Mercosur protests distract from cattle farmers’ real beef —there’s no cash in cows

Mercosur protests distract from cattle farmers’ real beef —there’s no cash in cows

There have been several demonstrations protesting against the proposed EU deal with Mercosur, the South American trade bloc that comprises Argentina, Brazil, Paraguay and Uruguay. The protests have been dominated by Irish beef farmers concerned that their market position will be damaged by allowing South American beef into the EU market.

Last week 2,500 farmers took part in an anti-Mercosur protest organised by Beef Plan, an organisation established last October. It was reported that buses had been put on to bring farmers from all Irish counties up to the Dail, sponsored by their local businesses and farming co-ops.

Farmers worry that allowing access to EU markets for beef from Brazil and Argentina will damage their already fragile economic position. According to the Teagasc National FarmSurvey, annual farm incomes from cattle rearingaveraged €12,529 in 2017. There are also concerns that growth in Brazilian beef farming would mean more Amazon deforestation and damage to the wider climate. In addition it has been alleged that Irish farmers are being sold down the river by the EU to help sales of German cars into South America.

There is no doubt that the financial position of Irish beef farmers is pitiful. Not only must they manage on incomes only a third of the national average, but their earnings are less than the average EU subsidy they receive. Teagasc data shows that direct payments to beef farmers in 2017 averaged €14,242, or almost 114% of average incomes. It is more effective farming subsidies than cattle.

It’s little wonder that farmers protesting outside Leinster House were driven up courtesy of local businesses and co-ops. The latter interests —rather than the farmers —may be the most significant beneficiaries of a grant regime that directly subsidises farming activity rather than farmers. Additional links in the beef supply chain —such as vets, co-ops and beef processors and their employees —benefit from the current subsidy regime. And beef farming tends to be concentrated in rural areas lacking significant industry. Co Galway has the highest number of beef cattle in the country, followed by Mayo, Clare, Cork and Tipperary.

Nonetheless, surely there is something daft about a situation where average beef farmer incomes are less than the subsidies paid to them. Is it not wrong for the state to encourage young people into beef farming through programmes such as succession farm partnerships? Why is the state offering tax incentives to groom young people to spend the rest of their lives in an economic cul-de-sac at a time when there is an abundance of productive jobs available elsewhere?

Economic concerns about the beef sector can only be aggravated when we consider the sector’s environmental impact. Teagasc believes that agriculture accounts for about 30% of Irish greenhouse gas production. The UN Food and Agriculture Organisation reports that cattle represent more than 60% of the agriculture sector’s global emissions.

With about 45% of the Irish herd being beef —rather than the similarly methane-generating dairy —cattle, that suggests that the beef herd accounts for about 8% of national carbon emissions.That is a significant carbon footprint for a sector wholly dependent on subsidy to provide its farmers with incomes. All the more so when a winding down of beef farming could free up land for activities such as tree planting, which would help rather than hinder the attainment ofnational carbon emission targets.

To argue that we should oppose the Mercosur deal as Brazil will cut down more Amazon rainforests to create beef pastures is to argue that two wrongs make a right, saying Irish beef farmers should be allowed to contribute disproportionately to Irish emissions because otherwise Brazilian farmers might boost Brazilian emissions.There are two additional long-term threats facing the Irish beef industry. According to research published in the Archives of Internal Medicine, every extra daily serving of unprocessed red meat —steak, hamburger, pork etc —increases the risk of dying prematurely by 13%. This medical evidence, coupled with concerns about agriculture’s carbon footprint, has led to a search for a non-meat alternative that would have the flavour and nutrition of meat without the health risks or environmental side effects.

In early May, Beyond Meat, an American company focusing on this area, floated on the stock market. Its share price surged more than 150% in its first day trading on the public markets. The enterprise now has a market value of about $10bn (€8.9bn). Meanwhile Nestle’s Sweet Earth brand plans to launch its own plant-based burger this autumn. Larry Goodman’s ABP Foods has a range of meat-free burgers.

The argument that Irish beef is being sold down the river to facilitate sales of German cars to South America inadvertently gets to the nub of the argument.

As the EU commissioner Phil Hogan rightly said, trade is a two-way process. He went on to contrast the additional 99,000 tons of South American beef to be allowed into the EU at reduced duty rates “in seven or eight years’ time” with equivalent gains in other recent trade deals, such as 65,000 tons of EU beef being allowed into Japan and 40,000 tons heading towards Mexico.

The South American beef to be admitted is equivalent to less than two quarter-pounders annually for every EU resident —hardly an existential threat. Hogan also confirmed that the EU’s Food and Veterinary Office, headquartered at Grange, Co Meath, would ensure that food products imported from Mercosur met EU standards.

Ireland has had a strong beef sector for centuries. Over those years it has failed to deliver general prosperity. In recent decades we have actively pursued policies of free trade and internationalisation. These policies have delivered general prosperity. Why on earth should Ireland’s response to the Mercosur deal be determined by representatives of an industry utterly dependent on subsidies?

Is it because our farmers arebetter at politics than they are at farming?

PS:

With so much attention in Britain being focused on Brexit, the Conservative Party leadership race and an exciting summer of sport, it is understandable that there is so little focus on the UK’s trade deficit.

Britain is running a large trade deficit, contributing to an even larger current account deficit.Last year, it amounted to about 4% of GDP. This year it could well reach 5%. That would make it the largest in the developed world. This is a point of significant economic vulnerability for our neighbours as the next Brexit deadline approaches on October 31.

The UK runs a large trade deficit as it imports significantly more than it exports. This can continue only as long as the tab it owes to the rest of theworld is allowed to mount. This cannot be assured. Turkey, for instance, recently ran a large current account deficit, when domestic economic overheating was suddenly replaced by economic retrenchment. That was a big factor behind the halving of the Turkish lira over the past five years. When Britain’s current account deficit has been this large in the past, sterling has fallen sharply.

The British political establishment has long used its currency as an economic airbag to cushion the effect of economic shocks. In late 1980, in the first 18 months of Mrs Thatcher’s era as prime minister, the pound reached $2.45. Five years later it fell below $1.10. The temptation to allow sterling to fall sharply in reaction to a possible hard Brexit-induced recession will be all the greater as the UK’s other recession-fighting tools are already almost exhausted. Interest rates are too low to be cut significantly, while the exchequer has been borrowing heavily in the wake of the financial crisis and the years since.

Relative to the euro, the pound has already fallen by more than a third since 2000. In the event of a hard Brexit, I wouldn’t be surprised if it were eventually —and the process could last several years —to fall by half its 2000 level, down towards €0.85

 

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