Teagasc Economic Assessment of Derogation Loss Frightening

IFA Dairy Chair Martin McElearney has described the findings of the Teagasc report on the economic impact for the dairy sector of losing the Nitrates derogation as frightening. The report outlines the stark reality of how important the derogation is to dairy farmers and the wider rural economy.

“The findings make for stark reading and are similar to the results of an economic impact analysis carried out by IFA. Farmers would be facing a potential 39% cut in family farm income should we lose the derogation, which would devastate the 7,600 farm families depending on it. No business can sustain a cut of that size in income. In reality, it would force many of these farmers out of business,” outlined the IFA Dairy Chair.

The report estimates that the loss of the derogation could result in a reduction in dairy cow numbers nationally of up to 15% and a reduction in milk production of up to 1.2bn litres.

“The numbers in this Teagasc report only relate to the dairy sector, but the loss of the derogation would have huge knock-on implications for the wider economy. A 1.2bn litre cut in milk supply would result in a reduction in dairy exports of about €1bn per annum. The obvious consequences would be job losses at processing level and also in other businesses which depend on dairy farmers for their living such as agri contractors, vets, merchants and others,” he said. 

The report also notes the potential impact on other sectors. If all those dairy farmers in derogation sought to rent additional land to retain their current cow numbers, they would require an extra 113,000 hectares, approximately the size of Co Kildare. This would have massive repercussions for the land market which would impact all sectors indirectly.

“The latest EPA results show that farmers have delivered on their side of the bargain by improving water quality. It’s now time for the Minister and the Department to deliver on their side by securing another derogation that is workable for farmers. Otherwise, as the report shows, we are facing an economic catastrophe for the sector,” concluded Mr McEnearney.