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The grey functionaries of KPMG have, in collaboration with Ireland’s largest farming newspaper The Irish Farmers Journal, released a report predicting a devastating €3 billion loss and a 29,000 job cost from implementing the latest round of EU Common Agricultural Policy changes. These changes include a 25% emissions reduction target and the potential loss of the nitrates derogation. The Nitrates Derogation allows farmers to exceed the EU-set limit of 170 kg of livestock manure nitrogen per hectare, permitting up to a maximum of 220 kg or 250 kg per hectare under stricter rules. This allowance is vital for keeping livestock numbers up and maintaining the profitability of Irish farming, especially for dairy and beef farmers who rely on higher stocking rates to remain competitive in a challenging global market. Without this derogation, the entire economic viability of many farms could be at risk.
Farmers are not only burdened by this potential loss but also by an increasingly unpopular and onerous compliance system designed to monitor cattle numbers. In addition to standard inspections, new technologies such as satellite photography are being deployed to ensure that farms are adhering to the stringent nitrogen limits. These inspections, while ensuring compliance with environmental regulations, have created a sense of constant surveillance that many in the farming community find oppressive. Furthermore, these measures come at a time when farmers are already grappling with rising input costs, including feed, fertilizer, and fuel, making it harder to sustain the same level of profitability.
KPMG’s report detailed how these changes would not only impact farms directly but would also ripple through the entire agricultural supply chain. The €3 billion loss they forecasted is split between farm production and the processing sectors. The production losses would account for nearly half of this figure, with the rest stemming from reduced throughput in the processing and production sector. Speaking on South East Radio, Phelim O’Neill, EU Correspondent for the Farmers Journal, elaborated on the far-reaching implications: “When you combine all of these together and the individual building blocks, for example, if we lose our nitrates derogation, that affects over 9,500 Irish dairy farmers. It affects the beef finishers who would supply up to a quarter of the cattle to the factories. The loss of production there essentially means that we will have fewer jobs in meat processing.” This cascading effect on both the supply of cattle and the jobs in the meat processing sector highlights the interconnectedness of the farming and food industries in Ireland.
Farm organisations have been quick to respond to the report, pointing out that these job losses would hit rural areas and small towns the hardest. Christine Power O’Neill of the young farmers’ group Macra Na Feirme voiced her concerns, stating, “These food processing jobs will not be replaced in rural parishes and small rural towns; it just means more people leaving rural Ireland. It’s poor economics and bad development.” Her comments underscore the broader social impact of these changes, not just on farming itself but on the entire rural economy. Rural Ireland has long been struggling with issues like depopulation, infrastructure deficits, and a lack of economic opportunities outside of agriculture. The job losses predicted by the KPMG report could exacerbate these trends, leading to further migration from rural to urban areas or even abroad, particularly among young people seeking better job prospects.
Ireland’s unique position in economic statistics further complicates this issue. The presence of a significant multinational sector distorts the country’s GDP figures to the point where they no longer reflect the true economic conditions experienced by most of the population. This has led some commentators to describe Ireland’s GDP as a figure rooted in “magical realism,” offering an inflated sense of economic prosperity that doesn’t match the lived experience of many citizens, particularly those in rural areas. While Ireland ranks second-highest in the EU for GDP per capita and fifth globally, this ranking is largely due to the activities of multinational corporations, many of which use Ireland as a base for tax reasons rather than as a primary driver of the local economy.
Patrick Honahan, the former Governor of the Central Bank of Ireland, has highlighted this issue in a 2021 paper, estimating that when adjusted for the distortion caused by multinationals, Ireland’s true economic position is closer to eighth or ninth in the EU rankings. The disparity between the glossy picture painted by GDP figures and the reality on the ground is stark. For many in rural Ireland, agriculture remains the primary economic activity, and the potential fallout from the EU’s emissions targets and the loss of the nitrates derogation threatens their livelihoods in a way that no amount of multinational investment can offset. The shiny allure of the tech and finance sectors, which dominate headlines and seem to offer a vision of Ireland as a modern, prosperous nation, may obscure the importance of traditional industries like farming and food production. But these sectors form the backbone of rural life, providing jobs, sustaining communities, and maintaining a way of life that has been passed down through generations.
What makes the KPMG report so alarming is its clear message that agriculture and food production, long the bedrock of rural Irish life, are under severe threat. The EU’s emissions reduction targets, combined with the potential loss of the nitrates derogation, will challenge the viability of thousands of farms. This, in turn, will have a knock-on effect on the food processing and production sectors, leading to job losses that will disproportionately impact rural areas already struggling with underinvestment and depopulation. The farming community, already grappling with numerous challenges, now faces an existential threat that could alter the landscape of rural Ireland forever.
This issue is not isolated to Ireland alone. Across Europe, similar debates are taking place as countries grapple with the need to address climate change while maintaining the viability of their agricultural sectors. However, Ireland’s situation is unique due to the sheer significance of agriculture to its economy and its rural communities. For many Irish farmers, farming is not just a job but a way of life, deeply embedded in the national culture and passed down through generations. The potential loss of jobs, businesses, and families from rural areas could have a profound impact not only on the economy but on the social fabric of the country.
In light of this, the KPMG report should serve as a wake-up call to policymakers. While the government’s focus has often been on the tech-driven multinational sector, which has brought immense wealth to the country, it cannot afford to ignore the importance of traditional sectors like agriculture. As Christine Power O’Neill pointed out, the loss of food processing jobs won’t just impact individual livelihoods but entire rural economies. For Ireland to achieve balanced growth, it needs to find a way to reconcile its ambitious environmental goals with the realities facing its farming sector.
Furthermore, the social implications of this potential economic upheaval should not be underestimated. Rural depopulation is already a significant issue, with young people leaving in search of better opportunities. If thousands of agricultural jobs are lost, this trend will only accelerate, leaving vast areas of rural Ireland economically hollowed out. The KPMG report makes it clear that this is not just an issue of economics, but of rural survival.
While Ireland’s tech and multinational sectors may dominate the national conversation, the real economic and social impact of EU agricultural policy changes will be felt most acutely in rural Ireland. The KPMG report warns of a future where farming becomes less viable, leading to fewer jobs in the processing and production sectors and accelerating rural depopulation. This issue should not be viewed in isolation but as part of a broader challenge to preserve the agricultural foundations that underpin much of Ireland’s economy and culture. Without a balanced approach, the future of rural Ireland looks increasingly uncertain.