The regulatory ‘chickens’ are coming home to roost

The general reporting of the announcement seemed to dwell disproportionately on the poor weather as a likely cause for the slide in production volumes cited as the most obvious cause for the ‘restructuring’. That this was an element can’t be doubted; the idea that it is the decisive element is, bluntly, ridiculous. There’s a much more valid explanation for the collapse in milk production that will likely see volumes back by approximately 10 per cent by year’s end. I believe the explanation is that after two years of low prices, high inputs, uncertainty about the future, and relentless regulatory pressure that farmer morale has effectively collapsed. The irresistible pressure being exerted by the Government and the EU to ‘shrink’ our dairy sector has now resulted in undermining the confidence in our sector and this generation of dairy farmers – and, more importantly, the next generation of dairy farmers – are now voting with their feet and ‘getting out’.

Between a rock

The politicians who we might have reasonably expected to comment on this reverse have been deafeningly silent. We might wonder why, but then realise that we’re between elections – those on June 7 and the general election most observers now feel is ‘nailed on’ for the end of October. Nobody will want to draw attention to their Government’s abject failure in the very sector in which Ireland has – or had – a world-leading reputation for excellence, sustainability, and research. So, we can’t expect too many to note the current collapse in investment, income and volumes in the dairy sector that the very same politicians would have agreed until recently was the jewel in Ireland’s farming crown.  

Even more noticeable was the lack of comment from the media’s always available horde of ‘activists’ from the environmental NGOs; they must have struggled to resist hitting that note of triumph. These collapsing figures are what they have been seeking for the better part of the decade. They seem to have won their battle against us – for now, anyway. But they are going to come up very short against a problem that they won’t have anticipated and that they don’t seem to much care about.

Negative multiplier effect

As the revenues from milk start falling away, the rural economies that flourished on the basis of the ‘milk multiplier’ effect will now experience that same multiplier effect but in negative. That reality is already apparent – the Tirlán announcement is just the beginning. And, as farmers’ income streams stops flowing out the gate into the wider community, consternation is going to replace complacency in those politicians who presided over the implementation of policies that did no favours for the dairy sector. As the order books for rural companies and contractors empty and as the phones don’t ring with new business, the full extent of the economic impetus provided by dairy farming will become quickly apparent. The ICMSA has been stressing it for years and has produced the figures and data to support our argument that this ‘milk multiplier’ is actually the economic engine for huge areas of the State, most specifically huge areas of Munster and south Leinster. We pointed out that this exact mixture of low prices, high inputs, and increasing regulatory pressures would undermine that tradition and economic force, but we were ignored or simply fobbed off. We might be about to see our warnings and expressions of alarm vindicated and proved right. It gives us no satisfaction to see it (and it mixes a metaphor where the dairy sector is concerned) but perhaps the regulatory chickens are coming home to roost?   

Knock-on impact

The ICMSA has repeatedly described as delusional the idea that the Irish dairy sector could, in some way, be ‘shrunk’ without massive consequential ‘knock-on’ damage to the wider economy in those areas where the production and processing of milk is almost the flagship economic activity. We insisted, time and again, that dairy farming is not just an aspect of the rural economy, but – right across swathes of the country – is almost the total of that rural economy. We warned repeatedly that the quite deliberate efforts of some so-called environmental commentators or ‘activists’ to make an artificial distinction between farming and ‘a rural economy’ were both false and misleading. We are about to be proved right, yet again.

The 150 redundancies that Tirlán are seeking may be just the beginning of a wider sector restructuring; we are in danger of entering a period of decline of the sector that more than any other provided prosperity and economic prospects to rural areas all across the State. The tragedy – and in time it will be judged as exactly that – is that it was perfectly possible to move smoothly towards our environmental targets while preserving our world-leading dairy sector and the rural economic bulwark it represents. We have, on numerous occasions, outlined how that can be achieved and why it is so necessary.

Instead, the Government and the EU have decided on a crude policy which has resulted in regulating dairy farmers out of existence at the prompting of a chorus of self-appointed and self-important commentators. There’s no point in the Government denying that this has not been the policy; the evidence is all around us in the crashing farm incomes, the plunging volumes of production and emptying order books. Those are now joined by the first announcement of voluntary redundancies. And that’s the irony here, because all this damage was itself ‘voluntary’; our Government decided to do it when there were other less destructive alternatives available.