Farm Viability: A Spatial Analysis

Paul Kilgarriff, Teagasc, Athenry & N.C.G., Maynooth UniversityTeagasc, Rural Economy and Development Programme (REDP)EAAE conference, Edinburgh, 23rd October 2015Co-authors:Prof. Cathal O’Donoghue, Dr Thia Hennessy, Ms. Mary Ryan, Dr. Emma Dillion, Mr. Stuart Green, Dr. Trevor Donnellan, Mr. Brian Moran, Teagasc.Dr Stephen Hynes, Dr. Eoin Grealis, NUI Galway.Dr. Niall Farrell, ESRI, Dr. Karyn Morrissey, University of Liverpool

Overview

Introduction Indicators being used

Environmental Economic Social Review of European Policy Definition of Viability Agricultural landscape in Ireland Maps of Landscape Results Conclusions

Indicators

Indicators are quantitative measures against which farm sustainability performance can be assessed

The 1987 Brundtland Report “Our Common Future” defined sustainable development as

“development which meets the needs of the present without compromising the ability of future generations to meet their own needs.”

We take three indicators from “Measuring Farm Level Sustainability with the Teagasc National Farm Survey” (2013)

One from three of the four groups of indicators: Economic, Environmental, Social and Innovation indicators

Sustainability Indicators – NFS (2013)

Type Mesure Unit

Environmental IPCC estimate/farm Tonnes CO2 equivalent/farm

Environmental IPCC estimate/kg of output Kg CO2 equivalent/kg output

Environmental Risk to water quality Kg N surplus/hectare

Environmental Nitrogen use efficiency/product Kg N surplus/unit product

Environmental CO2 equivalent/kg output Kg CO2 equivalent/kg output

Economic Income per unpaid labour unit €/labour unit

Economic Gross Output per hectare €/hectare

Economic Market based Gross Margin per hectare €/hectare

Economic Farm is economically viable 1=viable, 0=not viable

Economic Output derived from the market %

Social Farm business is not viable - no off farm employment Binary, 1=Yes, 0=No

Social Educational attainment Count variable 1-5

Social Farmer lives alone Binary, 1=Yes, 0=No

SocialFarmer is over 60 years of age and no household member is less than 45 Binary, 1=Yes, 0=No

Social Work load of farmer Hours worked on the farm

Sustainability Indicators – NFS (2013)

Type Mesure Unit

Environmental IPCC estimate/farm Tonnes CO2 equivalent/farm

Environmental IPCC estimate/kg of output Kg CO2 equivalent/kg output

Environmental Risk to water quality Kg N surplus/hectare

Environmental Nitrogen use efficiency/product Kg N surplus/unit product

Environmental CO2 equivalent/kg output Kg CO2 equivalent/kg output

Economic Income per unpaid labour unit €/labour unit

Economic Gross Output per hectare €/hectare

Economic Market based Gross Margin per hectare €/hectare

Economic Farm is economically viable 1=viable, 0=not viable

Economic Output derived from the market %

Social Farm business is not viable - no off farm employment Binary, 1=Yes, 0=No

Social Educational attainment Count variable 1-5

Social Farmer lives alone Binary, 1=Yes, 0=No

SocialFarmer is over 60 years of age and no household member is less than 45 Binary, 1=Yes, 0=No

Social Work load of farmer Hours worked on the farm

Economic Indicator

Taken from the concept of viability, see: FRAWLEY, J. P. & COMMINS, P. 1996. The changing structure

of Irish farming: trends and prospects, Teagasc Dublin. HENNESSY, T. 2004. Projecting farm numbers. 2015 Agri-

vision report. Irish Department of Agriculture and Food, Dublin, 82-96

Three classifications Viable - remunerate family labour at the average agricultural

wage, together with a return of 5 per cent on non-land assets Sustainable - not viable, but have off-farm employment Vulnerable – not viable or sustainable

Environmental Indicator

Nitrogen balance / use efficiency Environmental Protection Agency, Water Framework Directive

(EEC 2000) Measure nitrogen content of rivers and lakes Agriculture biggest contributor of nitrogen discharge Directives such as the Nitrates Directive (91/676/EEC) are

aimed at reducing pollution to groundwater and surface water as a result of nitrates from agriculture activities

Spreading animal slurry is only allowed during certain periods Levels of organic nitrogen applied to land also limited The directive aims to improve farming practices and prevent

farmers from over intensive farming

Social Indicator

Isolation Isolated Farmers Living alone Social consequences of living alone Mental Health Well-being amongst farmers Generally a high age profile amongst farmers Lack of a social life

European Policy

Common Agriculture Policy (CAP) - moving away from a primary focus on supporting agricultural production to have increased support for restructuring and diversification

Agenda 2000 - supporting the provision of environmental and social services and encouraging diversification of activities both on and off-farm

Luxembourg Agreement in 2003 - decoupling of income supports to be unrelated to production

As previously mentioned the Water Framework Directive and Nitrates Directive

Data Required

The distribution of agricultural activity and its economic impact The relative contribution of farming and non-farming incomes

within farm households and across other households The environmental characteristics of agricultural activity

(nitrogen use) The distribution of demographic characteristics

Data

Farm data comes from the National Farm Survey (NFS), NUTS 3 level

Household Budget Survey (HBS), the Living in Ireland Survey (LII) and the Survey of Income and Living Conditions (SILC) contain the distribution of incomes, labour market and demographic characteristics, but again are only representative at the national level and with limited agricultural data

Census of Population Small Area Statistics contains spatially disaggregated data at the ED level

Nitrogen data at the river catchment level Challenge bringing all data to the same geographic scale

Spatial Microsimulation

Creates spatially disaggregated micro data not previously available

Simulated Model of the Irish Local Economy (SMILE) model output used

Matches Census data with survey data using overlapping variables

We develop two separate models; one for farms and one for households

Link the National Farm Survey to the Census of Agriculture (SMILIONS)

Link micro household income data (the Living in Ireland Survey) with the Census of Population (SMILE)

Dataset

We have a dataset at the farm level with socioeconomic and demographic data linked to those farms at the ED level (3,440 EDs)

Measure of nitrogen, was at river catchment scale matched to EDs

SAPS 2011 at ED scale Farm viability measure at farm level (simulated data) Farm survey data from the NFS (1,200 representative farms) All of these data sources are merged The result socioeconomic and demographic data linked to farm

level data – matched by NFS team, anonymised

Farming Landscape

There is significant spatial heterogeneity in Ireland Better land in the South and East and the poorer land in the North and West The most profitable sub-sectors within agriculture tend to be dairy and to some

extent tillage farming which are predominantly concentrated in the South and East

The lower margin beef and sheep sectors are to a large extent located in the Midlands, North and West of the country

However in addition to the spatial heterogeneity in farm income sources, there is also significant heterogeneity in employment, types of employment and access to labour markets

The drystock sector (sheep and beef) tend to be more likely to have off-farm employment, whilst access to employment is likely to be higher in the south and east

It is important to understand this spatial heterogeneity to pattern target policy interventions.

Source: Modelling Farm Viability (2013) Source: Modelling Farm Viability (2013)

Source: Modelling Farm Viability (2013) Source: Modelling Farm Viability (2013)

Source: Rural Sustainability in Ireland: A Simulation Analysis (2012)

EPA Poor Water Quality Points

Source: Rural Sustainability in Ireland: A Simulation Analysis (2012)

Source: Rural Sustainability in Ireland: A Simulation Analysis (2012)

Source: Rural Sustainability in Ireland: A Simulation Analysis (2012)

Results

Created deciles of measures Viable Farms Sustainable Farms Vulnerable Farms Organic Nitrogen per Hectare

Areas classified according to demographic, farm level, environmental and economic variables

Classification of areas - Viability

Areas with a high proportion of viable farms have a higher unemployment rate and lower employment rate

Lower levels of tertiary education A higher population density A lower old age deprivation rate but higher child deprivation rate A higher stocking rate (livestock units per hectare) Higher organic nitrogen usage per hectare Higher river quality Higher levels of equivalised disposable income

Classification of areas - Sustainability

Areas with a high proportion of sustainable farms have a higher unemployment rate and lower employment rate

Lower levels of tertiary education A lower population density A higher old age deprivation rate but lower child deprivation rate A lower stocking rate (livestock units per hectare) Lower organic nitrogen usage per hectare Higher river quality Lower levels of equivalised disposable income

Classification of areas - Vulnerability

Areas with a high proportion of sustainable farms have a higher unemployment rate and lower employment rate

Lower levels of tertiary education A lower population density A higher old age deprivation rate but lower child deprivation rate A lower stocking rate (livestock units per hectare) Lower organic nitrogen usage per hectare Higher river quality Lower levels of equivalised disposable income

Classification of areas – Organic Nitrogen

Areas with a high proportion of sustainable farms have a higher unemployment rate and lower employment rate

Lower levels of tertiary education A lower population density A lower old age deprivation rate but lower child deprivation rate A higher stocking rate (livestock units per hectare), much higher Lower river quality Higher levels of viable farms Higher levels of equivalised disposable income

Conclusions

Disaggregating to the farm level allows us to add a spatial element to inform not only national policy but local policy

Farm viability classification system allows for more focused analysis

Obvious differences in the areas in which the various farm types are located

Not only farm level differences but demographic, economic and environmental

Possibility to examine other local specific factors and whether there are clear contrasts