9/10/15: Subsidies and Irish Agriculture: 2014 Data

Per latest data from CSO, Net Subsidies accounted for 59.6% of agricultural income in Ireland in 2014, ranging from 105.3% in the Midlands to 40.6% in South-West.

High as a kite on subsidies, Irish agriculture nonetheless managed to improve, thanks in part to lower euro valuations, its value added relative to subsidies. In 2012 net subsidies counted for 72.1% of total operating surplus (or income) in the sector, falling to 63.4% in 2013.

Key computational definition here are for GVA (Gross Value Added) and Operating Surplus (Income):

GVA at basic prices = Agricultural Output at basic prices – Intermediate consumption
Operating Surplus =    GVA at basic prices – Compensation of employees
                              –  Fixed capital consumption
                              + Other subsidies less taxes on production

Net value added in Irish agriculture in 2014 was EUR1.463 billion, up on EUR1.316 billion in 2013.

For the politicians claiming immense importance of the sector to Ireland, a quick reality check: Gross Value Added (which includes all labour inputs and capital spending in the sector, as well as subsidies net of taxes) stood at EUR2.192 billion in 2014.

And of that, subsidies accounted for 69.4 percent of total Gross Value Added - more than 2/3rds of Irish Agricultural Value Added came via a cheque from Europe, not from customers buying the goods.

In fact, claims about Irish Agricultural Sector contribution to the economy are often wildly off the mark. Per CSO data, the highest metric of this sector activity - Agricultural Output at Basic Prices is EUR7.328 billion for the entire 2014 and of these 20% (one fifth) were net subsidies.

11/3/2013: Food Security & Social Protection

'Gas Flyer of the Week' award this Monday surely goes to the 'never-too-close-to-reality' crowd in the UN:

You see, in the real world, vast subsidies lavished on farming sectors in the advanced economies do two things:

1. Reduce resources available for social protection (and in scarce resources world that UN does not seem to inhabit this implies more severely binding budget constraint effects across the entire economy taxed to support what often amounts to landed gentry and large famers), plus
2. In emerging and middle income economies, subsidies paid out in advanced economies imply reduction in trade flows in agricultural goods from poorer states to richer ones (which in turn reduces economic activity in the former states, increases costs of food in the latter states and reduces resources available for social protection across the board).

So 'food security' hardly has anything positive to do with social inclusion, but a load of negatives...

Go figure, UN thinks differently. Then again, they thought few years back that Iran and Syria were human rights defending nations too...