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Sustainable family farms need off-farm income

Although the family farm is seen as the cornerstone of rural Ireland, they are often not of the size to provide the sole income source for the farm’s family. For many sources of off-farm income are a necessity. Hence the family farm's future is not just about agri-food policy, it is about rural policy.

 

The Foundation’s view is that a sustainable future for the family farm means that farm-household members need to access non-farming income. The source should be local and not require the household members to travel large distances [like the capital] to find gainful employment. This, therefore, means that any rural policy should be focused upon on-farm value-added and on-farm or local food processing as well as stimulating non-farming / food related rural enterprises. The present situation whereby farms are no more than raw material providers for distant, large-scale, processors is unacceptable as it very swiftly removes the raw materials [and the potential value-added]from the rural communities themselves. It is a part of a short-sighted agri-foods-only policy.

 

A danger that should not be over-looked is that non-farming incomes begin to subsidize the farming. It is likely that non-farming and farm-related EU payments are already doing so; although that may be a deliberate decision so as to maintain the farm within the ownership of the family.

 

With the imbalanced trading position between the farmer and the processors / retailers in the food supply chain, it is probably fair to say that the typical family farmers are already subsidizing their supply chain 'partners' from external income or by providing their capital assets free of charge.

 

Currently this situation is deteriorating as farmers have become tied into supply-chains that sell commodities into global markets. To put it simply, most of Ireland’s farms are too small to compete with their counterparts elsewhere when the full costs of production are considered. It is an issue that has been swept under the carpet as 'agri-food' focuses on ‘global market’ sales. The result is likely to lead to yet more cross-subsidization as farmers strive not to lose the family farm itself.

A processing approach - low investment and high employment

The current mantra in the Irish agri-food industry is about consolidating the processing sector in the belief that economies of scale will lower costs to the extent that Ireland can produce commodities competitively. Given the size of the average Irish family farm, one questions whether this approach will be able to provide the farm-gate prices the typical family farm needs. One also asks whether an approach that invests in highly-automated processing [as per milk driers] is actually beneficial in the context of creating rural employment that, in turn, can supplement the income needs of the family farm. Does the evaluation of agri-food investments currently fall short in terms of using a holistic approach that looks into all the needs of those living in rural Ireland?

 

In contrast, our approach at RFI is that investments in the food processing sector should be evaluated in terms of i) the returns they can provide to the family farm and, ii) the rural employment that they create. If they are also established as genuine social enterprises, these can be the overriding objectives as shareholders do not come into the equation [as all profits after investment requirement retention would be returned to the social enterprise’s member-suppliers].

 

This approach also offers up the chance to investigate the lower-technology, ‘artisan’ direction for processing. One can also argue that this is an approach that has to be used in the production of premium foods products and that it is one that premium-paying consumers would expect to see. The trade-off with lower capital investment costs [that may be more suited to on-farm processing] is the lack of automation and, consequentially, higher labour usage. This may, nevertheless, be beneficial to the local economy and, from a holistic rural aspect, a plus. It may also provide a ‘fair-trade’ marketing plus for the products. Hence, it is far from a straight-forward financial evaluation.

 

A downside of artisan production for an export dependent nation is that it does not produce large volumes of homogenized commodities. This is a rational behind consolidation. The alternative approach offered by RFI is to to consolidate the products post-processing and to use designated quality-and-origin systems to provide a consistent product suitable for consolidation and that occurs with logistics, sales and marketing. There is evidence to suggest that such a system can work and this will be investigated by Regenerative Farming Ireland [see the International page of this website]. It would be an innovative way forwards but it is one that may allow some Irish family farms and rural communities to be more directly involved in the export of premium foods products.

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