After the Celtic Tiger died, Anthony Slattery quit his job as an accountant and bought some cows.
With food and drinks exports rising by close to a billion euros a year and food firms among the best performers on Ireland’s bruised stock market, agriculture is one of the few sectors to survive a devastating property collapse.
“A few years ago people thought you were insane if you went into farming,” said Slattery, 25. “Now there’s definitely money to be made.”
The government has climbed on the bandwagon, citing food and agriculture as a route back to growth, although experts warn expectations are inflated as the sector is highly dependent on EU subsidies and exports are skewed towards struggling European markets.
Construction’s poor cousin
Food and agriculture was a poor second to property development, banking and high tech during the Celtic Tiger decade to 2007, and lenders had little time for farmers upgrading their milking equipment.
But after the property bubble burst, bringing much of the economy down with it, the food sector was suddenly the safest bet in town.
“Now everyone is sitting up and taking notice of the agri-food sector,” said Jim Power, chief economist at financial firm Friends First.
While homebuyers and small businesses found it all but impossible to get credit this summer, leading lender Bank of Ireland boasted it was approving 85 per cent of loan applications in agriculture, fishing and forestry. Equities investors are equally enthused, driving food company stocks higher.
Key to recovery
The agri-food sector is worth around $32 billion and the government expects agribusiness exports to grow by 50 per cent to $16 billion by 2020, fuelled by food processing and the phasing out of production caps on dairy products, which is expected to boost dairy exports.
The government is also encouraging farmers to switch to higher-value commodities, to invest to boost productivity and to look at high-value artisanal food products. Still even if the strategy succeeds, agriculture would likely amount to no more than 10 per cent of annual economic output, said Power.
“It will be one of the stronger growth areas, but it is not going to result in a GDP bonanza,” said Power. “It’s not going to drive a new Celtic Tiger.”
Up the value chain
Irish farmers remain heavily dependent on commodity prices and have had limited success in moving up the value chain, despite a mini-boom in the number of artisanal producers.
“There are some farmhouse cheeses and organic yogurts, but there is not a huge amount happening,” said cereals producer Clemens Von Ow.
“Farmers here have been very weak at vision and marketing.”
For the moment, dependence on commodity prices is not a problem, and farmers joke that girls have started talking to them again at rural discos.
But even with the high prices, farmers’ net incomes last year were roughly equivalent to subsidies received, meaning they would just be breaking even without support, according to a recent government report.
Dairy farmer Slattery admits he was planning to do some part-time accountancy to ensure his financial stability once his farm is up and running.