Irish farming’s biggest challenge? The drive towards net zero

If uncertainty were a crop, Irish farmers would be facing into a bountiful harvest.

Not alone is the sector coping with the impact of Brexit and Covid, two “once in a lifetime” events in one, but it’s firmly in the crosshairs of a challenge that will dwarf both: climate change.

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Brexit has had, and continues to have, a huge impact on Irish farming. The UK is the largest market for Irish food and agri products. “While we have thankfully not seen an introduction of physical borders between the Republic and Northern Ireland and between the Republic and Britain as a result of Brexit, what Brexit has brought is a huge degree of uncertainty,” says Tom McEvoy, head of food and agribusiness for KPMG in Ireland.

It has left farmers with more questions than answers. What will the long-term arrangements of the Northern Ireland protocol comprise? What types of separate trade deals will the UK enter into with other non-EU countries? “This uncertainty means that, like any other business, Irish farmers have to think long and hard about future investment decisions,” he says.

Brexit has been playing out during Covid and, like all areas of society, Irish farming has been affected by lockdown restrictions and social distancing measures. Here, too, technology helped ensure that farmers continued to operate, with the majority of marts continuing to operate via the use of online marts.

If nothing else, it drove home the need to shore up broadband infrastructure deficiencies in rural locations.

But by far the largest challenge facing the sector is the impact of forthcoming sustainability regulations, as part of Ireland’s drive towards net-zero carbon emissions by 2050. How sectoral targets are allocated within this overarching ambition has the potential to make some farms unviable, according to KPMG’s research.

It recently published an economic impact assessment of a Northern Ireland Private Members’ Bill that sought to significantly reduce carbon emissions.

Its assessment found that a net-zero target by 2045 for Northern Ireland could lead to on-farm job losses of 13,000, and a reduction of £11 billion in economic output. “Predictions of an 86 percent reduction in cattle and sheep numbers are needed to hit the 2045 target in Northern Ireland, which would generally wipe out traditional grass-based family farming systems,” says McEvoy.

Given that the majority of farms on the island of Ireland are dairy and beef, it’s fair to assume a similar impact here.

High demand

This comes at a time when, from a demand perspective, the outlook for farming is bright. “Food and agri has been in significant growth phase for the last 10 years and farming plays a huge part in that,” says McEvoy.

As the global population increases, demand for food products will only grow. “People are moving towards healthier diets, which means getting closer to the raw or source product and less processing to achieve the right level of nutrition,” says McEvoy.

“As people become more focused on buying healthy, nutritious food, I believe that they will always come back to the excellent quality locally produced food that is available from Irish farms.”

Irish farm outputs, whether crops or food products, are regarded worldwide as of the highest quality. We also produce more than we consume and so have sufficient quantities to export. “Our nearest neighbour, the UK, is not self-sufficient when it comes to certain food products so the opportunity to export is quite close to home,” he says.

Technology could help the sector meet both growing demand and growing sustainability targets.

“The whole area of agtech – the use of technology in agriculture – has rapidly expanded over the last two years. There are plenty of sources of finance that want to invest and lots of new start-ups with innovative ideas trying to meet the challenges of farming, so it is really the coming together of finance and innovation to produce a better result for agricultural output,” says McEvoy.

“We have clients that are investing in using drones to map how different sections of land are responding to short-term fluctuations in weather, and this has helped target where fertiliser is actually needed and helps reduce the overall level of fertiliser usage.”

Consumer choices

Consumers have a role to play, too. “It is consumer behaviour that will ultimately drive the extent and the pace of change,” says McEvoy. “Consumers’ choices on what they buy, where and how they buy it, what it contains and how it is packaged will all be passed back from retailers to processors to the ultimate growers, which are farmers.”

Even the consumer trend here towards vegetarian and vegan diets is unlikely to affect Irish farming output unduly, given that nine out of every 10kg of milk produced here “is used to make stuff that is consumed all over the world,” says Kevin Hanrahan, head of Teagasc’s Rural Economy and Development Programme.

Countries in the developing world, as well as those with a fast-growing middle class such as China, are also displaying a “voracious” appetite for meat, he says, “so the trends at a global level are still quite positive for meat and dairy”.

Even if everyone in Ireland went vegan overnight, “it wouldn’t change things on the farm”, he says, as protein and fats for global export would continue to drive the sector here.

However, he too believes Ireland’s commitment to reducing greenhouse gasses to net zero by 2050 will force change.

Currently agriculture accounts for 35 per cent of emissions here. “So how to do that without radical change in agriculture is going to be very difficult,” he says.

Ireland’s Agri-Food Strategy 2030 is the industry’s attempt to grapple with that, but the law supersedes any strategy. How the Climate Change Advisory Council, which will set out carbon “budgets” for each sector in the coming weeks, treats farming will be key. “That is when the rubber will hit the road,” he says.