered as a warning signal for the future competitive performance for the average sized Irish farm. However, based on FADN data the competitive position of ‘larger’ Irish dairy farms (in the 50-99 dairy cow size category) did manage to maintain their competitive position within Europe even when total economic costs were considered. Hence, it could be concluded that part of the explanation of the deterioration of competitive ranking for the average Irish dairy farm when total economic costs are considered relates to the relatively low scale of primary agricultural activity in Ireland during this period.
    • Factors Shaping Expenditure on Food-Away-from-Home in Irish and UK Households

      Keelan, Conor; Henchion, Maeve; Newman, Carol; Downey, Gerard; Teagasc Walsh Fellowship Programme (Teagasc, 01/10/2009)
      Factors influencing consumer spending in two sectors of the food-away-from-home (FAFH) market (quick-service e.g. takeaways, and full-service e.g. restaurants) were analysed using national household expenditure survey data. Different variables affect expenditure in the two sectors in different ways. Income has a greater effect on expenditure in the full-service sector than in the quick-service sector. Similarly households that are health-conscious indicate a greater preference for full-service meals while households which place more value on time (and therefore are more convenience-oriented) indicate a greater preference for quick-service. Households of a higher social class and those with higher education levels also appear to favour full-service expenditure. In addition, younger, urbanised households favour quickservice meal options. The results emphasise the merits of analysing different sectors within the FAFH market separately.
    • Factors shaping expenditure on meat and prepared meals

      Newman, Carol; Henchion, Maeve; Matthews, Alan (Teagasc, 2002-02)
      The factors shaping Irish households' expenditure decisions on meat and prepared meals are analysed using the two most recent datasets of the Irish Household Budget Survey (1987/8 and 1994/5). The motivation for the research stems from the changing pattern of food consumption, leading to a decline in the importance of price and income factors, and a simultaneous increase in the significance of socio-demographic factors, assumed to underpin consumers' tastes and preferences. Irish households' expenditure patterns on all meat, specific meat categories and prepared meals are analysed using tobit, double-hurdle and infrequency of purchase models.
    • Farm Facilities On Small - Medium Type Dairy Farms.

      Gleeson, David E (Teagasc, 2000-11-01)
      82 % of farms with milk quota < 54,552 litres have bucket/pipeline milking plants. • There were a high percentage of milking machine faults on the farms surveyed. • Fragmented land portions are more likely to limit dairy expansion than farm size. • 60% of farms had beef buildings suitable for conversion to dairy housing • 88 % of farms had adequate cubicle spaces for present cow numbers • The cost of purchasing milk quota was considered to be the biggest factor restricting expansion. • 67 % of farms with quota > 54,552 litres are joined REPS. • 51 % of farms had dairies registered under dairy hygiene regulations. • Milk bulk tank size would limit dairy expansion without investment in larger static tanks. • The number of cows to fill milk quota is better matched in the higher quota category. • The length of the working day was 12.7 hrs/day for an average herd size of 23 cows. • Estimated cost of extra facilities per farm to allow for scaling up in milk production from 90,920-181,840 litres is £33,760