Skip to main content

Matt O'Keeffe

Putting the primary producer first

Primary producers are at the end of the queue.

They take whatever is left after everyone else has gotten their share. Commodity production lends itself to this economic model, with producers left helpless to improve their lot. Take it or leave it is the mantra of those who wield the economic power. This is commonplace across the world as farmers are pitted against each other to produce food as cheaply as possible and sell it for whatever the processors, traders, supermarkets and consumers deem is sufficient to keep them on the treadmill. It is a life-support system. Producers operate at low or non-existent margins, with basic supports provided from the public purse to keep them alive, if not kicking.
There is a revolution happening in Irish land use that we must use to improve the economic outcomes for primary producers. Energy production offers an opportunity to rebalance the profit pyramid in favour of the primary producer. The proposed Irish biomethane industry, much promoted, but not yet established at scale, offers the opportunity for a new economic model. Last month’s Government decision to provide a €40m kickstart to an Irish biodigester industry of scale is welcome. Developers in the private sector may anticipate strong financial returns from this latest energy rush but what’s in it for landowners? The digesters need feedstocks including silage and slurry. There is already a modest pricing mechanism being touted as the going rate for this raw feedstock, with mild sweeteners, including a return of digestate for use as fertiliser. The sums proposed are for farmers to decide upon in terms of whether it is worth their while to engage in the supply chain. The figures are far from generous and may or may not equate to or exceed what can be returned from other enterprises. What is clear is that biodigester feedstock producers are not currently being offered a piece of the action, a percentage or profit share of the end price for the gas produced, for instance. Neither have there been any proposals for increased cost of production price increases or consumer price indexation methodologies to build in higher prices for feedstock producers into the future. Upward-only rent reviews may be out of fashion in house and office rentals but would be a valuable option for contracted feedstock supplies to a biodigester industry.
For this new outlet for our produce, we should not accept traditional commodity production payment models that have ill served farmers in the past. The erosion in value of Common Agricultural Policy (CAP) payments over the decades has left farmers with a fraction of the original supports for food production. Neither inflation nor increased production costs were accounted for in CAP payments. This was not an inadvertent omission by those who control the purse strings. It was a deliberate policy to gradually, by inflationary stealth, reduce the real cost of food production subsidisation, knowing the willingness of producers to run ever faster to stand still. Those who fell off the treadmill, and thousands of Irish farmers have done so over the decades, have had their land subsumed into larger-scale units as producers continue the chase for greater efficiencies, delivering at best, static or falling incomes on a per-unit-of-production and per-hectare basis. The reality is too obvious to ignore. Unless we demand a new payment model for supplying feedstocks to an emerging biogas industry, farmers will continue to take whatever is left after everyone else gets their share. Biomethane production offers an opportunity to change the profitability model in favour of the primary producer.