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Competitiveness of Irish Farms

Analysis of the relative competitive performance of the main sectors of Irish agriculture is outlined below based on research by Thorne (2011).  The analysis is based on accountancy measures of competitive performance using Farm Accountancy Data Network (FADN) data for selected countries  for the period 2006 and 2007 (the latest available data from FADN at the time of preparation). The results outlined below are broadly consistent with the findings of previous reports on the competitive position of Irish agriculture (Thorne, 2004; and Carroll et al., 2008).  

Dairying  

Costs as a percent of dairy output on specialist dairy farms in Ireland were below the average of the selected EU countries examined for the period 2006 and 2007 (see footnote).. However, this competitive advantage deteriorated when total economic costs were considered. Total economic costs for specialist dairy farms in Ireland, including imputed costs for owned land and labour, were 10% higher than the average of the selected EU countries examined. The most significant imputed cost that contributed to the relatively high figure was the charge for owned land which has implications for the long-run competitive position of Irish milk production.

Beef Sector

Accountancy indicators for specialist beef systems, over the period 2006 and 2007, show that Irish producers did not hold a competitive advantage when cash costs or economic costs were examined as a per cent of total output. In 2006/07 total cash costs and economic costs as a percent of output were 1 percent and 40 percent higher respectively than  the average of all countries for beef rearing and finishing farm. Again, the imputed charge for owned land and labour had a large negative influence on the relative competitive advantage of Irish beef farms. Furthermore, in 2006/2007 cash costs were higher than beef  market based output.  These results not alone highlight a competitive issue but a viability issue given that cash costs were well in excess of market based output.

Cereals Sector

Irish cereal producers maintained a competitive advantage relative to the average of the other countries in the analysis. Irish cereal producers had the second lowest cash cost to total output ratio compared to the other countries examined for 2006/07. Even when total economic costs were measured Irish cereal producers maintained a competitive advantage compared to the average of all countries.

Sheep Sector

Accountancy indicators for specialist sheep farms, over the period 2006 and 2007, show that Irish producers did not hold a competitive advantage when cash costs or economic costs were examined as a per cent of total output. In 2006/07 total cash costs and economic costs as a percent of output were 1 percent and 50 percent higher respectively than the average of all countries examined.  Again the imputed charge for owned land and labour had a large negative influence on the relative competitive advantage of Irish sheep farms. In 2006/2007 cash costs were higher than sheep market based output.  As noted for the beef sector, these results not alone highlight a competition issue but a viability one.

References:
Thorne, F. (2004) The Competitiveness of Irish Agriculture 1996-2000 National Report, RERC, Teagasc publication.

Thorne, F. (2011, forthcoming) The Competitiveness of Irish Agriculture 1996-2010, National Report, Teagasc publication.

Carroll, J., Newman, C., and Thorne, F. (2008) The Relative Productivity and Competitiveness of Irish Agriculture 1996-2006 (2008), National Report, RERC, Teagasc publication.