Quantifying the viability of farming in Ireland: can decoupling address the regional imbalances?

Abstract

Irish agriculture has undergone fundamental transformations in the last two decades. A growing divergence between farming and non-farming incomes and a significant increase in part-time farming have led to intense debates surrounding the future viability of the Irish farmer. Irrespective of such deliberations, agriculture still remains an important employer and contributor to the regional economies of Ireland, a factor that is discussed in this paper. An analysis of the financial performance of farms shows that the regions that rely most on agriculture as an employer have the most economically and physically disadvantaged farms. The paper examines the role of agricultural policy in addressing this regional imbalance. In particular, the recent decoupling policy is examined. The results of economic models suggest that the decoupling reform increases the viability of farming in Ireland across all regions. However, the decision to implement the historical decoupled payment scheme has served to perpetuate the economic disadvantages of farming in the western half of the country.