The wide range of economic research and modelling carried out by Teagasc plays a significant role in supporting the growth of the Irish agri-food sector.
“Food and agriculture is a global business involving very complex interactions. We export 80 per cent of our food produce so what happens at a global level matters to us a lot,” says Prof Cathal O’Donoghue, head of Teagasc’s Rural Economy and Development Programme.
"We have to look beyond Ireland to things like new trade agreements such as the Transatlantic Trade and Investment Partnership (TTIP) and what their impact might be on Irish agriculture."
O’Donoghue and his team of researchers work with the Food and Agriculture Policy Research Institute (FAPRI) at the University of Missouri on this global modelling.
“We are able to run different scenarios and simulations to see what impacts new trade agreements or other events will have on the country. We work closely with the Government when it is involved in negotiations on these. Our team has been working in this area for about 20 years and this allows us to assess the impact of changes reasonably well in advance.”
Environmental matters are also of interest. “We look at things like the impact of EU environmental directives at a market level. We advise the EPA in relation to greenhouse gas emissions from agriculture and what the trends might be into the future.”
The research work is not confined to the macro level. “We also want to understand the impact of these things at farm level,” O’Donoghue says. “We have a lot of very detailed information about what happens at farm level built up over 40 years of the Teagasc National Farm Survey.”
This information was used last year during the Government’s negotiations on changes to the EU Common Agricultural Policy (CAP). “We can run experiments on computers to see what will happen at farm level if certain changes are made or aren’t made. The CAP is a very expensive programme and this work can help avoid costly mistakes by showing what might happen before any changes are implemented.”
Supports
O’Donoghue points to areas of natural constraint as an example. These are areas where, due to ground or other conditions, grass and other crops will not grow well and therefore are not very good for agriculture.
There are certain supports under CAP for farmers of such land; and the team at Teagasc are able to run computer simulations to predict what might happen to Ireland at a national economic level as well as to those farmers and their holdings were those supports to be changed.
While this information is useful for lobbying in Brussels, the expertise is also being used to assist Irish farmers in their day-to-day operations. “Lots of complex things happen at farm level and we have developed a suite of decision support tools to help farmers deal with these and manage their businesses,” O’Donoghue says.
There are three dimensions to this. “The first is a cash control planner. This is an Excel spreadsheet to help farmers manage their budgets and cashflows throughout the year. For example, in the fodder crisis in 2013 part of the problem affecting farmers was that they just didn’t have the cash to buy in the feed at that time of the year. We are trying to help them manage volatility in their businesses.”
Significant investment
The second element is a tool to help farmers analyse which aspects of their activity are profitable. “Farmers need to know what is profitable and what isn’t so they can focus on the areas which offer the best returns. Many farmers are also members of discussion groups where they meet their neighbours to share information on this.”
The third is timely as it deals with long-term decision-making. “With the milk quota regime just ended many farmers are thinking of expanding their herds or moving into dairying for the first time. This involves significant investment in new stock, new facilities like milking parlours, new equipment and new on-farm infrastructure like roads.
“Farmers need to be able to evaluate these investments to see if they will get a worthwhile return from them. We have provided them with a tool to help with this. It stress-tests the investment in the same way as a bank would and looks at the impact of changes such as increases in interest rates, falls in milk price, and so on.”
Also timely is the work Teagasc is doing on the successor programme to Harvest 2020. This is the Government strategy for food and agriculture up to 2025.
“We are also interested in the upstream and downstream impacts of agricultural outputs on the wider economy. Our work enables us to provide estimates of the number of jobs which might be created as a result of the strategy. We did this for Harvest 2020 and we will be doing the same for the new programme to assist the Government maximise the benefits from it.”
