RURAL IRELAND 2025 Foresight Perspectives - Coford

RURAL IRELAND 2025Foresight PerspectivesJoint PublicationNUI MaynoothUniversity College DublinTeagasc2005

Rural Ireland 2025First published in 2005 by NUI Maynooth, University College Dublin and Teagasc.Arranged for publication by COFORD (National Council for Forest Research and Development).Funded by the Department of Agriculture and Food, COFORD, the Environmental Protection Agency and the Marine Institute.© Copyright: NIRSA NUI Maynooth, RERC Teagasc, UCD Dublin.All rights reserved. No part of this publication may be reproduced, or stored in a retrieval system or transmitted in any form or by anymeans, electronic, electrostatic, magnetic tape, mechanical, photocopying recording or otherwise, without prior permission in writingfrom the authors.The views and opinions expressed in this publication belong to the authors alone.ISBN 1 902696 44 1Title: Rural Ireland 2025. Foresight Perspectives.Copies of the report can be obtained from:• The National Institute for Regional and Spatial Analysis, NUI Maynooth• The Rural Economy Research Centre and the Environmental Research Centre, Teagasc• The Department of Agribusiness, Extension and Rural Development, UCD, Dublin• COFORD, Sandyford, DublinCopies of the report can also be downloaded from the websites of the above institutions.

Rural Ireland 2025CONTENTSForeword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iiiExecutive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vIntroduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1PART ONESYNTHESIS REPORT1. Current Situation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52. Baseline Perspective to 2025: Sectoral Dimensions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103. Baseline Perspective to 2025: Population, Employment and Spatial Dimensions . . . . . . . . . . . . . . . . . .134. Strategic Challenges and Initiatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155. Competitive and Sustainable Rural Economy to 2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 196. Knowledge Rural Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 217. Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23Appendix 1: Members of the Inter-Institutional Working Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25Appendix 2: Participants in the Foresight Consultative Forum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26PART TWOTHEMATIC PAPERS1. Economic Conditions in the 2025 Baseline ScenarioB. Riordan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .292. The Broader Rural EconomyP. Commins . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .373. Some Spatial Dimensions: Population and Settlement PatternsP. Commins, J.A. Walsh and D. Meredith . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .454. Foresight Study of the Agri-Food SectorE. Pitts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .615. Foresight Report on the Forestry Sector in IrelandJ. Fennessy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .696. The Rural EnvironmentO. Carton, H. Tunney, J. Finn and L. Downey . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .77i

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Rural Ireland 2025FOREWORDWill the goals of State policy for rural Ireland be achieved?Can they be achieved?These are among the important questions addressed by this foresight study.In response to emerging challenges and opportunities, an Inter-InstitutionalWorking Group drawn from NUI Maynooth, UCD and Teagasc undertook thisassessment of the prospects for rural Ireland to 2025. Funding was provided by theDepartment of Agriculture and Food, COFORD, the Environmental ProtectionAgency and the Marine Institute.The report reflects the insights and analysis of the joint Working Group and wasinformed by a Consultative Forum (Appendix I and II). It thus provides a wellinformedview of alternative outcomes for the Irish rural economy in the next 20years. It details both the likely outcome of continuing current trends and ofalternative perspectives. Initiatives to achieve these alternative outcomes areconsidered. The report concludes that the benefits of national developmentprogrammes could be greatly enhanced by three over-arching measures. TheExecutive Summary highlights these measures.Part One comprises a Synthesis Report drawing on the Thematic Paperscontained in Part Two. Each section of the Synthesis Report has been framed so asto deal comprehensively with the dimension of the Foresight process indicated inthe title of the section. While this involves some unavoidable repetition, it allowseach section of the Synthesis Report to be read as a discrete entity. The viewsexpressed in the Synthesis Report and Thematic Papers are those of the WorkingGroup, as individual members or collectively, unless otherwise indicated.The contributions of all members of the Working Group and participants in theConsultative Forum are gratefully acknowledged, in particular Michael Dowlingfor chairing the Consultative Forum. We also wish to express our appreciation ofthe major input by Liam Downey in preparing the draft Synthesis Report.Finalisation of the Synthesis Report and Executive Summary was undertaken byJim Kinsella, Patrick Commins and Brendan Riordan. Liam Downey and JohnFennessy played a central role in finalising the report. Preparation of the report forpublication was undertaken by Lauren MacLennan, COFORD.The widespread commitment to the foresight project demonstrates theimportance of what is at stake for the future of the Irish rural economy, and theimperative to act now.Working Group Co-Chairs:Professor James A. Walsh, NUI MaynoothProfessor P. Joseph Mannion, UCD, Dubliniii

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Rural Ireland 2025EXECUTIVE SUMMARYGovernment policy for rural areas aims to build a ruraleconomy where enterprises will be commerciallycompetitive without damaging the environment. Itseeks to have vibrant sustainable communities, with aquality of life that will make them attractive places inwhich to work and live. It aspires for equity ofopportunity between rural and urban areas, and forbalanced development between the regions. Theseinitiatives are underpinned by EU policy for ruralareas, which subscribes to the attainment of ‘livingcountrysides’ within the context of balanced regionaldevelopment across the Union.Are these goals being achieved?Can they be achieved?If Current Trends Continue…A scenario assuming no major changes in currenttrends, other than those already signalled, will result inserious failures to achieve the declared policy goals forrural Ireland. Although the aggregate headlineindicators in the national economy are positive, theymask some underlying weaknesses that adverselyaffect prospects for the rural economy. On currenttrends the following outcomes are likely by 2025.• There will not be an acceptable regional balancein Ireland’s economy; population, commercialagriculture and modern enterprises will be evenmore concentrated in the east and south than atpresent.• Rural areas, especially in the northwest and northmidlands, will lag behind in respect ofcommunications and other infrastructure,particularly as EU funds will not be available fortheir further development.• There will be dramatic reductions in farmernumbers, lower agricultural prices, andwidespread decline in commercial farming.Lower volumes of farm output will threaten theviability of agri-food processing enterprises.• Forested land area will almost double; however,the value of forestry and wood product outputwill not increase to the same extent.• The marine sector will not have reached itsinherent potential, especially in terms of valueaddedin the seafood and renewable energysectors.• Provision of public goods from natural resources,including carbon sequestration by forests, will notbe achieved in the absence of adequate attentionto the valuation of these public goods andarrangements to pay their potential suppliers.• The rural landscape with Ireland’s rich naturaland cultural environment will be under continuedthreat.• Developments in the broader rural economy willnot offset losses and other weaknesses in thenatural resource sectors. Growth in exports fromthe dominant indigenous enterprises will remainrelatively low. Moreover, it is likely that a largepart of manufacturing output from foreign ownedenterprises will move to lower cost economies. Intheses circumstances, employment in buildingand construction will not continue at current highlevels.• New types of employment will not benefit themany rural communities outside of commutingcatchment zones.What Future Could Be Achieved?Rural Ireland in 2025 could be closer to the situationenvisaged in the goals for national policies. However,this requires taking action now on the following:• The National Spatial Strategy, implemented inconjunction with successive regionally focusednational plans, would result in a more balanceddistribution of population and economic activitythroughout the country.• Rapid communications and supportinginfrastructure would provide greater accessibilitythroughout all parts of the country.• The rural economy could sustain morecompetitive enterprises through the developmentof additional entrepreneurial and managementskills, as well as further innovation in products,business organisation and marketing.• The agri-food industry could have moredeveloped business, technological and innovativev

Rural Ireland 2025capacities, with a widely differentiated productportfolio selling in international markets.• Forestry and the ocean economy could besizeable suppliers to the energy sector andprovide valued public goods.• Maintenance of an attractive rural environmentcould be secured by compliance with EUDirectives and payment for public goods, as wellas better management systems nationally.• A knowledge-based bio-economy could emergebuilt on the comparative advantage of Ireland’snatural resources.• ‘Old economy’ enterprises could be upgraded,and manufacturing small and medium sizedenterprises (SMEs) could increase theircontribution to the rural economy.• Tourism could be a vibrant sector of the ruraleconomy, providing knowledge-basedenvironmental goods and services, focused onIreland’s unique landscapes and culture.• Clusters of internationally oriented companiescould exploit the full potential of naturalresources in food, the marine, forestry andtourism.Realising Attainable National Policy GoalsOverall changes required to achieve the aboveperspective and the ultimate goals of rural policies aresummarised below.• Greater commitment to rural and regionaldevelopment throughout government.• Construct an effective institutional framework toensure that policies respond to the defined needsof the rural economy and rural communities.• Change in the prevailing mode of policy-making,public administration and policy delivery such asthat(i) the rhetoric of stated policy is followedthrough with clear operational programmes,especially in relation to the White Paper on RuralDevelopment and the National Spatial Strategy;(ii) public programmes are initiated proactivelyand are not dependent on Directives fromBrussels;(iii) consultation with stakeholders and thecompletion of value for money audits prior tocommitment of major initiatives.• Repositioning of the Irish rural economy in theevolving global economy so that competitiveness,productivity growth, and transition to a servicesbasedknowledge economy are reconciled withenvironmental sustainability and rural socialviability.• Acceptance of the fact that while economiccompetitiveness is a central requirement, much ofrural development provides public goods andtheir value should be added to relevant receiptsfrom commercial markets in reaching decisions.• Recognition that rural development requires astrong focus on multisectoral development,tailored to the circumstances of different regionsand sub-regions and goes beyond agriculture andagricultural policy.• Emphasis on applying knowledge and researchbased information in decision-making andinnovation at all levels.• Stronger operational links between rural andcoastal development strategies.What Are The Most Essential Enabling Measures?For the proper implementation of the range of strategicinitiatives advocated in this Foresight report, threeoverarching measures are necessary:1. Establishment of a Rural PolicyImplementation Group to facilitate efficientresource use in developing a competitive andsustainable rural economy.2. Development of Regional Innovation andResearch Systems to support the developmentof a knowledge based rural economy.3. Provision of Education and TrainingProgrammes to raise the human resourcecapabilities of rural businesses, and of ruralpopulations generally.Without these measures the rural economy will notattain the prospects outlined above, and furthermorethe declared goals of rural policy will not be achieved.vi

Rural Ireland 2025INTRODUCTIONPROJECT AIM, APPROACHAND ORGANISATIONThe aim of this foresight project is to provideperspectives of Irish rural and coastal areas to 2025.The focus is on ensuring the economic vitality ofrural communities, protecting the quality of thephysical environment, and on enhancing the use ofthe country’s natural resources. Developments in thenational economy and international drivers of changeare also taken into account. The project identifieslikely outcomes from alternative scenarios of thefuture for selected themes. One scenario posits acontinuation of current trends. Another includesinitiatives leading to outcomes that would achieve agreater degree of implementation of goals set forth innational policy documents.The Rural Foresight project, initiated in late 2003,was undertaken by an Inter-Institutional WorkingGroup from NUI Maynooth, University CollegeDublin and Teagasc (Appendix 1). Funding wasprovided by the Department of Agriculture and Food,COFORD, the Environmental Protection Agency andthe Marine Institute.To provide a wider input into the study, aConsultative Forum, comprising knowledgeable andinfluential stakeholders, was established (Appendix2). Their discussions were facilitated by thepresentation of Thematic Papers prepared bymembers of the joint Working Group, and by stafffrom COFORD and the Marine Institute. TheWorking Group also drew on additional material inrelevant reports from other organisations.REPORT STRUCTUREThis report is in two parts. Part One comprises aSynthesis Report. This is based on the ThematicPapers contained in Part Two. In general, these followa common structure covering: (i) the drivers ofchange; (ii) current trends and issues; (iii) a baselineperspective to 2025, that assumes no major changesin the current trajectory; (iv) an alternative andattainable scenario to 2025; and (v) key initiativesrequired to achieve a better future by 2025.RATIONALE AND CONTEXTForesight initiatives create greater awareness oflonger-term trends and develop perspectives ofpossible futures, so that challenges and opportunitiescan be anticipated and emerging issues taken intoconsideration in current policy formation.The basic rationale for the rural foresight studystems from the declared aims of State policy, as setout in the 1999 White Paper on Rural Development,as well as in other policy documents. Rural policyaims for the maintenance of the rural population, notjust in aggregate numbers but also in a balancedspatial distribution. It aspires for equity in access andopportunity between rural and urban populations, andfor balanced development between the regions. Itseeks to have vibrant sustainable rural communitieswith a quality of life that will make them attractiveplaces in which to work and live. It aims to build arural economy where enterprises will becommercially competitive, without damaging thenatural environment.The foresight study considers these policy aimswithin an international and longer-term context. Itidentifies the various factors, which impact on effortsto achieve such aims. It also provides an assessmentof the extent to which policy aims are being realised,while giving early warning of the need for crucialpolicy adjustments.The other rationale for the project is the necessityto take stock of the mix of strong socio-economic andtechnological factors, as well as changing policyorientations, which are now impacting on rural areas.The driving forces of greater competition andbusiness rationalisation continue to bring aboutrestructuring in the natural resource based sectors.Increasingly, the rural resources of land, forestry andthe marine will be expected to provide for theamenity and recreational needs of a more urbanisedsociety. While some rural areas face the prospect ofdepopulation and economic decline, other areas,especially those within the catchments of urbancentres, on inter-urban communication routes, or inhigh amenity zones, are experiencing growingpressures on rural space, accompanied by a decliningconsensus as to the manner in which this space isused.1

Rural Ireland 2025Reforms of the Common Agricultural Policy(CAP) will reduce the scale of non-market subsidies.The scope of current EU rural policy measures isnarrowly conceived and will not build a strong anddiversified rural economy in areas where bothfarming and urban-generated development areeconomically weak. The next phases of EU CohesionPolicy will be dominated by the needs of the newMember States. Ireland and other long-standing EUStates will have to frame their regional policies withmuch less support from EU sources.In the global context, Ireland, as a small openeconomy with a comparatively high dependence onforeign direct investment (FDI), is particularlyexposed to risks from trade liberalisation,deregulation of markets, and the global mobility ofcapital and business. There is an accentuatedemphasis on market competitiveness, while at thesame time there are growing concerns for theprotection of the environment, food safety and animalwelfare. Also, within an enlarged EU, economic,social and territorial cohesion are important policyissues.2

Rural Ireland 2025 - Synthesis ReportPART ONESynthesis Report1. Current Situation1.1 The National Economy1.2 The Rural Economy1.3 Agri-Food Industry1.4 Forestry1.5 Marine1.6 Rural Landscapes2. Baseline Perspective to 2025: Sectoral Dimensions2.1 Agri-Food Industry2.2 Forestry2.3 Marine2.4 Rural Landscapes3. Baseline Perspective to 2025: Spatial Dimensions3.1 Population and Employment3.2 Agri-Food Industry3.3 Forestry3.4 Marine4. Strategic Challenges and Initiatives4.1 Agri-Food Industry4.2 Forestry4.3 Marine4.4 Rural Landscapes4.5 Population, Employment and Spatial Dimensions5. Competitive and Sustainable Rural Economy to 20255.1 Economic Prospects5.2 Achievable Perspective6. Knowledge Rural Economy6.1 Institutional Framework6.2 Rural Policy Implementation Group6.3 Regional Innovation and Research Systems6.4 Knowledge Transfer, Innovation and Human Resource Capacities7. ConclusionsAppendix 1:Appendix 2:Members of the Inter-Institutional Working GroupParticipants in the Foresight Consultative Forum3

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Rural Ireland 2025 - Synthesis ReportRURAL IRELAND 2025: SYNTHESIS REPORT1. CURRENT SITUATION1.1 The national economy (1 1 )The exceptional growth performance over the pastdecade has been driven largely by the internationallytraded goods and services sectors, especially theunprecedented growth in Foreign Direct Investment(FDI), rather than by significant improvements in theunderlying rate of productivity growth. Many ofthese FDI enterprises are strongly oriented toproducing goods, often at a relatively low point in thevalue chain. These labour intensive industries arenow open to the growing attractiveness of othercountries, as evidenced by a net outflow from Ireland,between 2001 and 2004, of 15,000 jobs frominternationally trading foreign-owned companies.Expansion of employment in recent years reflectsthe strong growth in the financial and businessservices and a boom in building and construction. Incontrast, manufacturing employment has declined toits lowest point since 1996. The tourism industry, asmeasured in terms of total visitor numbers, grew bysome 5 percent per annum between 1990 and 2002.However, rural areas have not benefitedcommensurately from this growth. Also, visitorsatisfaction rates are declining, especially in regard tovalue for money and infrastructural deficiencies.Despite the substantial investment in recent years, thephysical infrastructure is still poorly developed andless effective than in most developed countries.Funding of research and development (R&D) hasincreased significantly over the past decade.However, business expenditure on R&D isconcentrated mainly in large and foreign ownedcompanies, while the majority of small and mediumenterprises (SMEs) are characterised by a lowtechnological absorptive capacity. With someimportant exceptions, public funded research isincreasingly concentrated in the universities where itis largely committed to fundamental/academicresearch. Strategic research, leading to product andprocess innovations, and also new technologicalresearch on marketing and supply chain management,remain relatively neglected.1.2 The rural economy (2 & 3) 2Some key features of the broader rural economy areoutlined below, followed by synoptic perspectives ofthe agri-food industry, forestry, marine and the ruralenvironment.Population and employment trends, as well as thelocation of economic activity in general, show clearand growing differences between urban and ruralareas, and between the economies of differentregions. An outcome of this spatial differentiation isthat the rural economy can be envisaged ascomprising the following main categories: (i) periurbanareas with a high level of commuting to urbanbasedjobs; (ii) economically diversified areas relyingon building construction, manufacturing and othernon-farming employment; (iii) commercially strongfarming areas; and (iv) economically weak areashighly dependent upon poor but heavily subsidisedfarming.During the 1990s, the combined numbers ofpeople living in Dublin and the three neighbouringcounties continued to grow at a faster rate (13.7%)than in the remainder of the country (9.5%). Ruralareas with the highest population growth rates arethose adjacent to urban centres, and also those with ahigh-amenity natural environment. Areas with low ornegligible population growth are generally in thewest or north-west, together with narrow branchesextending into the south and midlands.Spatial differences in farming and land use areincreasing. The west and the border region show thefaster rates of withdrawal from dairying, accompaniedby higher rates of tree planting on farms andhigher levels of participation in agri-environmentalschemes.1 For further details see Thematic Paper No.1 entitled: Economic Conditions in the 2025 Baseline Scenario2 For further details, see Thematic Paper No.2 entitled: The Broader Rural Economy and No.3 entitled: Some Spatial Dimensions: Population andSettlement Patterns5

Rural Ireland 2025 - Synthesis ReportAlthough not reflected in increases in totalpopulation numbers, employment growth in ruralareas has been quite widespread during the years1991 to 2002. Much of this growth was due toexpansion in construction, and in commercial andretail services, both of which are dependent on thevitality of the macro economy. Associated withemployment growth were considerable increases incommuting and the spread of single dwelling housesin the commuting and high amenity zones.Visitor numbers to Ireland increased steadilybetween 1990 and 2002. However, as alreadyindicated (Section 1.1), the distribution of the relatedrevenue strongly favoured Dublin and the south-west,with lower revenue growth rates being recorded inthe more rural regions of the north-west and west.For the decade 1995 to 2004, there werepronounced regional variations in the employmentgrowth rates in those enterprises supported by thestate agencies. Dublin and the mid-east combined hadthe highest rates of expansion. The south-west andwest fared relatively well, and the south-east, midwestand midlands less so. The border region failed toshow any expansion.Some 60% of the population may be described asrural, in that they live outside the five major urbancentres and predominantly in coastal counties. Withall but an estimated 10% of the population residingwithin a 40 km radius of the 13 larger urban centres,the rural economy is not a geographically separateentity from the urban or general national economy.The functional interdependencies between rural andurban areas are increasing and the national economicgrowth of the past decade has benefited rural areas ina number of ways. In particular, employmentexpansion in rural areas has more than offset labourlosses in farming. However, rural regions continue tohave a high dependence on agriculture or otherproduction-based employment, often part-time andlow-paid. This reflects, among other issues, weaknessin the linkages between rural economies and FDIenterprises. Allied to this is the continued failure todevelop the regional innovation support servicesrequired to address the weak technological absorptivecapacity of many indigenous small and medium scalecompanies, particularly those not located adjacent tothe main cities.Low levels of regional innovation are related toweak institutional capacities and reflect the lack ofeffective operating networks between localbusinesses and third-level colleges, researchorganisations, enterprise support and trainingagencies (Sections 6.3 & 6.4). A key determinant ofregional institutional capacity is the competencies ofmanagers and others employed in the region, in bothprivate and public sectors, and their adaptability,entrepreneurship and attitudes to change, risk andinvestment. Poorly developed and inefficientphysical infrastructure also disadvantages ruralbusiness. As indicated by the fact that infrastructuralexpenditure in the BMW region is falling behindprojections, this situation is not likely to improvemarkedly in the immediate years ahead.Notwithstanding the economic benefits to ruralareas of the national economic growth of the pastdecade, there is a noticeable failure in socialdevelopment. This is evident from the decliningvoluntarism in local communities and weakness inthe capacity for mutual benefit and communitydevelopment associations, as well as continuingsocial exclusion, and failure to provide the level oflocal services and amenities needed to contribute to abetter quality of life.1.3 Agri-food industry (4 3 )The past decade has been characterised by a majorincrease in the participation by farmers and farmfamilies in the wider rural economy, with aprogressive decline in the contribution of agricultureto the broader rural economy. These changes havebeen accompanied by some structural and otherimprovements in the agri-food sector. The averagefarm size rose by some 20% during the 1990s andthere was also an overall increase in labourproductivity. The food and drinks sector grew by 6%per annum on average between 1995 and 2001, andemployment levels in the sector increased from45,000 in 1995 to 51,600 in 2002. An issue ofgrowing importance over the last decade and more isthat the relationship between agriculture and theenvironment is increasingly seen to be out of balancein many countries.In the immediate years ahead, world demand foragricultural products will continue to grow, althoughat a slower rate than in previous decades. Dairy andmeat products, especially poultry, as well as seafood,will provide a growing share of the human diet. The3 For further details see Thematic Paper No. 4, entitled: Foresight Study of the Agri-Food Sector6

Rural Ireland 2025 - Synthesis Reportrapidly growing demand for convenience foods willcontinue, in conjunction with electronic homeshopping. Major new markets will emerge forfunctional foods, including probiotic foods andneutraceuticals. Also, the requirement to become lessdependent on non-renewable energy sources, can beexpected to provide new market opportunities for theagricultural sector and for coastal communities. Tocapitalise on these opportunities and to develop amulti-functional agri-food sector, that is internationallycompetitive and environmentallysustainable, the industry needs to be re-positioned inthe knowledge economy.1.4 Forestry (5 4 )Forestry is a multifunctional industry and land usewhich, in addition to the generation of marketableforest products, has important dimensions in relationto the rural economy/employment, agriculture,renewable energy generation, and the provision ofenvironmental goods/services, notably biodiversity,carbon sequestration and recreational uses. Theforestry contribution to GNP was just under €700 min 2004.In response to the 1996 national forest strategy(Growing for the Future: A Strategic Plan for theDevelopment of the Forestry Sector in Ireland)approximately 15,000 hectares of forest have beenplanted per annum. While this is below the target of20,000 ha, it nevertheless represents the singlebiggest land use change over the past decade.Continuation of this trend would result in some 1million hectares, or 14-15% of the land area, beingconverted to forestry by 2025. This is still well belowthe EU average of 25%. The new Rural DevelopmentRegulation will reduce grant aid for afforestationfrom 100% to 70% of the cost of afforestation inadvantaged areas and to 80% in disadvantaged areas.The payment period for annual premiums will also bereduced from 20 to 15 years. These changes willreduce planting levels substantially in the absence ofany additional government fundingThe forestry sector is exposed to increasingcompetition from the coming on-stream of woodsupply from new EU Member States, which generallyhave lower costs and prices. This situation is likely tochange with increasing levels of prosperity in the newMember States. Ireland’s natural growth rateadvantage is also being challenged by increased costsacross the sector. There is scope for improved costcompetitiveness through reform of the timber salesarea, (as identified in the COFORD OPTILOGProject 5 ) and in the areas of harvesting and transport.A further challenge is the relatively small averagesize of private sector plantations (8 hectares onaverage). This figure is distorted by the large numberof plantations in the 2-3 ha size category. Half of thegrant aided plantations are 20 ha or more.The future competitiveness of the forestry sectorwill require greater cost efficiencies throughout allsegments of the wood supply chain, as well assignificant investment in R&D in all aspects of thewood-chain, including process and product R&D. Inregard to the farm forestry sector in particular, thedevelopment of cost-effective harvesting andtransportation systems is essential. The ability of theprivate sector to achieve forest certification is alsoimportant. Many of the panel board mills andsawmills now require roundwood to be sourced fromforests that have been independently certified as wellmanaged.In the future the forestry sector will play anincreasing role in the provision of public goods andservices. In regard to climate change, forestry has asignificant role to play in storing atmospheric carbondioxide in forests and wood products. Recreationaluse of forests will also grow in line with increasingaffluence and population levels, as well as greaterurbanisation. Forests also have a significant role toplay in biodiversity conservation and enhancement,at the genetic, species and ecosystem levels. Theadvent of the Water Framework Directive will alsoimpact on forestry, with increasing emphasis on therole of riparian woodland in achieving water qualitystandards.1.5 Marine 6The country’s marine resources encompass some900,000 km 2 of seabed, which is ten times theterrestrial area. The sector accounts for more than0.9% of national GDP and provides employment(directly and indirectly) for some 40,000 people. Of4 For details see Thematic Paper No. 5 entitled: Foresight Report of the Forestry Sector in Ireland5 OPTILOG is a collaborative project funded by COFORD and undertaken by the Irish Timber Council and Coillte, carrying out an efficiency anlaysisof the sale, purchase, harvesting and haulage of timber in the Irish forestry sector.6 Comments on the marine in this report are based on a submission from the Marine Institute.7

Rural Ireland 2025 - Synthesis Reportthe turnover of €3.1 billion in 2002, 67% wasgenerated by marine services (maritime transport,marine tourism), 29% by marine resource use(fishing, aquaculture, seafood processing, offshoreoil and gas exploration), and 4% by marinemanufacturing. The sector has strong linkages withother components of the economy. An efficientnational transportation system demands seamlesslinkages between land, air and sea transport. Anattractive tourism product depends on aspects of themarine and terrestrial environment. An efficientenergy generation and supply system can draw onnew opportunities in offshore wind, wave and tidalenergy. Food, produced on farms or from the sea,depends on a generic suite of production techniques,quality control, value added processing andmarketing.The marine resource provides significant nationalbenefits that are not readily captured by conventionaleconomic accounting. These include biodiversity,amenity and environmental quality. There is a need torecognise the value of such natural assets and allocatevalues and prices to them.Commonly used measures of output, income andemployment, applied to the national economy, mayunderestimate the value of an economic activity inparticular areas. Many of the regions where themarine sector is strongest are well below the averagein economic performance. The development andenhancement of marine-related activities is thus apriority for the economic well-being of many coastalcommunities.The key drivers of change and development in themarine sector are many, complex and varied.Economic factors include a constant need to maintaincompetitiveness in a global, open market. Europe iscurrently a major importer of food, includingseafood. Markets will grow for value-added products,such as convenience foods, health foods, nicheproducts and diversified agricultural products. Over90% of Ireland’s exports and imports are transportedby sea. Maritime transport and related activities areexpected to expand to facilitate increased exports andimports, with traffic moving from roads to short seashipping routes.Economic forces may, if unrestrained by nationalsocial and economic objectives, lead to undesirableexploitation practices, unbalanced spatial developmentand environmental degradation. If economicswere the sole driver, one could envisage an Irelandwhere maritime and shipping services, energysupplies and food (including seafood) were suppliedfrom outside the State with little or no employment oradded-value accruing to the Irish economy. Since thiswould be unacceptable in national policy, economicforces are tempered by other objectives, based onenvironmental, social, and regional developmentcriteria.Concerns about maintaining the quality of theenvironment will have implications for the marketingof Irish seafood and marine tourism products. With anincreased population and greater utilisation of marineresources, coastal space will be in demand forhabitation, industrial and tourism/leisure activities.The predicted impacts of climate change 7represent both challenges and opportunities for manymarine and coastal resources. A predictive capabilityand an adaptive strategy will facilitate anaccommodation to change, which could otherwisehave major social and economic implications.Environmental legislation, will be a key driver inthe use and management of marine resources. EUpolicies and Directives, such as the CommonFisheries Policy, the Habitats Directive, the WaterFramework Directive, the EU Marine Strategy, aswell as international conventions (OSPAR, CBD,etc.) will govern the management of futuredevelopments. An improved science-basedknowledge will be required to negotiate flexibility inthe way European legislation is implemented at thelocal and regional levels.New and emerging technologies (ICT, nanotechnology,biotechnology) are expected to result ininnovative and improved ways of “doing better, whatwe already do” and to create new opportunities inhow the marine resource is utilised, managed andmonitored.1.6 Rural landscapes (6 8 )Ireland’s rural landscapes are being reshaped bychanges in agriculture, as well as road, building, newhousing and other infrastructural developments. Inagriculture there is continuing spatial differentiation(Section 3.2), involving the concentration ofcommercial farming in Munster and south Leinster7 Climate Change: Implications for Ireland’s Marine Environment and Resources (Marine Institute 2005).8 For further details see Thematic Paper No. 6 entitled: The Rural Environment8

Rural Ireland 2025 - Synthesis Reportand the greater extensification of production inregions with sub-viable farms. While there is anoticeable decline in economic activity andpopulation in some rural regions, coastal and otherhigh amenity areas are experiencing populationgrowth. Interfacial areas between urban and ruralsettlements are being subjected to unprecedentedpressures from competing spatial demands. Thesedevelopments have major implications for the ruralenvironment, both natural and built.Water resources: Economic expansion, allied tosizable population growth in some regions, isplacing increased pressure on water resources.The contributions of waste from urban watertreatment plants and also agriculture, to thedeterioration in water quality can be expected todecline in the coming decade. Conversely, the ongoingdevelopments in housing, roads and otherinfrastructure will continue to contribute to lossesin water quality. In particular, with the siting ofgreater numbers of one-off houses in rural areas,(Section 6) contamination of water resources byseptic tanks is likely to increase. Also, the muchlarger volumes of sewage sludge produced and thelimited options available for its disposal,including land spreading, are becoming seriousconcerns.Air quality: The continued growth in road traffictogether with overall energy consumption point toa progressive deterioration in air quality,especially in urban areas. To meet thecommitments entered into under the KyotoAgreement, together with the more stringentlimits set in the EU Air Framework Directive,measures must be implemented in the short termto reduce greenhouse gaseous emissions. Theprojected reduction in the size of the nationalcattle and sheep herd and the associated lowerusage of nitrogen fertilisers may lead to somereduction in the sizeable contribution ofagriculture to the national emission levels.COFORD estimates that the much expandedforestry programme of the past decade will bebeneficial in reducing carbon dioxide levels bysome 8-12%. Eventually, however, compliancewith the aforementioned internationalrequirements and EU Directives will necessitatemore stringent control measures being applied toagriculture, especially the more intensiveproduction systems.Biodiversity: Ireland has a rich heritage of naturalhabitats including wetland, coastal and uplandlandscapes. These important natural resourceshave experienced serious impacts in recentdecades. Moreover the number and scale ofthreats are increasing. The aforementionedconcentration of commercial agriculture inMunster and south Leinster will impact on naturalhabitats, leading to a decline in population andspecies diversity, especially in the more intensivefarming areas. The concomitant withdrawal offarming from regions with predominantly subviablefarms, and consequential scrubencroachment, will affect the unique natural andbuilt environment in upland and wetland areas.However, there may be positive outcomes fromthe decoupling of farm subsides from productionvolumes. With the greater importance attached tothe conservation of wildlife habitats on farms,under the reformed CAP, and the increasedfunding being provided for their protection, morerigor will in future be applied to ensuring thatwildlife measures are appropriately designed,implemented and monitored.Soils: Irish soils are generally considered to be ofgood quality. They are, however, experiencingincreased pressures from land use changes,agricultural production systems, erosion, wastedisposal, industrial development and urbanisation.Following the publication in 2002 of the EuropeanCommission’s document entitled Toward aThematic Strategy for Soil Protection, increasedattention is being given to soil quality. Thereformed CAP includes the requirement tomaintain all farmland in good agricultural andenvironmental condition. Also, criteria in relationto soil erosion, organic matter and structure areincluded in regulated cross-compliance measures.Further to this, an EU Soils Protection Frameworkis expected in 2008, outlining what is knownabout European soils, their importance andsustainable use, leading to more detailedlegislative requirements in the future.Waste management: An estimated 75 M tonnes ofwaste was generated in Ireland in 2001, of which75% was contributed by agriculture, withmanufacturing, building and municipal wastesaccounting for the remainder. With furthereconomic growth, waste production can beexpected to increase. The total quantity ofagricultural waste is, however, likely to reducewith the projected decline in the size of thenational cattle and sheep herd. However, in themore intensive farming regions there is an9

Rural Ireland 2025 - Synthesis Reportimmediate requirement to develop strategies toensure that animal wastes are utilised in plantgrowth, rather than entering water supplies andthe atmosphere. The problem is particularly acutein relation to large scale pig and poultryenterprises. The bulk of the 21 M tonnes ofmanufacturing, building and municipal wastes aredisposed of through landfill. With the remainingnational landfill capacity limited to less than eightyears, much greater urgency needs to be given towaste reduction and recycling and thedevelopment of industrial scale landfill facilities,enclosed by adequate buffer zones. Incineratorsproposed in some of the regional wastemanagement plans are creating significantcontroversy in rural areas.Environmental goods: While there is increasingconcern about the negative impacts of agriculture(pollution, erosion, loss of habitats, destruction ofarchaeological sites, etc) there is also growingrecognition of, and demand for its associatedpublic goods. In this regard, access to rurallandscapes, archaeological and other heritageresources are issues of growing importance andconflict. With the increasing demands on ruralareas, the value of public goods associated withagriculture, forestry and the marine (such asarchaeological features and amenity areas) andpublic access to those are becoming increasinglyimportant concerns. There is a pressing need toquantify the relative value of these public goodsand develop their potential to contribute to thelocal economies, especially in areas withdrawingfrom agriculture.2. BASELINE PERSPECTIVE TO 2025:SECTORAL DIMENSIONSAssuming no major shifts in policies and otherdevelopments, apart from those already wellheralded, a business as usual perspective to 2025 ofthe major components and features of the ruraleconomy are outlined below.2.1 Agri-food industryAs stated in the Report of the Agri-vision 2015Committee, established by the Department ofAgriculture and Food in 2004, “The number of Irishfarms is expected to decline by 23%, from 136,000 in2002 to 105,000 in 2015. By 2015, one third of thefarm population will be classed as economicallyviable, another third of farms will be economicallyunviable with the operators working primarily off thefarm, and the remaining third will be transitionalfarms characterised by adverse demographicfeatures, such as having an elderly farm operatorand/or lacking an identified heir.Of the third of farms that will remaineconomically viable by 2015, 75% will be farmed ona part-time basis... Of those farms that are operatedon a full time basis and which are economicallyviable, the vast majority are expected to be dairyenterprises”(see www.agri-vision2015.ie).There is general agreement that the total numberof farmers will decline substantially in the decadeahead (see Thematic Paper No. 4). Whether, however,the contraction will occur as rapidly as suggested bythe aforementioned report, may be questioned bysome commentators. Important determinants in thisregard include the future availability of off-farmemployment (Sections 1.1 and 1.2), in particular, jobopportunities that will continue to attract young farminheritors to pursue non-farming careers. Lifestyleissues will also influence the rate of change. TheSingle Farm Payment System and quality of lifeinterests, allied to familial association with the homefarm, may slow down the expected decline in thenumber of farmers. Conversely, the pressuresassociated with the day-to-day commercial operationof a farm, while at the same time holding down anoff-farm job may prove increasingly unattractive,especially to the next generation of farmers.A continuation of these trends of declining farmnumbers and increasing part time operation offarming enterprises may be expected to 2025,stimulated by a buoyant non-agricultural economy,continued capitalisation of the sector and lower realagricultural prices. Land use for energy production,for forestry and for leisure uses will increase at theexpense of farming, and less productive land will beabandoned. The spatial differentiation of production,which has been a feature of recent decades, willcontinue.In summary, it is unlikely that by 2025 that Irelandwill have appreciably more than• 10,000 full-time commercial farmers,comprising predominantly dairy farmers, athousand or so commercial dry stock farmers,with roughly a similar number of sheepproducers and a few hundred pig enterprises.10

Rural Ireland 2025 - Synthesis Report• 30,000 part-time farmers deriving a significantportion (possibly half or more) of their incomemainly from cattle/sheep production. Many ofthose will have farm forestry/biomassenterprises.The competitiveness of the dairy and beef sectorsin the freer trade environment arising from the ongoingWTO negotiations will depend on theattainment of substantial scale and a shift frompredominantly commodity production to themanufacture of milk and beef products for specificconsumer markets on a consistent supply basis, andthereby securing producer prices. The pursuit ofcompetitive scale would result in a very dramaticreduction in farmer numbers as already indicated, andalso in employment in food processing.In the coming decade(s) there may be no morethan two dairy processing companies and acomparable number of large meat export groups.There could be a sizeable number of small andmedium scale agri-companies, engaged in thedelivery of farm services and products including foodproducts. While the number of farmers is expected todrop by about one-quarter over the next decade, farmoutput is unlikely to decline. Indeed it may rise,especially when the milk quota system is abolished,possibly in the coming decade. The value ofagricultural output would however have to double forthe sector to retain its current share of national output.In terms of milk output per cow or per hectare,Ireland’s dairy production sector had, in 2004, one ofthe lowest productivity levels relative to seven otherEU countries. However, because of lower costs, thesector has a high degree of competitiveness, in termsof cash costs as a percentage of output. In thisrespect, Ireland’s dairy production sector is betterpositioned than those in most other EU countries tocope with the expected economic environment in theimmediate years ahead.However, a major threat to the continuedinternational competitiveness of dairy production inIreland, and also the beef and cereals sectors, is thehigh price of land. If, as previously considered,farmer numbers do not contract to levels approachingthose outlined above, and given the increasingdemands on rural space for housing, roads, and otherinfrastructure, land prices will remain high. In thosecircumstances, farmers will have difficulties inpurchasing land and expanding their businesses to thescale and with the rapidity necessary to maintaininternational competitiveness, except perhapsthrough leasing or partnership arrangements. If, onthe other hand, the on-going reforms of the CAP, inparticular the introduction of the Single PaymentSystem, result in the rapid decline over the comingdecade in farmer numbers envisaged above, thiscould lead to a situation where Ireland’s national milkquota would no longer be a constraint on milkproduction. In those circumstances, the value ofindividual farm milk quotas would decline, and thequota system would no longer be a restriction on theoutput of saleable milk. Currently, the investmentcapacity of dairy farmers to expand and cope withdeclining milk prices, and also the opportunities for anew cohort of well-trained young farmers to builddairy businesses, are severely limited.Flexibility in access to land for farming allied tothe business, innovative and technological capacitiesof those engaged in farm production and foodprocessing, will ultimately determine whether Irelandhas more or less than the 10,000 full time commercialfarmers in 2025.2.2 ForestryAssuming the continuation of current planting trends,up to one million hectares of land, amounting to some15% of the total is likely to be converted to forests by2025, as previously indicated. Approximately twothirds will be private forestry, mainly owned byfarmers with the balance in public ownership (seeThematic Paper No 5).The sector is expected to be harvesting 6 millioncubic metres of roundwood, with roughly comparableamounts being produced by the private and publicsectors. The bulk (some 75%) of the forestry outputin 2025 will be sawlog. The remaining one-quarterwill be pulpwood.The real price of roundwood in 2025 may belower than current prices. Furthermore, the forestcontracting and other support infrastructural serviceswill, at best be operating at marginal profitability.Other weaknesses that may characterise the privateforestry sector in coming decades include small,scattered farm forestry holdings, (just 8 hectares onaverage) and little private investment in afforestation.While up to half of houses may be of timber frameconstruction, the share of the home market suppliedby domestic sawnwood is likely to be limited.By 2025 afforestation grants and the payment ofannual premiums are likely to have been substantiallyreduced or even discontinued. The major uncertainty11

Rural Ireland 2025 - Synthesis Reportcurrently facing the sector relates to the timing ofand/or the extent to which these vital financialsupports for afforestation may be reformed.The major benefits of the national forest plan mayrelate mainly to the public goods aspects of forestry,in particular carbon sequestration and recreation. Twoimportant considerations in this regard are firstly,afforestation and forest operations must continue tohave due regard for the natural and culturalenvironment, in particular biodiversity andarchaeological features. Secondly, forests alreadyplanted or being planted must be designed to copewith expected climate change. With the growinginterest in green energy, many of the 30,000 part-timefarmers that Ireland is expected to have in 2025(Section 2.1) as well as a number of the projected10,000 full-time commercial farmers, will beproducing wood biomass as an important componentof their farming enterprises.2.3 MarineIn a business as usual scenario, based on currenttrends and policies, the dominant development pathin the marine sector will be characterised by shorttermplanning with little consideration for realisinglonger-term sustainable economic opportunities.Without strong leadership being provided by theState, development of the sector will be along narroweconomic lines with technological advances focusedon achieving greater economies and efficiencies. Asis already evident:• The private sector cannot provide forcomprehensive development as most of themarine resources are held in public ownership.• Failure to invest in marine infrastructures and inbroad-based sustainable marine developmentwill result in enterprises at the lower end of thevalue-chain moving to lower-cost countries.• The shipping sector will continue to providevital trade linkages, but it will be dominated byforeign-owned vessels and services.• The full potential of the renewable ocean energysector will remain untapped, although Irelandwill have a small but successful oil and gasindustry.• The country’s reputation as a high-qualityenvironment for tourism and quality seafoodwill be compromised.• In the fishing sector, the mismatch betweencatching capacity and available stocks willcontinue to undermine stability. However,reforms of the Common Fisheries Policy and theestablishment of Regional AdvisoryCommittees will alleviate this to some extent.• Aquaculture production will be constrained byprice competition, disease problems andenvironmental conflicts.• Delays and failures in implementing EUenvironmental Directives will have negativeoutcomes for the marine food and tourismsectors.• Failure to quantify in economic terms the publicgoods and services provided by the marine willresult in adverse and irreversible longer termimpacts.2.4 Rural landscapesIreland’s rural landscapes will be substantiallychanged by 2025 (see Thematic Paper No. 6). As isalready evident in urban catchments and highamenity areas, there will be increasing demands onrural and coastal landscapes. To strike the necessarybalance between economic dictates and the protectionof rural landscapes, sustained financial and humanresources need to be committed to conflict resolutionprocesses, leading to the development of a morerational public consensus on the location of housing,roads, utilities, and access to rural landscapes.Overall, pollution of waterways is likely to haveabated by 2025, but with some important exceptions.Unless substantial resources are devoted to theregular inspection and maintenance of the septictanks in the increasing number of one-off houses inthe countryside, contamination of water supplies,including domestic springs, will become a majorproblem, especially in high amenity areas.Agriculture’s contribution to the deterioration ofwater quality is expected to be reduced in response toEU Directives and to stricter enforcement of nationalregulations, including a code of Good FarmingPractice, as well as to the more widespreadparticipation by farmers in the Rural EnvironmentProtection Scheme (REPS). In the intensive farmingareas of Munster and south Leinster, substantialinvestment in waste storage facilities will berequired.12

Rural Ireland 2025 - Synthesis ReportAs already indicated, the continued growth in roadtraffic and overall energy consumption points to afurther deterioration in air quality, especially in urbanareas. However the reduction in cattle and sheepnumbers resulting from the reform of the CAP can beexpected to lead to some reduction in gaseousemissions from agriculture in the coming decade.Also, the sequestration of carbon dioxide (potentiallyup to 12%) by the national afforestation programme(Sections 1.6 and 2.2) will be beneficial. However,odour problems from the disposal of animal manuremay become more pronounced, especially in theintensive farming areas (Section 4.2). Such emissionsare not likely to be tolerated, especially by nonfarminghouseholds residing in farming areas.Forestry has both positive and negativeenvironmental attributes. However, in the intensiveforestry areas (Section 3.3), forestry could have anadverse environmental impact, especially in theupland areas with their unique natural and culturalresources.The spatial concentration of commercial farmingin Munster and south Leinster and the withdrawal ofagriculture from less productive farming areas, inparticular upland and wetland areas, will impact onthe biodiversity and archaeological heritage in theseareas (Section 3.2). This situation is already evidentin the Burren (Co. Clare) and elsewhere.Growing international concerns with soildeterioration are reflected in the proposed EU SoilsDirective. The problems relate to the contaminationof soil and water resources in areas adjacent to ruralhousing settlements not connected to proper wastetreatment facilities is a growing problem (Sections1.6, 2.4). Also, pressures to dispose of wastes, such asdried sewage sludge on agricultural land couldincrease the risk of contaminating soil, and ultimatelyfood products, by chemical residues.Given the necessary consultation and appropriateincentives (Section 4), the long- standing problem ofwaste disposal will be progressively addressed by theestablishment of privately operated industrial-scalelandfills, regulated by the Environment ProtectionAgency (EPA), in conjunction with the judiciouslocation and strict operation of incinerators. Problemsassociated with the disposal of farm wastes will, aspreviously mentioned (Section 2.4), be largelyaddressed. However, in regions of the country,notably the Cavan/Monaghan area, which have highconcentrations of industrial scale pig, poultry andmushroom production, the current managementsystems are not sustainable. Large-scale treatmentsystems are required.The reduction in farmer numbers, together withenlargement of farms to the scale necessary tomaintain international competitiveness (Section 2.1),will result in the longstanding familial associationwith archaeological sites becoming significantlyeroded. Thus the coming decade constitutes a highrisk period for Ireland’s archaeological heritage.Indeed, some evidence indicates that the rate ofdestruction of archaeological sites may be increasingin coastal areas, and especially in the commercialfarming counties, due mainly to land improvements(removal of banks, ditches etc) associated with moreintensive grassland farming. A similar situation maypertain in relation to forestry.While there is increasing consensus about thenegative environmental impacts of agriculture andforestry, there is also growing recognition of, anddemand for, the public goods associated with bothsectors. In this regard, access to rural landscapes andto natural and cultural resources is an issue ofgrowing importance and, also, of conflict. With theincreasing demands on rural access, the public goodsassociated with agriculture, forestry and marine willbe increasingly valued in coming decades. Animportant issue in relation to the future of theseenvironmental public goods is the impact of climatechange.3. BASELINE PERSPECTIVE TO 2025:POPULATION, EMPLOYMENT ANDSPATIAL DIMENSIONS3.1 Population and employmentA business as usual perspective to 2025 must takecognisance of employment and populationprojections (Section 1.2), especially their spatialdimensions (see Thematic Papers No.2 and No.3).Two crucial questions in this regard are: (i) can theunprecedented national economic performance of thepast decade be sustained, and if so, (ii) will thebenefits flow out to rural communities in all parts ofthe country – given that such widespreadgeographical dispersal did not happen during the pastten years?There are several grounds to be doubtful of thelong-term sustainability of recent economic growth,especially as it relates to rural areas. This growth was13

Rural Ireland 2025 - Synthesis Reportachieved through a confluence of fortuitouscircumstances, without any significant rise inunderlying productivity (Section 1.1). Most futuregrowth will have to come from productivityincreases. This, in turn, will require high-techenterprises and a major expansion in the contributionof market services to the macro economy.Employment in these sectors tends to locate in thelarger urban centres. At first sight the expansion inrural employment over the past decade (Section 2.1)looks optimistic, but the real picture is camouflagedby some less sanguine features. Many rural areas stillhave a high dependence on an agricultural economy,which is heavily subsidised at levels that cannot beexpected to continue through to 2025. Overall,manufacturing employment has been static, while jobgrowth in agency-assisted companies has favouredthe larger urban locations and, regionally, the east.Much of the current production-oriented FDImanufacturing could, as previously stated (Section1.1), move to lower-cost economies. Indigenousagency-assisted enterprises have shown little realgrowth in sales or exports. Construction employment,a major source of jobs for rural workers, cannot bemaintained at current exceptional levels. Tourism isexpected to expand further but its regionaldistribution remains quite selective (Section 2.1). Inaddition to these vulnerabilities, Irish rural areas areparticularly exposed to the price of fossil fuels andconstraints on gaseous emissions.Even a continuation of past trends could lead toserious policy failures, especially if judged on thecriterion of achieving balanced regionaldevelopment. Dublin and the eastern counties willcontinue to increase their share of national populationand employment. The other major urban centres willalso continue to increase size, as will population inperi-urban areas – maintaining incessant pressure oninfrastructures and utilities. Urban growth in theregions will be enhanced by dedicated enterprisepolicies, services provision and regulatory measures– in line with the National Spatial Strategy. Clusterdevelopments, in the sense of a critical mass ofenterprises benefiting from new technology, pools ofexpertise and specialised supports, will be feasible insome provincial locations. However, the ‘rural spillover’will be limited, given the human resource andinfrastructural weaknesses at rural level (Section 1.2).The BMW Region, especially the north-west, willcontinue to lag behind the economic performance ofthe rest of the country, because of its weak urbanstructure and associated factors. There will besignificant rural problems also in the traditionallystrong farming areas currently adjusting to farmoutput restrictions and eventually to world marketprices. For rural areas, generally, but especially thoseoutside the commercial farming areas, much willdepend on how functionally connected they are tourban-centred economic developments. For thoseoutside the main urban catchment areas, speciallyfocused programmes of local economic developmentwill be necessary. Some coastal and high amenityrural areas, such as the lakelands, will see furtherincreases in population, as people with high incomesor assets are able to exercise greater choice as towhere they will live – provided of course that theattractions of the physical environment are not erodedby careless, short-sighted planning.3.2 Agri-food industryWhile the contribution of agriculture to the economyis expected to decline (Section 2.1), farming andmuch of the food processing industry as well assectors supplying services to the agricultural and foodindustry, will continue to provide a base ofemployment and income generation in rural areas.In terms of full-time equivalents, farming in 2025may provide upwards of 25,000 to 35,000 jobs. Whilenot all in rural locations, there could be a further40,000 to 50,000 employed in the food and drinksindustry. Also, there will be a sizable number of ruraldwellers (say 5,000 – 10,000) with jobs in small andmedium scale companies, providing specialisedservices to the agri-food and other sectors. In total,upwards of 70,000 to perhaps 100,000 may beemployed directly and indirectly in the agri-foodsector in 2025. Thus, the agri-food sector willcontinue to play an important role in the ruraleconomy. In particular, it will provide a bulwarkagainst the risk of over-dependence on foreign multinationalcompanies.The structural changes outlined in Section 2.1 willbe attended by greater geographical differentiation infarm production. This will lead to rural Ireland in2025 being characterised by the following threeagriculturally defined spatial areas, which haveimportant implications for the rural economy.• Intensive farming areas: The projected numbersof full-time commercial farmers, mainly dairyfarmers, and associated food processingcompanies will be concentrated predominantlyin Munster and south Leinster, leading to14

Rural Ireland 2025 - Synthesis Reportgrowing conflicts in these regions betweeneconomic and environmental sustainability.• Extensive farming areas: Most of the projectednumbers of part-time farmers will beconcentrated in the border, midlands andwestern region, where they will be engagedmainly in extensive beef/sheep production. Asizeable proportion of full-time commercialbeef producers will also be located in thisregion.• Marginal farming areas: The withdrawal ofagriculture from marginal farming areas willadversely effect the unique natural and culturalenvironment of upland and wetland areas. Thiswould place in jeopardy the amenity-tourismvalue of environmentally important ruralregions and reduce their opportunity to developalternative multifunctional land uses. In manysuch areas, traditional landscapes are beingreplaced with extensive monocrop forestry orscrub encroachment, as is already evident in theBurren (Co. Clare) and other counties in thewest of Ireland.3.3 ForestryEmployment in forestry is currently in the region of12,000 full-time job equivalents (see Thematic PaperNo.5). However, difficulties are being encountered inattracting and retaining new forest workers. There isa need for nationally accredited forestry trainingcourses allied to proper career structures, similar tothose pertaining in other countries, in order to attractand retain the young people required to raiseproductivity and international competitiveness of theforestry sector.With the necessary training for those engaged inforest management, harvesting and transport, andprocessing (including farmers as well as thoseemployed in the sector), combined with a wellbalanced state/private mix in terms of funding andinvestment, including sustained funding for astrategic research programme, forestry could in thedecades ahead make a sizeable contribution to therural economy. The sector has the potential to providesustainable employment for up to 20,000 ruraldwellers and also contribute to farm incomes. Thedesignation of regions/areas as preferred locations forforests could lead to rural Ireland in 2025 beingcharacterised by two distinct types of forestry, whichwould have important implications for the ruraleconomy.• Commercially managed forest: Thepredominance of commercial plantations onmarginal land will be further accentuated by thewithdrawal of agriculture from the lessproductive farming areas and the concentrationof forestry along the western seaboard, and inother counties with sizeable upland and/orunder-utilised areas, such as Leitrim and Cavan,and other regions with more difficultagricultural soils.• Non commercial public goods forest: Theseareas will be managed mainly for biodiversity,recreation and other public goods, and willinclude forests owned and managed by theNational Parks and Wildlife Service, and otherpublic bodies as well as private owners. A keyissue will be the provision of public goods, inparticular biodiversity, at the landscape leveland not necessarily in each individual landparcel. To conserve and encourage biodiversitylinkages between landscape units will be animportant component of land management.4. STRATEGIC CHALLENGESAND INITIATIVESAs already indicated (Section 1.1), much of theproduction-oriented or low-tech assembly thatcharacterises many of the FDI companies in Irelandcould move to lower cost economies, also possibly,back office and service type jobs (see ThematicPapers No.1 and No.2). The consequences of such anoccurrence for the national economy and theemployment boom of recent years need noelaboration. Among the measures being taken toreduce the risk is the substantially increased researchfunding being provided to universities forfundamental research. This will lead to a muchgreater output of PhD graduates, which FDIcompanies are increasingly recruiting. Theavailability of higher numbers of PhD graduates mayprovide an incentive for some FDI companies toremain in Ireland.A substantial number of those living in rural areasare employed in FDI enterprises. With the economicimpetus these companies and others provide,employment in building and road construction hasboomed in recent years. Waning of this buildingboom, combined with the expected downturn inagriculture (Section 2) would have very adverse15

Rural Ireland 2025 - Synthesis Reportconsequences for the rural economy. In suchcircumstances, accessible jobs from growth amongexporting businesses would be of critical importance.The major challenge facing the wider ruraleconomy is to achieve the optimum balance betweenbusiness competitiveness on the one hand andenvironmental and social sustainability on the other.This will require a sustained commitment ofresources to building demand-driven regionalresearch and innovation systems, involvingeffectively operating networks between localbusiness and enterprise, education/training andresearch agencies (Section 6.3). It will also requiresupportive environmental and socio-economicresearch. Given the opportunity costs involved, thepublic organisations concerned are often not in aposition to provide services that are specially tailoredto meet the requirements of individual regions/localareas. Funding specifically earmarked for use incommissioning/contracting the delivery of research,education/training and other support services needs tobe made available to regional/local agencies.Otherwise their needs, in terms of research andinnovation, will continue to be poorly provided for.The core challenges facing the natural resourcebased sectors of the rural economy, and the keyinitiatives that now need to be taken, are outlinedbelow. Further details on those and other importantchallenges and initiatives in relation to the agri-food,forestry and environment dimensions of the ruraleconomy are set out in the Thematic Papers containedin Part 2.4.1 Agri-food industryThree key challenges face the agri-food industry.These are: (i) responding to declining realagricultural prices; (ii). achieving an appropriatescale of operation; and (iii) increasing productdifferentiation (see Thematic Paper No. 4).Competitiveness in the predominant dairying andbeef sectors requires the attainment of muchincreased scale in both production and processing. Inmilk production the delivery of 1 million litres ormore of milk per farm business has frequently beensuggested as a necessary production target. Also, ashas been advocated in a number of national reports –most recently the McKensey and Prospectus Reports– major rationalisation is required in dairy and beefprocessing. Ireland’s seasonal milk productionsystem and the consequential plant capacityrequirements and associated under-utilisationproblems, have crucial implications for the scale ofcapital investment required in dairy and also beefprocessing facilities. In addition to this large capitalrequirement, the processing sector must attain themassive scale required to maintain internationalcompetitiveness. As mentioned in Section 2.1, thesepressures can be expected to result in Ireland having,in the coming decade(s), just two major dairyprocessing companies and a comparable number ofbeef export processing groups. Governance issuesmay of course adversely delay this essentialrationalisation process.The progressive lowering of real agriculturalprices will severely challenge and could threaten theeconomic viability of the dairying and beefproduction. These are the core sectors of agriculture,where Ireland is considered to have some competitiveadvantages. With its current scale and excessivedependence on undifferentiated products, the primaryfood processing industry will be subjected to parallelpressures. If the primary producer does not produce,the first stage processor cannot survive. Thesecondary processing sector, in particular theprepared consumer food component, which has beenthe most dynamic sector of the food processingindustry in recent decades, is already sourcingsignificant volumes of its raw materials on worldmarkets. As with the FDI sector, the preparedconsumer food companies may ultimately find itmore profitable to re-locate to cheaper economies,including the new EU Member States. Themanufacture of prepared consumer foods and alsosome other high value food products is not dependenton having an indigenous farm production sector.The new policy framework, allied to the growingcompetitive environment, increasingly demands themanufacture of market required food products ofconsistent quality and guaranteed safety, produced ina manner compatible with environmental and animalwelfare requirements. Meeting these demands willrequire the development of new livestock productionsystems, that match animal nutritional requirementsand genetic potential, and that produce in anenvironmentally sustainable manner, consistentquality raw materials for the food processingindustry. These must be internationally competitivenot only in price, but also functionally. In theknowledge driven international markets, the agrifoodindustry must have the business, technologicaland innovative capacities to support a moredifferentiated product portfolio, ranging from thecontinued manufacture of high volume commodity16

Rural Ireland 2025 - Synthesis Reportproducts, to food ingredients and to short shelf lifeand other high value products, such as functionalfoods.In the immediate years ahead, the agri-foodindustry must position itself within the knowledgeeconomy. In particular it must have the technological,innovative and business capacities required to obtainthe optimum balance between the economic dictatesof cost-efficient farm production, food manufactureand supply, while at the same time meeting growingconsumer and societal demands regarding foodquality, safety, nutrition and diet-health relationships– as well as protecting the environment, and meetinganimal health and welfare concerns. Coping with thistesting new context will require fundamental stepchanges in agri-food and rural economic research, interms of strategic directions, capacities andorganisational/delivery structures.4.2 ForestryReduced afforestation grants/premiums, andincreased wood supplies, from other EU MemberStates, allied to uncertain roundwood prices and themitigation and adaptation aspects of climate changeare major challenges facing the industry (seeThematic Paper No 5).Increased awareness and realisation of thebenefits of forests and the major potential of woodenergy (including the use of forest carbon sinks in theEU Emissions Trading Directive), greaterrecreational use of forests, as well as delivering betterwater and biodiversity services would be beneficial tothe rural economy. However, there are majorchallenges facing the sector as detailed in ThematicPaper No. 5. In the immediate decades ahead themain national contributions of the forestry sector willbe in public goods provision, in particularrecreational uses and carbon sequestration. Tomaximise this important contribution, financialincentives for the public goods provided by forestryare essential. The provision of forestry environmentalpayments, is in this regard an important initiative.Increased and sustained investment in nationallyaccredited forestry training courses, technologyresearch and development is also essential in order tooptimize the public good provision and improve thecompetitiveness of the sector.4.3 MarineWith the adoption of a proactive and partnershipstrategy for marine resource development, supportedby the application of science and technology, keyinitiatives in the marine sector could result in thefollowing positive outcomes by 2025.• Ireland could be a strategic node in European-North American and Baltic-Mediterraneanshipping routes, with a developed re-distributionpoint serving European short sea routes. Anassociated Maritime Financial Service Centrecould be established.• Oil and gas could be brought ashore, andrenewable ocean energy could provide up to30% of national electricity demand. A thrivingand environmentally sustainable marineaggregates industry could also be developed.• Ireland has the potential to be a prime touristdestination for marine and leisure activities, inan attractive environmental setting.• New opportunities for a more economically andenvironmentally sustainable seafood sector canbe expected from reforms of the CommonFisheries Policy, a reassessment of costs (energyrequirements, crew available, etc.) andinnovative partnerships to exploit Ireland’sgeographical proximity to important EUAtlantic fishing grounds, linked to integrationalong the whole seafood processing chain.• Greater local control over regional fisheries,through Regional Councils would invigorate theinshore sector supporting a specialised fleet.• The demand for seafood, especially in healthand specialist food markets, coupled with thestrong green image of products caught offwestern Europe, will provide an opportunity forinnovative partnerships to supply value-addedniche European and global seafood markets.• Aquaculture can expand considerably in termsof production levels, species diversity andproducts.• New commercial developments will be mostnotable in the science-based sectors wherelucrative marine bio-prospecting activity couldprovide important support for localbiotechnology companies.• By exploiting ICT capabilities and new sensortechnologies, Irish companies could17

Rural Ireland 2025 - Synthesis Reportsuccessfully penetrate monitoring andsurveillance product and services markets.The three critical requirements for the positivescenario outlined above are:(i)(ii)A strong proactive and leadership role by theState in putting the sustainable development ofthe country’s marine resource centrally on theeconomic development and political agenda.Raising the intensity of research, technologicaldevelopment and innovation (RTDI), through afocused Marine RTDI Funding Programme, todevelop the necessary scientific understanding,technologies and innovative business modelsthat can realise efficiencies and create newmarine resource development opportunities forboth local and global markets.(iii) Raising environmental issues and concerns to apre-eminent position, maintaining a high qualityenvironment, balancing longer-termenvironmental impacts against short-termeconomic gains, and introducing into economicdevelopment models assessments of themonetary value of public goods and services.4.4 Rural landscapesContinued infrastructural developments andgeographical concentration of intensive agricultureand forestry (Sections 3.2 and 3.3), combined withthe potential impacts of climate change are crucialchallenges for the future management of rurallandscapes. Demands on rural space, includingpressures on water and other environmentalresources, will become more acute, especially in theeastern region, due to the combined effects of furtherpopulation growth and climate change (see ThematicPaper No.6).EU Directives, provided they are fully andproperly implemented in a timely manner, provide abasis for cautious optimism that the environmentaldegradation of recent decades will be arrested.However, as previously indicated, sustained financialand experienced human resources need to becommitted to conflict resolution in relation to thelocation of roads, utilities and other infrastructure, aswell as public access to rural landscapes. Otherwisethese issues could become substantial impediments tocontinued economic growth.The daunting challenge involved in striking theoptimum balance between economic developmentsand environmental management, points to theconcept of envisaging the environment as a virtualeconomic entity, within which a dynamic range ofcompeting developmental, environmental and socialpressures have to be systematically accommodated,without the demands of one sector impacting undulyon others.Inherent to this concept is the need repeatedlyreferred to, for the value of public goods, especiallythose provided by agriculture, forestry and the marinesectors to be quantified and priced, for their full valueto society to be included adequately in the process ofpolicy formulation. In this regard the establishmentof a strong national capability in environmentaleconomics is an urgent priority in building Ireland’senvironmental research capability.The complex array of interactive issues involvedin reconciling the seemingly conflicting demands ofenvironmental development and environmentalmanagement, need to be better understood, in order tobe managed effectively. This will require thesustained commitment of resources to a nationallymanaged environmental research programme. In thisregard, there is need to build on the researchprogrammes being financed and managed by theEnvironmental Protection Agency. In particular,closer integration of scientific and policy-orientedresources is essential in generating the knowledgerequired by policy and decision makers in devisingsolutions to emerging problems. Further to this, themajor structural changes expected in agriculture, inconjunction with climate change, underline thepressing need to establish cost effective baselinesagainst which the impacts of those and other majorchanges, on both the natural and culturalenvironment, can be objectively assessed and timelycorrective action taken where necessary.To ensure the environmental management ofintensively farmed regions (Section 3.2), urgentattention also needs to be given to the development ofa Public Goods Incentive Scheme, designed toencourage full-time commercial farmers to conservenatural habitats and archaeological sites, whilst notunduly inhibiting the profitability of their farmbusinesses.Unlike REPS, the proposed Public GoodsIncentive Scheme would not have predeterminedlimitations on the productivity of the entire farm. Thefocus of the scheme would be those part(s) of thefarm that have significant public goods, especiallynatural habitats, archaeological sites and historic18

Rural Ireland 2025 - Synthesis Reportlandscapes. In addition to the conservation ofspecified heritage sites, payment of the incentiveswould be conditional on adherence to environmentaldirectives, regulations and the Code of Good FarmingPractices. Also the proposed incentives could bedevised so as to address the issue of public access tonatural habitats, archaeological sites and historiclandscapes.4.5 Population, employmentand spatial dimensionsA key objective of public policy is not only tomaintain the rural population in aggregate numbers,but also to achieve a balanced spatial distribution ofpeople and jobs (see Thematic Paper No.3). Some ofthe initiatives required to realise this aim have in factbeen already well identified in the White Paper onRural Development (1999), the National SpatialStrategy (2002), and in various other national plans.However, the rhetoric of declared policy has not beenmatched by sufficient commitment to implementingthe actions identified as necessary.What is now needed are: (i) responsive andeffective institutional structures to formulate andimplement policies for multisectoral ruraldevelopment; and (ii) strategic and regionallyspecificsynchronisation of existing polices andplans, together with some new actions and takingaccount of the changed EU policy environmentbeyond 2006. The National Spatial Strategy shouldbe implemented with sustained political commitmentand in a manner joined up with future nationaldevelopment plans. These plans should retain thegood practices already established under previous EUfunding requirements, including the setting of targets,and performance indicators, and the establishment ofregional monitoring systems. The plans should havean explicit focus on the NUTS 3 regions. The currentBMW and Southern and Eastern regional division istoo gross and unrealistic a categorisation to respondto Ireland’s regional variations. Special attentionneeds to be given to generating local economicdevelopment in those areas lying outside thecatchment zones of the larger urban centres, whereneither agriculture nor urban generated growth willmaintain population. Within this context, theimplementation of the 2002-2012 County Strategiesneeds to be given a much stronger impetus thanhitherto.While EU structural funding levels will bereduced, future rounds of EU cohesion policyfunding will emphasise regional competitiveness,including exploitation of the full potential of naturalresource based employment, upgrading old economyenterprises, and developing internationally-orientedclusters at regional locations. Regional and subregionaldevelopment could also be supported bystrengthening inter-urban networks which are in factemerging organically. A western corridor needs to bedeveloped as a counter to the Greater Dublin Region.The commitment under the reformed CAP tomove supports from production agriculture to ruraldevelopment, (Pillar 2 of the CAP), is welcome.However, the currently designed Pillar 2 is too feeblea response and also too much centred on agriculturalstructures to offer any real hope of making asignificant contribution to developing a strong ruraleconomy in Ireland. It needs to be much broader inscope. Tourism policy also needs a clear rural andregional dimension, and in which the public goodfunctions of agriculture and other natural resourcesare adequately recognised.Most importantly, the future development of therural economy needs a dedicated research supportsystem linked to public policy-making, and to guidethe optimal use of rural resources and rural space.This would be an integral component of regionalresearch and innovation systems (Section 6.3).5. COMPETITIVE AND SUSTAINABLERURAL ECONOMY TO 20255.1 Economic prospectsUnless the underlying rate of productivity growth issignificantly improved, the level of out-performanceof the past decade or more will not continue; instead,the economy is projected to grow by some 3 to 5%per annum (Thematic Papers No. 1 and No. 2). As aresult the size of the economy in 2025 will be doublethat in 2002 and incomes per person would be 60%higher.Sustaining the assumed productivity growth trendof 2% a year per person employed would requirecontinued expansion in the contribution of marketservices. These will occupy the position of lead sectorinstead of high technology manufacturing. This scaleof expansion would be required to alleviate theimpact, especially in rural areas, of the expectedcontraction of employment in agriculture, buildingconstruction, traditional manufacturing industries,and eventually perhaps, food processing.19

Rural Ireland 2025 - Synthesis ReportIreland’s rural and regional economies are, asalready indicted, intrinsically affected bydevelopments in, and the growth of, the nationaleconomy. Over one-quarter of the rural population isemployed in agriculture and the building industry,where long-term contraction is to be expected.However, contraction of these industries may beoffset if rural regions can share in the overall growthin the export-oriented service sector. Between 1991and 2002 the proportion of rural residents engaged inthe professions and other service type occupationsnearly doubled. With the continued preferences forliving in high amenity rural/coastal areas there is thepossibility of a switch to the provision of services inthe structure of rural employment in the years to2025. Allied to this, there is growing societal demandfor wholesome food products of assured safety andconsistent quality, produced in a manner that meetsenvironmental and animal welfare requirements. Alsothe demand is rising for public goods associated withagriculture, forestry and the marine. These trendswould enhance the service content of the ruraleconomy.Notwithstanding the aforementionedopportunities, a major concern for rural and regionaleconomies is the outcome of negotiations on WorldTrade Organisation’s Agreement on Agriculture. Inparticular prices for livestock products could fall dueto reduction in protection of the EU market andconsequent competition from imports at worldmarket prices.The cost of energy will almost certainly increaseby 2025, but possibly not so much as to be a majorconstraint to its use (see Thematic Paper No.1). Muchof the projected 60% global increase in energypurchased by 2030 will be supplied by oil and gas.However, there may be an elevated risk of crisisinducedspikes in energy prices, as happened in early2005 when prices jumped to over US$50 per barrel.Indeed some observers contend that there will bedifficulties with energy supplies and prices from 2015onwards, unless renewable sources come on stream.While not discounting such eventualities, the scopefor greater efficiencies in energy use is such that,when combined with replacement of hydrocarbons,access to energy is not likely to be a critical constrainton economic growth up to 2025. Apart from crisisinducedepisodes, supply and demand are likely to bemore or less balanced at real prices no higher thanrecent peaks. However, because of the persistenttravel inherently involved and the requirement formore extended transport networks, rural Ireland isparticularly vulnerable to both the price of fossil fuelsand constraints on gaseous emissions.As already indicated, Ireland is far in excess of the13% increase in greenhouse gas emissions allowedfor in the commitments made in the KyotoAgreement. Even allowing for the purchase ofemission permits, payment of carbon taxes andreduced agricultural emissions due to the expectedfall in cattle and sheep numbers, greenhouse gasemissions projected for 2010 would still be some25% above those in 1990. With evidence of globalwarming becoming more troubling since the signingof the Kyoto Agreement, constraints on greenhousegas emissions are likely to increase up to 2025. Thiswould have major implications for economic growthand underlines the important role that an expandedforestry programme and other forms of carbonsequestration together with renewable energysources, can play in alleviating the impact.5.2 Achievable perspectiveAssuming a sustained national growth rate of theorder of 3 to 5% together with the necessaryinvestment in infrastructure and in the developmentof an indigenous knowledge economy, rural andcoastal Ireland in 2025 could be envisaged as havinga balanced mix of business enterprise sectors,supported by enhanced telecommunications andtransport networks (see Thematic Papers).• The service sector will be the predominantdriver of growth, with much of the employmentconcentrated in urban centres.• The manufacturing sector will also beimportant, especially exporting businesses builtupon sustainable comparative advantages.• Old economy enterprises will be up-graded,with agriculture, forestry and the marine makingimportant contributions to the rural economy.• Ireland could have a sizable knowledge bioeconomy,built upon the comparativeadvantages of the natural resource based sectorsincluding agri-food, forestry and the marine.• Locally trading companies could be a vibrantsector of the rural economy, with tourism inrural and coastal areas providing knowledgebasedenvironmental goods and services,focused on Ireland’s unique landscapes.• There could be a sizable number ofinternationally oriented clusters of companies20

Rural Ireland 2025 - Synthesis Reportexploiting the full potential of natural resourcesin food, forestry, the marine and tourism.Obstacles to achieving these prospects include:• Stagnation in the macro economy and failure toextend growth to the rural regions.• Inadequate provision of infrastructure to linkpeople and businesses in rural areas to thecentres of economic activity.• Degradation of Ireland’s rural and coastallandscapes constitutes a most worrying threat.Of particular concern is the further spread ofone-off scattered housing in the countryside,especially holiday homes. Extensive scrubencroachment together with monocultureafforestation in upland and wetland areas is alsoa concern.• Failure to create institutional structures andgovernance systems with the sustainedcommitment and capabilities to respond to thechallenges facing the rural economy.• Lack of the necessary knowledge to informpublic policy and strategic planning.6. KNOWLEDGE RURAL ECONOMYThe economic opportunities presented in Section 5are in many instances realistically achievable. Thekey strategic question is: are they likely to beachieved?6.1 Institutional frameworkImplementation of many of the strategic initiativesoutlined in Section 4 requires in particular interdepartmentaland cross-agency commitments toensuring that sectoral policies and programmescontain responses focused on the defined needs of therural economy and communities (see ThematicPapers No.1 and No.2). The needs of the ruraleconomy must be seen comprehensively, asimportant dimensions of regional development andnot simply as problems to be solved by the reformedCommon Agricultural Policy. The CAP has noincreased funding for rural development in realterms; and moreover, its concept of ruraldevelopment is severely restrictive. With the nextround of EU Cohesion policy funding largelydedicated to convergence and competitiveness, theopportunity exists for Ireland to seek increasedfinancial support to build regional/ruralcompetitiveness. Given the prevailing weaknesses inthe existing institutional framework, it is difficult tobe confident of the timely and proper implementationof the strategic initiatives identified in Section 4,unless the overarching measures set out below are putin place and, most importantly, are properlyresourced and effectively operated.6.2 Rural Policy Implementation GroupThe compartmentalised policies and budgetaryprovisions of the different government departmentsand agencies involved in developments pertaining tothe rural economy do not provide the institutionalframework necessary to mobilise decision makersand stakeholders (in both the public and privatesectors) to undertake the collective strategicinitiatives (Section 4) and also the overarchingmeasures (outlined below) that are required to repositionrural Ireland in the knowledge economy. ARural Policy Implementation Group on resourcedeployment in rural areas is the cardinal requirement.The Group should comprise senior officials fromappropriate government departments anddevelopment agencies, together with senior managersof rural businesses and leaders of relevant voluntaryorganisations. Its establishment would ensure thatrural enterprise initiatives (Section 4) have an explicitpresence in the policies, budgetary provisions and theimplementation strategies of governmentdepartments and development agencies.A prime concern of the proposed Group would bethe establishment of the financial and otherpreconditions necessary for the implementation ofnational and regional reports, in particular theNational Spatial Strategy (2002), the White Paper onRural Development (1999) and the Report of theEnterprise Strategy Group (2004) which places astrong emphasis on the development of indigenousbusinesses. The Group would provide a coherentinstitutional framework for developing the strategicconsensus necessary to mobilise funding and otherresources for collective initiatives (Section 4) inrelation to the multi-dimensional issues involved inbuilding a knowledge rural economy. Its work wouldbe underpinned by research on the functioning of therural economy and the quantification of the likelyeffects of policy initiatives and other externalinfluences.21

Rural Ireland 2025 - Synthesis Report6.3 Regional innovation andresearch systemsProvision of the rural knowledge infrastructure, thatis adequately and specifically funded to supportinnovation and demand driven research on regionallyspecific issues, is urgently required (see ThematicPapers). The central role of knowledge in drivingnational and regional innovation and economiespoints to the need for the development of new modelsfor the organisational structure and delivery ofresearch and innovation. To meet the specificcontext-dependent needs of rural regions, ananalogue of the US Land Grant Colleges may beappropriate. These colleges have a strong extensionrole in delivering new knowledge to potentialadopters in rural areas. Such an extension modelwould position the higher education organisations toact more directly as intermediaries in developingclusters of indigenous businesses. In particular itwould provide a structured system for meeting notjust the research requirements of rural regions andindigenous businesses, but also their education andtraining needs, as further outlined in Section 6.4below. A widespread anomaly in relation to theserepeatedly defined needs, are the major discrepanciesin the relatively small, and often decreasing,proportions of national and EU science budgetsallocated to knowledge-transfer as opposed toknowledge-creation.An innovation driven approach to research needsa radically different funding system from thatconventionally applied to higher educationinstitutions and state research institutes. To raise thecapacity of rural regions to generate, absorb andintegrate research and technological innovations andtransfer them into economic growth, the fundamentalrequirement is a dedicated strategic funding system.This needs to be designed so as to enable ruralregions:• to capitalise on their comparative advantages,by mobilising all the resources available,towards the attainment of context-dependentand demonstrably attainable goals; and also• to take advantage of best practices and modelsavailable in relation to the governance,organisation and delivery of integrated researchand innovation systems.6.4 Knowledge transfer, innovationand human resource capacitiesInnovation requires the capacity to combineknowledge from different disciplines/sectors andapply it to real world problems, in an environment ofcost constraints and financial risk. It is not justdependent on research quality or quantity.The current pre-occupation with funding basicresearch, primarily in the universities, is important. Itis not, however, a precondition for, and will not perse, drive technological or other innovations. Researchhas been described as the transformation of moneyinto knowledge; innovation as the transformation ofknowledge into money. Basic research is of vitalimportance in providing the knowledge platformrequired to support the delivery of up-to-dateeducation programmes. It is also essential aspreviously indicated (Section 1) in providing theincreased numbers of properly trained researchers,required to support continued economic growth andin Ireland retaining its position as a beneficiallocation for FDI companies.The university education system is mainlyconcerned with the development and provision ofnew knowledge. The development of knowledgerelated skills is strategically important but notformally provided for by the current system. Toensure their continued employment prospects,research graduates need to rapidly acquire a complexarray of knowledge-related skills, for instance incommunications, problem solving, preparingresearch proposals and research budgeting andmanagement, while at the same time keeping abreastof developments in their own fields. To meet theseslife-long learning requirements, the universities andother third level institutions need to have a moreproactive and systemic approach to the provision ofpostgraduate training programmes, especially foryoung professionals embarked on careers in both thepublic and private sectors. In addition to this, the longstanding and well documented deficit in the provisionof nationally accredited industry trainingprogrammes, for both managers and operativesemployed in a wide range of sectors, needs to beproperly and urgently addressed. Training is anessential conduit in technology transfer. By providingthe required training programmes, the Institutes ofTechnology in particular, have a crucial role to play inraising the technological absorptive and innovativecapacities of regions and companies.22

Rural Ireland 2025 - Synthesis Report7. CONCLUSIONSThe re-positioning of the rural Ireland in theknowledge economy and ensuring its futurecompetitiveness, are fundamentally dependent on theimplementation of the three overarching measuresoutlined in Section 6. These are the establishment of:• ARural Policy Implementation Group• Integrated Regional Research and InnovationSystems• Education and Training Programmesspecifically designed to raise the humanresource capacity of rural regions and especiallyof businessesBased on previous experiences with policyrecommendations, it is not likely that these essentialoverarching support measures for a competitive andsustainable rural economy will be readilyimplemented. In their absence, the rural economy in2025 will not attain the economic prospects outlinedin Section 5.2. Instead it will approximate more to theBaseline or Business As Usual Perspective set out inSections 2 and 3.The rural economy in 2025 will to a significantdegree be dependent on our own national strategicchoices. We Cannot Plan the Future - We Can Planfor the Future. The cardinal question is Can We Acton the Plans? by developing the necessaryinstitutional framework and commitment ofresources. We need to develop better, not more publicinstitutions.Constructing an effective institutional frameworkto support continued economic growth nationally andat regional level is the single biggest developmentalchallenge facing Ireland.23

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Rural Ireland 2025 - Synthesis ReportAPPENDIX 1:MEMBERS OF THE WORKING GROUPGerry BoyleOwen CartonPatrick ComminsLiam DowneyMartin DownesJim KinsellaJoe MannionDavid MeredithEamonn PittsGordon PurvisBrendan RiordanHubert TunneyJames WalshNUI MaynoothTeagascNUI MaynoothUniversity College Dublin/NUI MaynoothNUI MaynoothUniversity College DublinUniversity College Dublin (Co-Chair)TeagascTeagascUniversity College DublinTeagascTeagascNUI Maynooth (Co-Chair)25

Rural Ireland 2025 - Synthesis ReportAPPENDIX 2:PARTICIPANTS IN THE FORESIGHT CONSULTATIVE FORUMMichael Dowling (Chairman)Derek BreenKieran CalnanKieran CarolanDeirdre CarrollTom ClintonShane ColganDoreen CorridanAlan CraigPatrick CrehanNiall CussenMartin FarrellJohn FennessyKieran FitzgeraldJohn FoxJohn GardinerMary JacksonMary KellyGerald KeenanMichael MonaghanLisa McAllisterKieran MoylanMatt O’KeefeYvonne ShielsTony SmythDonal WhelanHead of Agri-Strategy, Allied Irish BanksManager Food Division, Enterprise IrelandChief Executive Officer, SWS GroupManaging Director, Green Isle FoodsAssistant Secretary, Dept Community, Rural & Gaelteacht AffairsFarmer/BusinessmanScientific Officer, EPAManager AI and Farm Services, DairygoldDirector, National Parks and Wildlife ServiceDirector, Crehan Kusano & AssociatesSenior Adviser, Dept. Environment, Heritage and Local GovernmentAssistant Principal Officer, Dept. Agriculture & FoodResearch Programme Manager, COFORDDirector Food Division, IBECAssistant Secretary, Dept. Agriculture & FoodDept. Crops, Horticulture & Forestry, UCDAssistant Principal, Dept. Tourism, Sport and RecreationDirector General, EPAManaging Director, Richard Keenan and Company LtdFaculty of Veterinary Medicine, UCDCEO, Western Development CommissionAssistant Director, Border, Midlands & Western Regional AssemblyFarmer/JournalistDirector Strategic Planning & Development, Marine InstituteSenior Inspector, Dept. Agriculture & FoodTechnical Director, Irish Timber Growers Association26

Rural Ireland 2025 - Thematic PapersPART TWOThematic Papers1. Economic Conditions in the 2025 Baseline Scenario.B. Riordan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .292. The Broader Rural Economy.P. Commins . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .373. Some Spatial Dimensions: Population and Settlement Patterns.P. Commins, J. Walsh and D. Meredith . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .454. Foresight Study of the Agri-Food Sector.E. Pitts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .615. Foresight Report on the Forestry Sector in Ireland.J. Fennessy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .596. The Rural Environment.O. Carton, H. Tunney, J. Finn and L. Downey . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7727

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1. Economic Conditions in the 2025 Baseline Scenario1. Economic Conditions inthe 2025 Baseline ScenarioB. Riordan 1INTRODUCTION:SCENARIOS AND METHODSThis paper provides the starting point for subsequentpapers in this Foresight project. It provides a scenariofor 2025 based on current trends. It focuses on thelikely prospects for economic growth, and inparticular growth in Gross National Product (GNP)per capita, for the period up to 2025. SubsequentThematic Papers provide scenarios for specificsectors and regions within the context of this‘baseline’ scenario.An alternative scenario resulting fromimplementation of specific initiatives will also beanalysed, initiatives would include:1. More intensive development of the knowledgeeconomy;2. Strengthening of the incentives to take accountof the external costs and benefits of choicesmade at work and in private life, including:a. Location of work and home;b. Travel and transport demands;c. Services sought, for example: venues andshops, water and sewage, connections for mainselectricity and for communications;d. Environmental impacts including: waterpollution, gaseous emissions as, for exampleGreenhouse Gasses; land use and effects onvisual amenity.As a result society and the economy perform moreefficiently with outcomes examined in subsequentpapers. These will be contrasted with the likelyoutcomes from the trend, or ‘Business as usual’,baseline scenario whose overall features are outlinedin this paper.1. ECONOMIC GROWTH IN IRELAND –A CONTINUATION OF THE 1990SMODEL TO 2025?Our assessment of the process underlying Irisheconomic growth and hence the assumptions aboutrates of economic growth up to 2025 are based on the2003-2010 Benchmark forecast in the ESRI MediumTerm Review 2003-2010 2 . Detailed projections areprovided in Table 1.The drivers of long-run growth in the ESRI modelstress, on the one hand, the key role of internationaleconomic conditions and, on the other hand, domesticsupply conditions. In the short run internationalfactors, including: exchange rates, interest rates andgrowth in international markets, will influencedemand for exports, but in the long run the key driverwill be the evolution of global economic growth.Likewise, on the domestic supply side, internationalcompetitiveness in terms of relative prices, wagesand broader input costs and regulatory burdens, willprofoundly affect economic performance in the shortto medium run. In the long run, however, prosperitywill be determined by our ability to increaseunderlying productivity.The lesson from the “Celtic Tiger” era of the1990s is that we achieved an exceptional growthperformance mainly by dint of demographic factors,particularly increased labour-force participation,especially of women, and immigration, rather than bysignificantly improving the underlying rate ofproductivity growth. This was possible because of theunique features of a small economy like ours, whichhas the capacity to grow its labour force significantlythrough labour migration and the exploitation ofopportunities for enhanced labour-force participation.These demographic factors were supported by thepursuit of prudent macroeconomic policies, thematuring of sustained investments in human capital,and the influence of the Social Partnership model in1 Email address: brendan@briordan.org2 Bergin, A. et al. (2003). Economic and Social Research Institute, Dublin.Acknowledgement to members of the Working Group, particularly G Boyle, P Commins and P Crehan for generously enabling me to draw on theirthinking, knowledge and their own drafts in the preparation of this document.29

Rural Ireland 2025 - Thematic Papersthe setting of competitive wages. Thesedevelopments in turn led to an unprecedentedincrease in Foreign Direct Investment (FDI), whichboosted the stock of capital resources and generatedother positive externalities too.It would be fortuitous indeed if the confluence ofthese factors continues to operate in the period up to2025. The boost to growth from enhanced labourforceparticipation, for instance, is likely turn to anatural slowdown. The emphasis will then shift to theprospects for sustaining, and hopefully increasing,the underlying rate of productivity growth. Ourability to achieve this outcome is likely to affectsubstantially our capacity to get enhanced growth inliving standards.We now consider some of the factors that haveoperated in the past to underpin economicperformance with a view to assessing whether theinfluence of these trends will continue to be as benignin future.Over the next decades average rates of growth inthe economies of our main trading partners are likelyto be about two percent a year, according toconsensus forecasts. Their growth would bebeneficial for growth in Ireland, providing marketsfor exports and inward investment.Ireland is seen to continue to gain from variouscircumstances that have favoured a performanceahead of our trading partners over past years.However, evolution of the structure of population andthe economy has reduced the scope for the samedegree of out-performance in the future. The assumedchanges, shown in Table 1, indicate that most of thegrowth would come from sustaining the two percentgrowth in productivity per person at work, achievedin many earlier years. The cumulative effect would beto raise the value of output per person at work by 58percent between 2002 and 2025. This, combined withsome further structural evolution, would deliver a 60percent rise in Gross National Product per capitabetween 2002 and 2025. It would also yield a similarrise in people’s disposable income.Achievement of the projected rise in output andincomes is likely to involve major expansion in thecontribution of market services to the economy,already seen in the rise of the International FinancialServices Centre (IFSC). These will take over the roleof lead sector from high technology manufacturing.In contrast, employment would contract inagriculture, building, the traditional manufacturingindustries and, eventually, food processing.Demand, particularly for improved services,would also rise with the anticipated growth inincomes. Of particular relevance for the ruraleconomy would be enhanced consumer preferencesfor environmental goods, which tend to be associatedwith high incomes, such as the requirement to have apleasant countryside for recreational pursuits. Theseare clearly public goods and externalities ofagriculture and forestry. Payment for their supply ispartly provided in the Rural Environment ProtectionScheme (REPS). However, it does not cover all of theland, largely due to the capping of payments, nor doesit cover all of the public goods that could be providedby land occupiers. Demand for food would also gofurther down the route of looking for assurances thatevery product is reliably enjoyable, safe andproduced in environments that are animal-welfarefriendly.Ireland’s rural and regional economies are likelyto be substantially affected by developments in theoverall development and growth of the economy.Analysis of employment data in the 1991 and 2002Censuses, from Prof Jim Walsh and Cian O’Connor,indicates how rural Ireland may gain as well as losein the context of the overall projections. In theiranalysis they took rural to be all of the people notliving in urban areas of 1,500 people or more. Thisshowed that 40 percent of the population was ruraland they accounted for 39 percent of people inoccupations in 2002. However, the pattern of theseoccupations does not auger well for the future as over25 percent were in agriculture and building industrieswhere long-term contraction is to be expected.However, the professions and other service typeoccupations seem to have been as prominent in ruralnon-agricultural employment as in the urban areas. Inaddition, the numbers of rural residents in theseservice occupations nearly doubled between 1991and 2002. Some of this work may have actually beendone in urban centres, though it is notable that theproportion of people in the professions and otherservice occupations did not differ greatly betweencounties close to major centres and those furtheraway.2. GLOBAL GOVERNANCE, TRADE ANDMOBILITY OF CAPITALContinuation of the current internationalarrangements is a cardinal assumption. This is ascenario that has benefited Ireland in the past,however, it does imply that competitive performance30

1. Economic Conditions in the 2025 Baseline Scenarioin international trade in goods and services is anessential part of the ‘business as usual’ baselinescenario. The consequence of any competitiveweakness is illustrated by the net outflow of jobsfrom foreign owned businesses over the period 2001to 2004.One downside for the rural and regional economyin this global trade scenario is that the EUcommitment to implementation of the World TradeOrganisation’s Agreement on Agriculture includes arisk of reduced prices for livestock products throughcompetition from imports at world market prices.3. ENERGY SUPPLY, DEMAND AND THEGHG CONSTRAINTThe cost of energy in 2025 will almost certainly behigher than in 2002, but possibly not so much as to bea major constraint on its use. Reasons for thisincrease are mainly:1. A rise in the international price of oil and,2. Taxes, charges and other measures to constrainemissions of greenhouse gasses (GHG).In addition, there will be a greater risk of supplydisruptions pushing prices to crisis levels, illustratedby prices in late 2004 of $50 per barrel. Theseconsiderations will now be examined in more detail.3.1 The oil and gas marketThe World Energy Outlook 2004 projects a 60percent increase in energy purchases by 2030reflecting strong growth in China, India andthroughout Asia. In the baseline scenario much of thisexpansion would be supplied by oil and gas at a priceequivalent in terms of money values in 2000 of $25per barrel. The report’s analysis of the consequencesof a price of $35 per barrel clearly demonstrates theresponsiveness of supplies of oil and gas to higherprices. It also shows an increase in the role ofproviders of energy from unconventional sources. Inaddition, an energy saving scenario demonstrates thescope for reducing consumption thus supporting theview that depletion of oil and gas deposits over thenext 25 years need not do serious harm to the globaleconomy. Thus these sensitivity tests of the baselinescenario above, support the view that, over the years,supply and demand will be balanced at real prices nohigher than recent peaks. However, there may be anelevated risk of crisis-induced spikes in energyprices.3.2 Greenhouse gas (GHG) emissionsProjections of GHG emissions to 2030 in the WorldEnergy Outlook 2004 are ‘calling into question thesustainability of the current energy system’ in thewords of its publisher, the International EnergyAgency. An early response to this threat was theKyoto Protocol and the commitments in it by EU,Russia, and other countries, to constrain theemissions of GHG in 2008 to 2012 relative to 1990.Projections show Ireland overshooting itscommitment by a wide margin. The ESRI Benchmarkforecast in its Medium Term Review 2003-2010includes an assumed addition of 20 euro per ton ofcarbon dioxide emitted to the costs of all users ofhydrocarbon fuels. For large industrial users thiswould come in as the cost of buying additionalemission permits. Other users, including transportand home heating, are assumed to pay a carbon tax.However, even with these measures and the fall innumbers of cattle and sheep also reducing emissions,the levels projected for 2010 would still be 25 percentabove those in 1990. Ireland is thus far in excess ofthe 13 percent increase allowed within the EU burdensharing arrangements for fulfilling the commitmentmade at Kyoto. The Review states that from January2005 the excess would be covered by purchase ofemission allowances through the EU EmissionsTrading Scheme. This enables companies to sell theallowances they have been awarded in their NationalAllocation Plan or to buy from others.Constraints on GHG emissions are likely toincrease in the years to 2025, as Kyoto has alwaysbeen but a first step in reducing emissions and, sinceits signing, the evidence of GHG global warming hasbecome far more troubling. However, such is thescope for increasing efficiencies in energy use and insome replacement of hydrocarbons as a source ofenergy, that it seems unlikely that access to energywill be a major constraint on activities in Ireland upto 2025.Rural Ireland is particularly vulnerable to both theprice of fossil fuels and constraints on GHGemissions. Rural living involves considerable traveland more extended transport networks. Members ofsome households will also be engaged in dairying, orthe raising of cattle and sheep with their attendantemissions of GHG. Other households will be engagedin marine occupations that are quite sensitive to theprice of fuel. In an alternative to the ‘business asusual scenario’ the vulnerability of these householdsto increases in fuel prices and constraints on GHG31

Rural Ireland 2025 - Thematic Papersemissions could be recognised. Thus, for example, inseeking to curb the major contribution of travel andtransport to growth in GHG emissions, a policy ofcongestion charging would be less damaging to therural economy than restraint though large increases inthe cost of motor fuels.Alleviation of the problems GHG emissions mightbe provided by rural Ireland including:• Harnessing of wind and wave energy becominga major rural activity;• Sequestration and absorption of carbon dioxideprovided by expansion of afforestation;• Biofuels as a source of energy has been seen asan option, but is unlikely to feature largely in theenergy market scenario set out above unlessaccorded tax incentives (J. I. Burke, Teagasc,Briefing Note).4. THE KNOWLEDGE ECONOMY –IRELAND TO THE FORE?Our understanding of the drivers of economic growthhas undergone an enormous transformation in recentyears. It is still recognised that the accumulation ofcapital is the key to growth but the emphasis has nowvery much shifted towards the nature of capital.Capital can be considered as: private physical capital(plant and machinery, etc.); public physical capital(infrastructure); human capital; knowledge capital;institutional capital and social capital.While the role of “knowledge capital” has begunto be appreciated as much more significant in recentyears, it has also begun to be increasingly recognisedthat the quality of our institutions and the extent andquality of “social capital” that exists in ourcommunity play a crucial role in driving nationalprosperity and quality of life.“Knowledge capital” is unique relative to otherforms of capital. Once created it becomes availablefor productive use, until it becomes obsolete, withoutany further cost. Thus investment in “knowledgecapital” holds out the prospect of increasing returns.The critical role of “knowledge capital” is capturedwell in the following quotation:‘the price of a car depends less and less on theraw material prices and the wages of thepeople working these materials directly, butincreasingly on the expenditure made by themanufacturer in research and development,engineering-design, logistics, advertising,marketing, accounting, etc.’ 3A knowledge economy is characterised by a highemphasis on knowledge creation and diffusion, theclose integration of research and innovation,continual learning and the creation of demand-drivenregional innovation systems (indigenous innovation)involving the formal co-ordination of the roles ofvarious knowledge generators, namely: universities,institutes of technology, research organisations andthe R&D departments of industries. Majorcomponents of the knowledge economy include:innovation, research and development, education,training and communications.Until now productivity gains seem to have comethrough a combination of a quite well educatedworkforce with the ‘know how’ brought in largelywith foreign firms through foreign direct investment(FDI). The role of these mainly high technology firmsin leading growth is projected to diminish, thus thescenario for growth to 2025 will be more reliant onenhancing the local knowledge economy. Theprospects for each of these main components in the‘business as usual’ scenario will now be briefly noted.4.1 Innovation for businessIt may be harsh to assess performance by the numberof patents originating in Ireland, where the rate permillion of population was 70 compared to 140 for theEU, averaged over the years 1998-2000. However,another indicator of our current reliance on importedtechnology are the large payments made to foreignfirms for the use of intellectual property rights.AVice-president of Siemens once said that thedifference between research and innovation is asfollows:• Research is the transformation of money intoknowledge, and• Innovation is the transformation of knowledgeinto money.These two processes are at the heart of theknowledge economy and fundamentally different inthat they:3 European Commission (2004) Foresight and the Transition to Regional Knowledge-based Economies, Final Report of the expert group “Blueprintsfor Foresight Actions in the Regions”, Directorate General for Research, Brussels.32

1. Economic Conditions in the 2025 Baseline Scenario• Require different styles of imagination andcreativity,• Operate on different time-scales, and• Occur in different social-relational contexts.Innovation requires problem solving and theability to combine knowledge from differentdisciplines, and to apply it pragmatically andimperfectly to real world problems, subject to harshtime and cost constraints, in an environment offinancial risk.In the Knowledge Economy, knowledge is acommodity to be sourced globally. The sourcing ofresearch and technology is really not very differentfrom sourcing accountancy, legal expertise ormedical advice from your doctor. In the future awidespread capacity to manage the acquisition ofcomplex knowledge services will be the greatestsource of competitive advantage for companies andwithout it Ireland will lose out.4.2 Research and developmentThe National Development Plan includes relativelylarge funds to support Research and Development,particularly in universities, through the HigherEducation Authority and Science Foundation Ireland(SFI). However, even a recent report noted thatspending on R&D in Ireland was well below that inother members of the OECD. 4Further, there is a view that while university basedresearch has a fundamental role to play in the futureit is more in the realm of developing problem solvingand knowledge management skills rather thantreading the traditional path. The most significantcontribution of university based research to jobcreation and competitiveness thus lies not in thecreation of new campus spin-off companies, but inproviding high quality human capital endowed withadvanced knowledge skills for living and working ina knowledge economy. The required shift in emphasiscould be reflected in a new contract between societyand university along the lines of "Do what you wantin research and here is the money to support you.Spend it well to stay curious, keen and on-top of yourdiscipline, what is expected in return is that yousystematically use your research and your teachingas a platform for developing knowledge economyskills ..."4.3 EducationThe educational attainments of the labour force roseconsiderably from 1993 to 2003. Between these yearsthe percentage with third level education rose from21 to 32 percent. Conversely those with only primaryeducation fell. This process is projected to continueso that by 2013 those with third level will account for40 percent of the workforce (ESRI 2003 p53).However there remains the other 60 percent whohave no more than a leaving certificate. Further,recent reports show the persistence of educationaldisadvantage.In future the ‘shelf-life’ and need-likelihood offactual knowledge will continue to shorten. What willbe of strategic importance will not be 'factualknowledge' but the development of knowledgerelated skills. At present our educational systems aremainly concerned with the development of factualknowledge. Currently students acquire knowledgeskillsby accident, or by exposure and on their own,not as a result of formal attempt to cultivate suchknowledge.In future education will be expected to foster skillsto independently:• Discover and understand complex work relatedproblems;• Communicate their insights to peers and nonpeersalike;• Identify the knowledge required to solveproblems;• Acquire that knowledge through self directedlearning and collaboration;• Monitor their progress and evaluateperformance and other risks;• Respond to any shortfalls by re-formulatingtheir problem solving strategies;• Simplify solutions and communicate them topeers and non-peers, and• Collaborate in all stages of this work with peersand non-peers alike.For the moment educational systems make noreally systematic attempt to provide people with theseskills. Given the increasing importance of technicaland scientific knowledge, the demand for people withknowledge skills and the increasing career-mobility4 OECD (2004) Main Science and Technology Indicators.33

Rural Ireland 2025 - Thematic Papersof individuals, the aspirations to be a knowledgeeconomy are unsustainable.4.4 TrainingThere is long standing deficit in provision ofnationally accredited industry training programmesacross a wide range of sectors. This is true ofqualification of people entering the work force and ofskill development for those at work. Participation in‘life long learning’, for example, was at a lowly 10percent the end of 2003 5 . In particular, thetechnological absorptive capacity of indigenouscompanies seems to be seriously limited by trainingdeficiencies. The problem is illustrated in the foodindustry. Here Ireland is well endowed with researchachievements at the three-world class centresdedicated to food research. However, one of theobstacles to the transfer of knowledge and technologyfrom research to application in industry is consideredto be lack of a training programme geared tonationally accredited standards. More widespreadand effective training is imperative in the comingyears.4.5 CommunicationsOn most measures Ireland is well short of the leaders.Households, and even businesses, without computersare proportionately more numerous in Ireland than inour major competitors. Access to broadbandconnection to the ‘information highway’ is morerestricted in Ireland with only half of the country’stelephone lines being capable of giving access 6 .There may also be a deficiency in formal networkarrangements to ensure communication betweenpotential users and providers of innovations. Thesedeficiencies have been well documented andimprovements are to be expected.4.6 Implications for rural IrelandAn indigenous ‘knowledge economy’ could beparticularly effective in generating employment inrural areas and getting it away from the greaterDublin area (GDA), and the few other centres, thatcurrently attract most of the foreign direct investment(FDI). The centripetal draw of the GDA also seems tobe true of employment in internationally tradedservices where only nine percent of the employmentis in the Border, Midland and West (BMW) region.In summary, this brief review of Ireland’s place inthe ‘knowledge economy’ stakes indicates seriousweaknesses. This is especially bad news for ruralIreland were the future actually turn out to be like this‘business as usual’ scenario.5. FUTURE CLIMATE CHANGE INIRELAND 7Direct output from General Circulation Model(GCM) simulations are largely inadequate forregional scale impact analysis due to their relativelycoarse spatial resolution. Statistical downscaling wastherefore used to project likely changes from the1961-90 averages in Irish climate.5.1 Estimated effects in IrelandThe results suggest that the impact on Ireland willgrow and effects by 2055 include:• Current mean January figures are predicted toincrease by 1.5ºC mid-century with a furtherincrease of 0.5ºC-1.0ºC by 2075.• By 2055, the extreme south and southwestcoasts may have a mean January temperature of7.5-8.0ºC. By then, winters in Northern Irelandand in the north Midlands would be similar tothose presently experienced along the southcoast.• Since temperature is a primary meteorologicalparameter, secondary parameters such as frostfrequency and growing season length andefficiency can be expected to undergoconsiderable changes over this time interval.• July temperatures will increase by 2.5ºC by2055 and a further increase of 1.0Cº by 2075 canbe expected. Maximum July temperatures in theorder of 22.5ºC will prevail generally with areasin the central Midlands experiencing maximumJuly temperatures of 24.5ºC.5 CSO, Quarterly Household National Survey, January 2004.6 Sunday Business Post, 12 September 2004, p8.7 Text from Dr John Sweeney. NUI Maynooth.34

1. Economic Conditions in the 2025 Baseline Scenario• Overall increases in precipitation are predictedfor the winter months of December- February.On average these amount to an additional 11percent. The greatest increases are suggested forthe northwest where increases of approximately20 percent are suggested by mid century. Littlechange is suggested as occurring on the eastcoast and in the eastern part of the Central Plain.• Marked decreases in rainfall during the summerand early autumn months across eastern andcentral Ireland are predicted. Nationally, theseare of the order of 25 percent with decreases ofover 40 percent in some parts of the south-east.5.2 Impact on AgricultureThe scenarios produced were used as input to cropsimulation models for a range of present and potentialfuture crops. The simulation results show that theexpected climate changes will have major effects onIrish agriculture. However, even by 2055 theseimpacts, though significant, cannot be regarded aspotentially catastrophic. Impacts by 2055 wouldinclude:• For livestock production, the expectation ofmore frequent summer droughts will requiresignificant supplementation of grazed grass.• Maize silage is increasingly likely to replacegrass silage, potentially increasing grazing landareas. At the same time, increased production ofgrain maize is expected.• Barley is another potentially important source ofenergy for supplemental feeding of livestock.The expected increases in cereal grainproduction may be expected to reduce the costof feed barley. However, the extra costsassociated with irrigation may offset this if itproves necessary, thereby bringing theeconomic viability into question, especially ifbarley is in competition with maize as a foragecrop.• Soybean is an important supplemental source oflivestock protein and is currently imported.Soybean has the potential to replace maize asthe marginal crop in Irish agriculture.• Although warmer temperatures would beexpected to result in shorter winter housingtimes for livestock, a trend towards wetterwinters may raise the risk of problems ofpoaching and soil damage. The balance ofgrazing season length against winter rainfall willdictate the stored feed requirement, and theactual climate will dictate the choice of foragecrop grown. Opportunities to spread slurry ordirty water in winter will be substantiallyreduced and increased slurry storagerequirements are likely to be needed. Droughtstress will become increasingly important by2055.Irish agricultural land use distribution will alter inresponse to climate change. A sharpening of eastwestcontrasts is likely to occur with livestockproduction dominating more to the west, and arableproduction dominating east of the Shannon. Planningfor irrigation is needed, particularly in the east, toensure that water costs are acceptable and summersurface and ground water resources are not overused.6. AN OVERVIEW OF THE ‘BUSINESS ASUSUAL’ SCENARIO FOR 2025In the years to 2025 rural Ireland will continue tooperate in an economy growing at rates above thosegeneral in the EU. Features of the national economyin this scenario would be:• Incomes 60 percent above 2002 levels inpurchasing power;• Economic growth increasingly driven byexpansion of sales of market services at homeand, especially, abroad, and continuedexpansion of high technology manufacturingwith foreign direct investment (FDI);• Consumer demand growth would be particularlystrong for environmental goods and mostservices, demand for food would continue toshift from more to better in terms of assurancesthat every product is reliably enjoyable and safe;• The importance of the knowledge economywould become more evident.Rural areas would face differentiated challengesin the midst of the growing national economy.Opportunities for rural Ireland would include:1. Loosening of location as an inseparable part ofdoing specific jobs;2. Provision of environmental and recreationalpublic goods;3. Increasing demand for food of reliable eatingquality and safety;35

Rural Ireland 2025 - Thematic Papers4. Generation of electricity from wind and waveenergy.Threats to the level of economic activity in ruralareas would include:1. Decline in numbers at work in agriculture,building, old technology manufacturing and,eventually, the food industry - employments ofparticular importance in rural areas;2. Further concentration of growth in the greaterDublin area (GDA) spearheaded by expansionof employment in internationally traded marketservices;3. Deficiencies in the development of Ireland’sknowledge economy, particularlydisadvantaging more distant parts of ruralIreland;4. Constraints on agriculture from decliningbuying power of agricultural prices and nationalobligations to curtail emissions of greenhousegases (GHG) and water pollutants;5. Decline in the amount of sea fish landed due todwindling stocks of fish and increased costs offuel;6. Fall off in rural tourism continuing andexacerbated by static productivity and the rise inearnings per hour available from other activitiestending to drive up the cost of traditional ruralhospitality.7. Early effects of global warming tending to moverainfall from east to west and from summer towinter, resulting in greater risks of drought inthe south east. Wetness of the ground from thefall onwards would curtail the grazing seasonand require increased storage of slurry.In conclusion this ‘business as usual’ baselinescenario is but a starting point for considering whatmeasures might be taken to capitalise on theopportunities and avoid its worst aspects.Table 1: Baseline projection of Ireland's Economic Growth to 2025.Items 2002 2025 Increase(percent)Total population (thousand) 3,910 4,900 25%Age group 15 to 64 years(percentage of population) 67% 64%(thousand) 2,616 3,140 13%Labour force participation rate (percent) 68% 72%Labour force (thousand) 1,798 2,153 20%Unemployed (Principal Econ. Status)(percent) 7% 6%Unemployed (thousand) 122 140 10%Numbers employed (thousand) 1,720 2,210 20%Productivity(euro(2002)per person employed) with a 2% growth per yearGross National Product per person employed 60,742 96,000 58%GNP: million euro (2000) 104,474 210,000 90%GNP per caput: thousand euro (2002) 26,645 43,000 60%Note: data in this table derived from:a) Those in CSO projections based on the 2002 Census with assumptions F2 and M2.b) ESRI Medium Term Review 2003-2010. Bergin, A. et al. (2003). Economic and Social Research Institute,Dublin.36

2. The Broader Rural Economy2. The Broader Rural EconomyP. Commins 1INTRODUCTIONThis paper was prepared on the basis that the ruraleconomy is not a geographically separate entity fromthe urban or general national economy. Thefunctional interdependencies between rural and urbanareas are increasing. Commuter catchment areas arebecoming more extensive. Locational decisions (byfamilies or firms) are less constrained bygeographical factors. Some services needed by ruralresidents are being centralised in main urban centres,while at the same time rural areas meet the needs ofurban-based workers and populations, especially inhousing and recreation. The proposed NationalSpatial Strategy is based on consolidating rural-urbanrelationships. A 40 km radius around 13 of our largerurban centres would include all but 10% of thenational population. Even using size-of-place criteria,the 1999 White Paper on Rural Developmentconsidered the “rural” to be all the territory outsidethe five major urban areas; in which case some 60%of the national population is rural.For these reasons, the “broader rural economy”should be considered, for present purposes, in termsof regional or sub-regional economies where thedrivers of change will be linked to developments inthe national economy, and to how the nationaleconomy, in its “openness” to international forces,will be positioned in the wider global economy overthe next two decades.In terms of thematic coverage, the paper’s focus ison (i) enterprise and employment; (ii) infrastructuresfor innovation and access; and (iii) some aspects ofsocial development. A fourth set of issues is alsorelevant, namely, settlement patterns, population andspatial development but these are covered in aseparate paper (see Thematic Paper No. 3).The structure of the paper follows the template setfor the preparation of sectoral papers.1. DRIVERS OF CHANGE IN THE RURALECONOMY(i) Restructuring in the agri-food sectorThe longer term outcome of supply and demandforces on the agri-food sector is marked by a numberof well-established features: downward pressure onfarmgate prices and incomes; an impetus to increasescale in production and processing; replacement oflabour with capital; spatial differentiation in land usewith commercial farming becoming concentrated inthe more productive land areas; and increasingreliance on non-farm sources of income.(ii) Restructuring in the broader economyRural communities are also coming under theinfluence of the pressures of economic restructuringin the economy generally, especially as restructuringaffects opportunities for employment. Longer-termtrends are described as “tertiarisation” and“dematerialisation”. The former term denotes therelative decline of primary production and of theconventional manufacturing sector, and theexpansion of service-type occupations. The latterconcept refers to the fact that “intangible inputs” andservices, rather than raw materials, have become anincreasingly important component in the value ofgoods. These inputs include such factors as researchand development, design, logistics, marketing, etc.The contribution of “services” to GDP exceeds 70%in some developed economies, compared to 55% inIreland.(iii) Striving for competitivenessCompetition is becoming more open, international,and intense. There is a strong concern withcontrolling and lowering costs, with multinationalenterprises seeking out the locations where economicactivity can be pursued on a least-cost basis.1 Email address: mairinuichomain@eircom.net37

Rural Ireland 2025 - Thematic Papers(iv) Growing importance of innovation and theknowledge economyA knowledge economy is characterised by a highemphasis on knowledge generation and application,the close integration of research and innovation,continual learning/relearning, informationprocessing, and reliance on information andcommunications technologies.Of interest to rural economies is the growingconcern to develop “regional innovation systems”.The focus is on the system – the totality ofinfrastructures for generating or accessingknowledge, for transmitting knowledge, and forsupporting its productive application in dealing withregionally specific challenges. 2As the services content and knowledge inputs infinal products increase, the traditional distinctionsbetween manufacturing and services become lessclear; the relevant distinction is between “oldeconomy” and “new economy” enterprises.(v) GlobalisationGeographical barriers are reduced as capital,enterprise, financial flows, products and servicesmove across the globe in networks that areincreasingly disconnected from the frontiers thatmark out the boundaries of sovereign states.(vi) International tourismAs a specific element of global trading, internationaltourism has grown rapidly and is expected tomaintain its rate of growth over the next 20 years.The main drivers of this growth are: higher levels ofdisposable income, increased leisure time, increasingavailability of affordable transport, reduction ofcross-border travel formalities, and wider access toinformation through information techonlogies.(vii) PoliciesRural change is driven by policies which supporttrade liberalisation, influence the location ofinvestment, assist regional development or fosterrural development. Some policies have a“restraining” influence on market liberalisation –especially those requiring compliance with “good”environment management.(viii) Counter trends to the dominant economic modelof changeThe foregoing drivers of rural change are, for themost part, integral to the development of a modernmarket-driven economy. This type of economy is alsocharacterised by values that espouse the free market,by consumption patterns and lifestyles that supportmass markets, and by ideologies that favourindividual freedom and limited state regulation ofeconomic affairs.However, there is evidence of counter trends thatchallenge this dominant economic model. Apart fromemerging “anti-globalisation” movements, these areevident in concerns for the physical environment; forsustainable development, environmentally andsocially; for safety, authenticity or traceability infood; for shorter food supply chains; for the socialinclusion of marginalised groups and cohesion acrossregions; and for an appropriate balance between workdemands and quality of life.2. KEY TRENDS AND EMERGING ISSUES(i) Labour outflow from farmingThe movement of labour away from farming willcontinue, mostly because of non-entry in the firstplace rather than because of career changes. The keychallenge will be to provide employment for ruralyouth, ideally in their own regions.However, jobs as such will not be sufficient. 3 Jobprovision will need to be complemented byopportunities for up-skilling and re-skillingespecially in light of the need to develop aknowledge-based workforce. The idea of life-longlearning is replacing traditional education-workretirementdemarcations.(ii) Realignment of land useThe extensification or even withdrawal of agriculturefrom regions with predominantly sub-viable farmswill adversely affect the unique natural and builtenvironment in upland or wetland areas. One2 “Innovation” is a broad term covering, e.g. new products or services, new processes, new markets, or novel approaches in organisational structures ornetworks, etc.3 Household Budget data show low earnings for non-farm workers in farm households (Commins 2003).38

2. The Broader Rural Economyconsequence is a likely reduction in theamenity/tourism value of these areas with the risk ofjeopardising the opportunity to developmultifunctional and “public good” land use strategies(see Thematic Paper No. 6 on Rural Environment).(iii) Rising costs of doing businessAlthough not specifically a rural issue, costs inIreland have risen substantially above those of ourcompetitors, e.g. housing, insurance, energy,broadband, refuse disposal, dining etc. (ESG2004:21). By comparison, of the ten highest rankingcountries in the league table of competitiveness, fiveare Nordic despite their high taxes (EconomistOctober 16-24, 2004:102). The ESG noted (p.22) inthis context that domestic competition in Ireland isunderdeveloped while there are also public sectorinefficiencies.(iv) Heavy reliance on foreign direct investment(FDI) 4The country’s economic performance over the pastdecade has been driven largely by the internationallytraded goods and services sector, and by the growthof FDI. In 2002 the stock of FDI in Ireland wassecond highest in the world, in per capita terms, afterHong Kong. Foreign firms account for the following(of agency supported firms):All Firms 15%Jobs 50%Corporation Tax Yield 47%Expenditures in Ireland 51%Exports 90%However, FDI firms have a number ofweaknesses. They:• Are strongly production oriented (whereasmodern growth is in traded services);• Are at low points in the value chain;• Are reliant on their external parent organisationsfor R&D and for marketing (activities thatunderpin competitive strength).The central issue here is the growingattractiveness of other countries for the type of FDIthat Ireland has secured in the past (Time MagazineOctober 11, 2004). Since 2001 there has been a netoutflow of 15,000 Irish jobs from the internationallytrading foreign-owned base 5 . This means reducedopportunities for the sub-supply and indigenous base(ESG 2004:19). Judged from data pertaining to theBMW region, rural areas have a disproportionateshare of low technology, old economy enterprises(textiles, clothing, wood products, leather, etc.)(BMW 2004:33).(v) Low investment in R&D and low innovation ratesIreland’s gross expenditure on R&D remainssignificantly below that of, e.g., the Nordic countries(1.4% of GNP compared to 3-4%). Businessexpenditure on R&D is concentrated in large andforeign-owned firms (ESG 2004:30). Moreover, theR&D focus has been on technology for products orprocesses, while non-technological innovation hasbeen neglected (e.g. in marketing, supply chainmanagement, etc.). The rate of European patentapplications (per million inhabitants) in Ireland isabout half that in the EU 15 and one-quarter that ofFinland (ESG 2004:30).(vi) Rural (urban generated) employment growthCensus data show widespread employmentexpansion in rural areas – more than offsetting labourlosses in farming. Apart from the likelihood that thejobs are low-paying (see footnote 3 above), it seemsfrom data on the BMW region that this employmentboom is based on building construction, wholesaleand retail services, and public services.Manufacturing employment has declined; nationallyit is currently at its lowest point since 1996.The issue is whether this kind of employmentgrowth is sustainable given that construction, inparticular, has attained inordinate prominence in theeconomy over the past decade 6 .4 Data here and under the next heading are mainly from the ESG Report (2004).5 This mobility also means opportunities for Irish firms to remain competitive by moving to low cost environments.6 In 2004 Ireland built almost 80,000 new dwelling units. Britain has 15 times as many people but builds only twice as many houses as Ireland. Thesector accounts for 15% of GNP here, or over twice as much as Britain (Economist 16 October 2004).39

Rural Ireland 2025 - Thematic Papers(vii) Regional concentration of tourismTotal visitor numbers to Ireland increased at anannual average rate of 5.5% between 1990 and 2002.In the promotion of tourism nationally Ireland isrepresented very much as a rural holiday destination;yet, rural areas have not benefited commensuratelyfrom the growth in visitor numbers and revenue. Theregional distribution of revenue has strongly favouredDublin and the South West, with the lower growthrates recorded in the more rural regions of the NorthWest, Shannon Region and the West. Furthermore,some outdoor pursuits (cycling, hill-walking,angling) have been on the decline (even before thefoot-and-mouth crisis). Visitors report fallingcustomer satisfaction ratings, especially in regard tovalue for money and gaps in infrastructure.The report of the Tourism Policy Review Group(2003) recognized that Irish tourism will encountergreater competition in the future as transport andinformation technologies will change the waytourism business is conducted, and visitors seek valuefor money, as well as quality holidays.(viii) Deficits in infrastructures (for innovation andaccess)Low regional innovation rates (see above) are relatedto low institutional capacities, reflected in the lack offormalised collaborative arrangements amongstakeholders for generating and diffusing knowledge.The relevant stakeholders are third level colleges,research organisations, R&D departments ofindustries, enterprise support agencies, trainingagencies, etc. 7 Debate about developing knowledgebasedenterprises at regional level refers to the needto establish “clusters” that would allow for theattraction of specialised labour (“knowledgeworkers”), creation of linkages with researchsupports in third level education institutions, andcritical mass in providing supporting financial andtrade services.At the level of the individual the complement ofsuch regional institutional capacity is thecompetencies of managers and other employees, theiradaptability, entrepreneurship and attitudes to riskand investment.Access infrastructures include in particularphysical communications and transport systems, aswell as telecommunications. Irish infrastructure ispoorly developed and inefficient relative to mostdeveloped countries (ESG 2004: 23). Mostexpenditure in road projects under the EU StructuralFunds has gone to national primary routes in theDublin region and to major inter-urban routes. In theBMW region expenditures on roads have fallenbelow budget. Broadband services in the country arestill quite poor, and expensive. In particular, access tothe “last mile” disadvantages rural small-businesses(ESG 2004: 101).(ix) Deficits in the “soft” (social) infrastructureWhatever its future sustainability, the economicgrowth of the last decade has benefited ruralcommunities. Yet, there is a noticeable failure insocial development. These are evident in decliningsocial capital (declining voluntarism in localcommunities, weaknesses in associational capacityfor mutual benefit or community development, lackof civic leadership, etc.), continuing social exclusion,and failure to provide local amenities and servicesthat contribute to a better quality of life (Frawley etal. 2005).A holistic approach to “rural economicdevelopment” requires that the concept be broadenedto include actions that also focus on sustainablecommunities through social development.3. BASELINE PERSPECTIVE TO 2025This perspective and the preferred perspective (seesection 4) are both based on the assumption thateconomic development is a systemic process. That is,it involves a number of components, which aremutually supportive or “synergised”, creating asystem whereby the whole is greater than the sum ofthe parts. Conversely, “underdevelopment” canoccur, when several key interconnected elements aremissing or out of mutual harmony. This idea isrelevant in understanding the prospects for the futureof the Irish rural economy where a complex of factorshas been involved in economic growth, but a differentcomplex of interrelated factors underpins economicdecline. In the latter circumstance we face a malignscenario for a number of reasons.7 EU Blueprints for Foresight Actions in the Regions indicate that a regionally-based demand driven approach to research and innovation needs a totallydifferent funding approach from that applied to universities or national research institutes.40

2. The Broader Rural Economy(i) Decline of the “tiger” economyWhile a baseline perspective conventionally assumesno major alteration in the drivers and current trendsof rural change, the assumption cannot be readilyaccepted in the case of the Irish rural economy. Thereason is that the recent pathway of economic changein Ireland is not firmly established; it contains withinit the seeds of its own eventual failure. The boom ofthe 1996-2005 period has been due to a fortuitousconfluence of factors that are a series of “one-offs”,and not repeatable (Economist 16 October 2004).These factors include: high levels of EU subsidies;low energy costs; the FDI boom under favourabletaxation regimes; the unprecedented activity inconstruction; the “catch-up” and unrepeatable typeinvestments in infrastructure; and demographiccircumstances such as available labour. Of particularimportance is the fact that the growth has beengrowth in outputs but not in productivity orefficiencies. The “break-off” of this unique set factorsover the next two decades, coupled with the erosionof competitiveness (already obvious), will mean the“unwinding” of the progress of the past decade withdetrimental consequences for the rural economy.(ii) Elimination of agricultural subsidiesThe low levels of market-based income in farminghave been concealed by farm subsidies. These will bemuch reduced in scale in future reforms of the CAPand under WTO rules, because of their politicalunsustainability without clear and measurable publicgood benefits. Such benefits will command a lower“price” than currently, putting unprecedentedpressure on farm incomes.(iii) Inadequacy of EU policyCurrent EU policy statements refer to a greaterorientation of the CAP towards rural development.The rhetoric is unlikely to be supported in reality. Therural development measures are narrowly focused onagri-structural problems and not on the broader ruraleconomy. Besides, there is no increase in future ruraldevelopment funding, in real terms (Ahner 2004).(iv) Inadequacy of institutionsThere is little evidence that the aspirations in theWhite Paper on Rural Development (1999) will berealised. One reason is that many of the actionsenvisaged as necessary in the White Paper requireinter-departmental or cross-agency initiatives but theinstitutional framework for these does not exist and isunlikely to be created on the basis of experience sincethe White Paper was published.(v) Erosion of manufacturing baseMuch of the FDI manufacturing base that isconcerned with production-oriented or low-techassembly will move to lower cost economies. Indeed,many service jobs or back-office jobs will also moveto, e.g. the Far East. The construction sector willretreat to a more normal pattern, in contrast to itscurrent unusual prominence in the economy. Whilekey sub-sectors of enterprise will be sustained,especially high value-added manufacturing in food,pharmaceuticals, medical technology, software andcommunications technology, their location will bespatially selective with limited benefit to ruralregions. Currently, for example, the BMW region hasa due proportionate share of the country’smanufacturing employment (27%), butdisproportionately low shares of the country’sfinancial and international services employment(9%), or high-tech jobs (9%). The spatial distributionof employment will be restricted by higher energycosts.(vi) Failure of indigenous entrepreneurship andenterpriseRural regions, by and large, have a high dependenceon “labour-intensive, threatened” types ofemployment. Their vulnerability will not be offset bynew enterprises, indigenous entrepreneurs,innovation in new products, or non-technologicalinnovation (e.g. in marketing). The main reasons forthis are lack of impetus and spin-off from the FDIsector, failure to develop regionally specific supportsfor indigenous innovation, and lack of technologicalabsorptive capacity.(vii) Stagnation in rural tourismEven if recent (1990s) trends in Irish tourism aremaintained – despite falling competitiveness,opening up of new destinations, and dissatisfactionratings – the benefits will not be captured by ruralcommunities, on current evidence.41

Rural Ireland 2025 - Thematic Papers(viii) Failure to maintain necessary infrastructuresThe attrition in the productive and wealth creationbase of the economy will limit the investments ininfrastructures for innovation and access especially atrural regional level. While there will be national levelRDT and innovation infrastructures there will not besufficient funding to complement this at sub-nationallevels. Third-level institutions are currentlyexperiencing financial stringency. The “new fundingapproach” needed for regionally based knowledgeeconomies will not be feasible (see footnote 7).(ix) Failure in social developmentSimilarly, lack of funds will inhibit the provision ofrural amenities and services essential to an enhancedquality of life for rural dwellers (e.g. in medicalservices, communications, fostering the socialeconomy, policing, etc.).(x) Rural migration and demographic imbalanceGiven the above malign – even doomsday – scenario,a return to involuntary migration and brain-drainsfrom rural areas is inevitable. The consequence is there-emergence of imbalances in population structure,rural depopulation, redundant or under-usedinvestments, and the higher servicing costs inherentin a low-density rural population.4. PREFERRED PERSPECTIVE IN 2025.(i) Growth rates will be maintainedFor a benign scenario, the ESRI assumptions forshort-term growth rates in the Irish economy will berealised and these rates will be maintained over thelonger-term. These will be in the order of 3% to 5%(see Thematic Paper No. 1). While the primary sector(agriculture, fishing) will make a reduced relativecontribution to GNP, manufacturing will remainimportant but the services sector will be the mostprominent driver of growth.(ii) Sectoral mix will be well balancedThis is because:• Key components of the enterprise base,especially those exporting, will be maintained;• Opportunities in internationally traded serviceswill play a significant role in the country’seconomy (ESG 2004: xi);• Although Ireland will not, realistically, achieveworld class performance in all areas ofeconomic activity, enterprise will succeed byreinforcing those niche areas where sustainablecomparative advantage can be built (ESG2004:39);• Locally-trading businesses will thrive in abuoyant economy;• There will be widespread upgrading of “oldeconomy” enterprises;• Enterprise closure rates will be offset by newstart-ups.(iii) The business environment will enhancecompetitivenessSome practices that inhibit competitiveness will beeliminated, e.g. inappropriate regulatory policies,barriers to entry to markets, the sheltered statusenjoyed by sectors of business activity (ESG2004:92).(iv) Ireland will build, at regional levels, theknowledge base and enterprise capability to developproduct and services of higher valueThis will be done by:• Significant public funding of research andinnovation systems directed towards buildingdemand driven regional technological bases;• Focused investment in key areas of technologyappropriate to national and regional needs (notjust high-tech technological enabling capacity);• Assisting enterprises to access andabsorb/exploit innovations;• Strengthening linkages between enterprise andknowledge sources;• Complementing production capabilities byexpertise in market development.(v) Regional and sub-regional specificities will berecognised in economic developmentThis will be achieved by:• Building knowledge infrastructures at regionallevel with particular regard to knowledgetransfer and applications;42

2. The Broader Rural Economy• Exploiting the full potential of natural resourcebased industries especially in food, the marine,forestry, tourism;• Developing internationally-oriented “clusters”at regional locations.(vi) Rural-based tourism will be a significantcontributor to the development of the rural economyThis will happen because:• Pro-competition policies will have a positiveimpact on lowering travel costs;• There will be a clear focus on rural Ireland’sunique attractions in terms of its distinctivephysical landscape, culture and heritage; itscapacity to respond to growing concerns abouthealth; and the search for “back to nature”experiences;• Marketing will target specific categories ofvisitor to whom these attractions will appeal;• Competitive pricing of tourism products.(vii) Rural areas will enjoy a world-classtelecommunications infrastructure, as well as a muchimproved access to physical communication andtransport networksThis will be possible because:• Of continued updating of infrastructureinvestments at regional and local level;• Of remote access and networked connectivity tosources of knowledge, information and to waysof meeting other customer needs.(viii) Material prosperity in rural areas will becomplemented by a satisfying quality of lifeThis will be possible because:• The attractive qualities of physical environmentand heritage will not be destroyed;• Rural people will have amenities and serviceson a par with what is available in thecontemporary society;• There will be opportunities and rewards(material and intrinsic benefits) for participationin civic affairs, leisure pursuits and professionalor personal development.(ix) Rural social exclusion will be eliminatedThis will be achieved by:• State action (such as the National Anti-PovertyStrategy);• More widespread material prosperity;• A well-functioning social economy at localcommunity level.5. INITIATIVES FOR A BETTER FUTUREIN 2025As a general comment under this heading, membersof the Foresight Consultative Forum observed thatthere were already in the public domain manyproposals that could achieve the betterment of therural economy. The problem was that these were notacted upon – for a number of reasons but especiallybecause there were not appropriate and effective“cross-agency” structures at a sub-national level.There is also no strong and coherent policyconstituency to lobby for a “better broader ruraleconomy”.The following initiatives were identified:1) Institutional Framework: The currentframework is not effective in responding to theneeds of multi-dimensional rural economic andsocial development. The need is not so much foradditional structures but for arrangements tointegrate and better coordinate the activities ofexisting structures in delivering public policymeasures to rural communities. Regionaldevelopment should have a more explicitpresence in the agenda of central governmentdepartments and state agencies.2) National Development Planning: The practiceof national development planning, so wellestablished under previous rounds of EUStructural Funds, should be continued evenwhen such funding ceases. Procedures such assetting targets and performance indicators aswell as regional monitoring systems should beretained. It is important, however, to place amore explicit focus on the lower level andsmaller scale (NUTS 3) regions, where theprogress on rural regional development can bemore transparently assessed.3) Knowledge-driven Regional Development:Regionally based research and innovationsystems are needed – forms of infrastructure43

Rural Ireland 2025 - Thematic Papersdifferent from the existing models. These maybe some analogue of the US land grant colleges,which have had a strong extension role indelivering new knowledge and technicalinformation to potential commercial adoptors.An extension model would also include“brokers” who could help to strengthen theweak “absorptive capacity” for innovationamong indigenous enterprises. In this contextalso, regional innovative clusters could befostered. A special emphasis would be given tothe research and training inputs needed to raisethe performance of indigenous enterprises.4) EU CAP Policy: Continue to shift from Pillar 1to Pillar 2 (production agriculture to ruraldevelopment) in the CAP but, more importantlyin the longer term, consider the development ofthe “broader rural economy” as an issue inregional development and in the NationalSpatial Strategy – not as a problem to be dealtwith by common agricultural policy measureseven when the scope of this policy is widened.5) EU Regional Policy: Levels of EU structuralaid will be reduced. However, about 18% of thenext round of EU cohesion policy funding willbe dedicated to regional competitiveness.Ireland should seek support under this headingto build the competitiveness of its regions.6) Regional Ring-fencing: Public investmentsshould be earmarked and then ring-fenced foruse within the respective regions.7) County Development Strategies to 2012:Proposed by all counties, these now need to beimplemented – a task which requires clearcommitments from agencies at central level.8) Rural and Regional Proofing: The White Paperon Rural Development proposes that all sectoralpolicies will contain a regional and rural focusto ensure that policy implementation representsappropriate responses to the needs of ruralcommunities. This idea needs to be given moreeffective weight in policy.9) Social Progress Accounting: Conventionalmeasures of economic performance at NUTS 3regional levels need to be supplemented by asystem of “social progress” recording tomeasure performance on social provision,access to services, skills upgrading.10) Tourism: Tourism policies should have a clearerrural and regional dimension. The White Paper(p. 45) noted that rural tourism lacks a cohesivestrategy within the context of overall tourismpolicy. Such a strategy should recognise thepublic good functions of agriculture and thecountry’s other natural resources.11) Infrastructures: National development plans(see above) should provide, within a strategicframework, a range of modern infrastructures inrural areas. Innovative approaches totelecommunications offer the prospect of bypassingconventional technologies in connectingsmaller population towns to “the informationhighway”.12) Social Economy: The social economy is a basisfor providing services which are not supplied bythe market or the public sector e.g. caringservices, cultural activities and local amenities.This sector should be developed with greaterimpetus, with a focus on developing thecapacity of citzen-based organisations to operatein partnership with statutory agencies.REFERENCESAhner, D. (2004). Rural development and the newfinancial perspective. Paper to Seminar,Florence, Italy. 30 April.Border, Midland and Western Assembly (BMW).(2004). Audit of Innovation in the BMWRegion. BMW, Ballaghaderreen, CoRoscommon.Commins, P. (2003). Trends in rural householdincomes. Paper to National Rural DevelopmentForum, Portumna, Co Galway.Department of Agriculture and Food. (1999).Ensuring the Future: A Strategy for RuralDevelopment in Ireland. White Paper,Department of Agriculture and Food, Dublin.Enterprise Strategy Group (ESG). (2004). Ahead ofthe Curve: Ireland’s Place in the GlobalEconomy. Forfás, Dublin.Fitz Gerald, J., McCarthy, C., Morgenroth, E. andO’Connell, P. (2003). Mid term evaluation ofthe National Development Plan and CommunitySupport Framework for Ireland 2000-2006.ESRI, Dublin.Frawley, J., O’Meara, N. and Whiriskey, J. (2005).County Galway Rural Resource Study. Teagasc,Dublin.Tourism Policy Review Group. (2003). NewHorizons for Irish Tourism: An Agenda forAction. Fáilte Ireland, Dublin.44

3. Some Spatial Dimensions3. Some Spatial Dimensions:Population and Settlement PatternsP. Commins 1 , J.A. Walsh 2 and D. Meredith 3INTRODUCTIONThe spatial dimensions of economic change anddevelopment cannot be reduced to a simple ruralurbandichotomy. Referring loosely to ‘the ruraleconomy’ as if it were a single, homogeneous or evena self-contained entity may be convenient but it leadsto understating the significance of substantialregional and sub-regional variations within ruralIreland. Spatial differences arise from thegeographically uneven distribution of naturalresources but, increasingly, they are also created bythe layout of the urban system, and by the extent towhich urban-generated economic activities havespill-over impacts on rural areas. In turn, the urbansystem itself is a hierarchy of centres whoseindividual sizes and territorial distribution have beendetermined historically by a complex mix ofeconomic, geographical and political factors – as wellas by myriads of individual decisions. Onceestablished, settlement patterns exert their ownreciprocal influence on locational decision-makingand act as constraints or stimulants to furthereconomic development options (NESC 1997).State policy aims to facilitate a balancedgeographic distribution of economic activity, and theharmonious development of both rural and urbanareas. A main conclusion from this paper is thatIreland’s rural areas represent several quitedistinctive rural economies (see Table 1) and that, insome important respects, spatial divergences are infact increasing, contrary to policy aims. Anaccompanying set of maps illustrates the main points(see Appendix).Table 1: Rural Areas Typology and Population ChangesArea Type 1% of total population % change % of total increase% of total area2002 1991-1996 1996-2002 1991-2002Urban 6.2 61.1 4.4 8.9 73.3Rural Type 1 14.5 11.6 1.8 10.9 13.2Rural Type 2 19.3 10.4 2.0 8.1 9.7Rural Type 3 19.9 5.4 -2.7 2.8 0.0Rural Type 4 22.8 6.3 -1.9 2.2 0.2Rural Type 5 8.9 2.7 -0.4 1.7 0.3Rural Type 6 8.4 2.5 5.4 9.2 3.3State Total 100.0 100.0 2.9 8.0 100.01 Urban areas = places with at least 1,500 persons and >150 persons/km 2Rural type 1 = peri-urban areasRural type 2 = very strong farming areas in transition to a non farm economyRural type 3 = strong agricultural areas adjusting to output restrictionRural type 4 = structurally weak areasRural type 5 = very marginal areasRural type 6 = high amenity and diversifying consumption spacesSource: Derived from Census of Population 1991, 1996, 20021 Email address: mairinuichomain@eircom.net2 Email address: jim.walsh@nuim.ie3 Email address: dmeredith@rerc.teagasc.ie45

Rural Ireland 2025 - Thematic Papers1. DRIVERS OF CHANGE1.1 Economic forcesThe spatial agglomeration (concentration) ofeconomic activities is a universal feature ofdeveloping societies. Urbanisation is a persistenttrend and the spatial footprints of urban areas extendfar beyond their boundaries. However,deconcentration and counterurbanisation also occurin advanced economies, especially wheregeographical barriers are reduced by moderntechnology and communications. Services andamenity provision takes on a hierarchical character.Modern services (such as specialised health care)become concentrated in larger urban centres becauseof the need for higher numbers of users. This featuretends to disadvantage rural areas which remaindependent on lower levels of service.The spatial distribution of population, types ofsettlement and of economic activity is stronglyinfluenced by longer term economic restructuring –in natural resource exploitation, industrialorganisation and services delivery. There are obviousgeographical variations in the basic resources of Irishagriculture but over time, as farm productivity(output per person) increased, there has been growingdifferentiation of economic performance betweenfarming regions of the State. The Irish farm economyhas been increasingly differentiated territoriallybetween a less prosperous west and north-west andthe more favoured counties of the east and south(Lafferty, Commins and Walsh 1999). Apart fromdifferences in the basic resource endowments, theimportant factors associated with spatial variations inagricultural production are the scale of farm businessand farming system.Economies of scale also make for spatialconcentration in non-farm enterprises. A notablefeature of economic restructuring in the broader ruraleconomy is the rapid growth of the services sector –especially producer services (tourism, retailing,finance, marketing, software provision, etc.). These‘new economy’ activities vary in their locationpatterns. However, higher level information-intensiveactivities (such as financial services) tend to locate incentral places, usually at the top end of the urbanhierarchy where a modern business milieu exists.Routine ‘back-office’ operations, on the other hand,can follow the same dispersal patterns asmanufacturing branch plants. Tourism andrecreational activities do not particularly requirecentralised locations (although urban tourism is nowsignificant).1.2 TechnologyIn production agriculture, machine technologyreplaces labour and therefore reflects the spatialpatterns in farm labour outflow. In the rural economyin general, modern transport and communicationstechnology can help to overcome the barriers ofgeography. E-commerce is creating revolutionarychanges in the conduct of business. Crudetransportation costs and traditional peripheralityconsiderations no longer matter as much as they did20 years ago.However, infrastructural provision tends toprioritise those locations where other economicactivities are already expanding and creating demand.Thus, in practice, information and communicationstechnologies (ICT) have established a ‘digital divide’– a basis of exclusion not alone among categories ofpeople or of businesses, but by consolidatingdivergence between regions.Advances in engineering and biotechnology mayalso have spatial impacts. Spatial clustering strategiesare now advocated for the commercial application ofnew technologies, especially where ‘platforms’ arecreated at locations which link up R and Dcapabilities, third level education and venture capital.1.3 Social forcesTrends in social values and lifestyles haveimplications for rural spatial development. Coupledwith rising incomes, these trends are expressed indemands for rural housing and living space, changesin land use, e.g. towards less intensive farming, andattitudes towards environmental conservation.Preferences for rural living, taken alongside thedecline of jobs in farming and the centralisation ofemployment provided by other sectors, result in theexpansion of commuting zones and the emergence ofsettlement patterns that resemble forms of ‘extendedsuburbanisation’. Increasingly then, rural areas aremultifunctional, changing from primarily areas ofproduction to encompass areas of consumption inorder to meet the lifestyle needs of society in generalfor housing, leisure, amenity and active recreationalactivity – as well as for infrastructures, utilities andwaste disposal. This greater diversification of the useof rural space inevitably leads to conflict over its46

3. Some Spatial Dimensionsuses, as different social values are brought forward bythe different claimants to rights over the countrysideand rural space.1.4 Policy measuresA wide range of policies recognise the importance ofmanaging territorial development and expressly orindirectly influence the spatial distribution ofpopulation and economic activity. Farm price policiestend to favour regions of high agricultural output.Regionally focused farm policies (such as those fordisadvantaged areas) are intended to benefit specificareas. Similarly, regional and rural developmentmeasures seek to direct the location of economicactivities. Physical planning strategies are aimed atinfluencing local settlement patterns. At EU level,policy has moved to curb excessive tendenciestowards the spatial concentration of population andeconomic development. Linked to this concern is adesire to connect rural areas to the economies ofurban centres. Policy measures refer to such terms as“balanced regional development”, “territorialcohesion”, “rural-urban networks” and “polycentricurban networks”. Ireland’s National Spatial Strategyreflects this aspiration for the better management ofterritorial development.In the wider European policy context there is ashift from direct state intervention in maintainingnational strategic industries and economic activities(e.g. in agriculture, transport and communications) topolicies favouring market liberalisation, deregulationand privatisation. This trend poses problems for ruraldevelopment whose aims fall mainly under theheading of ‘public goods’ and thus tend not to bedictated by market forces which will favour urbanlocations at the expense of rural development(Department of Agriculture and Food 1999:20).2. SPATIAL TRENDSThe analysis under this heading seeks to make anumber of points. Both in the farming and nonfarmingsectors, there is considerable diversity in theIrish rural economy, encompassing strong and weakfarming areas, areas becoming diversified with newrural-based employment, and areas linked closely tourban-generated economic activity. These different‘rural economies’ are not necessarily spatiallycontiguous with administrative boundaries, whichhas implications for cross-boundary collaboration in‘packaging’ policy interventions locally. In respect ofsome trends, there is increasing spatial divergencerepresenting a failure to meet the State policyaspirations for balanced regional development.2.1 Farming and land use: widening regionalgapsRegional differences in Irish farming and land usehave widened further during the 1990s (Comminsand Walsh 2004). Agricultural census data for 1991and 2002 show that: (i) the farm business sizepolarization between Objective 1 regions and theother regions was accentuated further; (ii) the switchaway from dairying (the enterprise yielding thehighest gross margins) was most pronounced in thewestern and border regions; and (iii) tree plantingrates on farms in the Objective 1 region countiesgreatly exceeded the rates in the other counties.Participation in the agri-environment programme isalso higher in the north west, west and midlands.2.2 Continuing spatial imbalances in populationIreland’s spatial demography is marked by twopersistent trends: spatial concentration andurbanisation. Between 1961 and 2002 the populationof Dublin together with its perimeter counties(Meath, Kildare, and Wicklow) increased by 70%.This concentration in the east is best described asurban sprawl. In the same 40-year period populationin the four other ‘municipal centre’ counties (Cork,Waterford, Limerick and Galway) increased by 36percent. The increase in the remaining counties wasjust 18 percent. A more refined analysis is presentedin Section 2.3 below.2.3 Differential trends by type of rural areaA typology of rural areas for 1996 4 is shown in Map1. This is based on Census of Population data anduses the restrictive definition of ‘rural’ as placesoutside of settlements having at least 1,500 personsand a density of >150 persons per km 2 .Table 1 shows the following:• Urban areas (inclusively defined) have 61% ofthe national population and accounted for 73%4 Based on McHugh (2001) a typology of this kind is unlikely to be static but this 1996 version is adequate for present purposes.47

Rural Ireland 2025 - Thematic Papersof the State’s population growth during the1990s.• Between 1996 and 2002, when nationalpopulation increased rapidly, the highest rates ofexpansion were in the peri-urban rural areas(Type 1).• ‘Structurally weak’ and marginal rural areas(Types 4 and 5) are concentrated in the west andnorth-west, with narrow extensions into otherregions, such as west Clare down to west Cork.In recent years most farms in these areasobtained almost 100% of their farm incomesfrom non-market payments. The same areashave the highest incidence of part-time farming.• In the south and east it is possible to distinguishbetween two categories of traditionally strongagricultural areas (Types 2 and 3). This wasbecause Type 2 shows some of thecharacteristics of the structurally weak ruralareas.• Areas with negligible or weak populationgrowth during the 1990s (Types 3 and 4)account for a relatively small share of thenational population – 11.7% - but for 30.1% ofthe rural population.• Apart from the peri-urban areas, there was rapidpopulation growth mostly in coastal areas ofhigh amenity (west Galway, north-west Clare,south-west Kerry, west-Cork and Wicklow).While these types of areas represent only 2.5%of the State’s population they account for 25%of the increase in the 1990s in the rural areasbeyond the peri-urban zones.2.4 Qualitative differences by regionPopulation concentration and urbanisation involvemore than mere numerical shifts; they also haveimplications for the qualitative characteristics of thepopulation in the different types of area.Demographic vitality, as a ratio of younger to olderage groups is strongest in urban areas and peri-urbanrural areas (Map 2). These spatial differences, whichare very much the outcome of internal migration, givea clear advantage to urban catchment areas with theadvent of a knowledge-based economy. Higher levelsof education follow a similar pattern (Map 3).2.5 Settlement size and contiguityThe number of larger population centres (over 10,000persons) increased from 23 to 33 between 1986 and2002. The demographic problems of the north-west,and of the midlands to a lesser extent, lie in theirweak urban structure. These regions havecomparatively few settlements of more than 5,000persons). The importance of this point is underlinedby the fact that high tech enterprises tend to locate inlarger centres.While settlement size is an important factor inpopulation growth so is the contiguity of settlementsand the emergence of regional inter-urban routes. Theradial routes from Dublin are clear examples butsimilar though less pronounced patterns are evidentfor Galway-Limerick, Tralee-Killarney and Sligo-Letterkenny. These links offer prospects forstrengthening urban networks outside of the GreaterDublin Area. Smaller villages, traditionally linked tothe agricultural economy and lying outside interurbanroutes (e.g. in north Kerry and west Clare) tendto lose population.2.6 Expansion in rural employmentThere has been widespread growth in ruralemployment during the 1990s (Map 4). The numberobtaining work more than offset the labour declinesin agriculture in the great majority of rural censaldistricts. Furthermore, the expansion in the numbersof self-employed was quite widespread. Theincreased employment in rural areas was mainly dueto unprecedented building and construction,commercial and retail services and, to a lesser degree,to manufacturing. The higher percentage of femalesat work is clearly related to access to urban centres(Map 5).While rural employment growth is a positive trendfrom a rural development standpoint, its longer-termsustainability cannot be deemed to be ensured. It isunderpinned by a period of exceptional progress inthe building industry; there is poor or static growthgenerally in the manufacturing sector; andemployment on farms -though in decline- owes muchto the heavy subsidization of farm-incomes.Moreover, as shown in the next section, mostemployment gains in agency-supported enterprisesare captured by a minority of regions.48

3. Some Spatial Dimensions2.7 Spatial differences in employment in agencysupportedenterprisesDuring the decade 1995 to 2004, permanent full-timeemployment in companies supported by stateagencies 5 increased by 22%, with jobs in foreigncompanies increasing by 24% 6 . The rapidlyexpanding sectors were International FinancialServices and Other International Services. Severedeclines in the Textiles, Clothing and Leather sectorreflected losses by indigenous companies, possibly asa consequence of relocation to low-cost economies(Forfas 2005:21).There were sharp regional (NUTS 3: - RegionalAuthority Regions) differences in the overall trends.The highest increases were in Dublin (+40%), MidEast (+32%), the South West (+29%), and the West(+23%). Dublin and the Mid East combined accountfor 65% of the national increase, and for 72% of thejobs growth in foreign-owned companies. Bycontrast, the Border Region witnessed a decline of8%, while both the Border and Midlands experiencedlosses in employment in foreign owned companies.The data show the spatially selective nature of theerosion of ‘old economy’ enterprises, and of theexpansion in ‘new economy’ jobs. Surprisingly, eventhe Mid-West and South East, both with strongregional centres, showed only moderate rates of jobgrowth in agency assisted companies.2.8 Expansion of commutingAssociated with the rural employment growth notedin section 2.6, especially the urban-generated jobs, isa greater reliance on private transport and theextension of commuting zones 7 . Nationally (rural andurban combined), the numbers travelling to workremained static from 1981 to 1991 but more thandoubled during the 1990s. In rural areas thepercentage of residents travelling more than 10 milesto work almost doubled (to 40%) between 1991 and2002. Just over 86% of households in rural areas nowhave at least one car.The incidence of long distance commuting (30miles or more) is highest in the outer rings around themajor urban centres, especially Dublin and Galway.(Map 6) Waterford is somewhat an exception,presumably because of the competing influence ofCarlow, Kilkenny and Wexford in the south-east.2.9 Implications for rural housing developmentsPopulation growth and the tendency towards separatehousehold formation (and thus smaller households)have resulted in increased housing construction inrural areas. The incidence of young households (‘prefamily’couples and young families) is quitewidespread but is highest in the urban hinterlands andcommuting zones. Single rural dwellings (defined asdetached houses with their own septic tanks) areconcentrated in the commuting zones and close to thenational road network. Single rural dwellingsconstructed during 1991 to 2002 show widegeographical dispersal but with concentrations nearto the commuting zones, south east coast, and inDonegal.2.10 The ‘digital divide’Private transport and communications technologiesare important means of access for rural areas. Asalready noted most rural households have a car; thosewithout cars are predominantly in the northwest andin the coastal area from Galway down to thesouthwest. Access to the Internet, however, shows aclear-cut digital divide between urban and rural areas(Map 7). Taken together, the urban concentration ofinternet access and higher education levels (Map 3)point up the weakness of rural areas in benefitingfrom the types of employment that characterise amodern economy.3. BASELINE PERSPECTIVE TO 2025A baseline perspective assumes that recent trends willcontinue into the future, with no major ‘shock’occurrences or policy changes other than thosealready signalled. There are in fact some policychanges in sight which have the potential to throwrecent ‘positive’ trends off course. Furthermore, for anumber of reasons, it is difficult to see some trends,which have favoured the rural regions, beingsustained with the same momentum as in recent yearsof unprecedented economic (urban-generated)development.5 IDA Ireland, Enterprise Ireland, Shannon Development, and Udaras na Gaeltachta6 Based on annual averages for two three year periods, 1995-1997 and 2002 – 2004.7 The reference here is to daily commuting; weekly commuting occurs but no Census data exists to analyse such activities.49

Rural Ireland 2025 - Thematic PapersFirstly, apart from any negative commodity pricetrends, the substantial contributions of subsidies tothe operating surplus in farming will not continue toincrease as they have done since the mid-1990s 8especially after the 2006-2013 EU programmingperiod. The impact of any real reduction is likely tobe more severe in the structurally weak and marginalfarming areas because these subsidies now representnearly all their operating surplus. Secondly,allocations from EU structural funds, especially tothe BMW region, will be much lower than in the past.In addition there will be EU restrictions on the scopefor national government to provide regional aid apartfrom selected incentives such as those expressly forsupporting competitiveness. Thirdly, environmentallegislation will impose new compliance costs onbusinesses. Energy costs, including those involved incommuting, may also be additional factors. Costs ingeneral, together with a less favourable taxationenvironment, will dispose foreign enterprise to seeklower cost locations outside Ireland. Fourthly, beyondthese policy issues, it seems unrealistic to expect thevolume of building construction – which has been ofgreat significance to rural areas – to be sustained atthe exceptional rates of recent years. There is also therisk that some lower skill industrial activities willmove to overseas locations.Without positing a truly pessimistic scenario, thefollowing perspective for 2005 – 2025 is outlined:• Urbanisation and spatial concentration ofeconomic activity and population will continue,with Dublin and neighbouring countiescontinuing to increase their share of the State’sinhabitants. The growth of the other urbancentres will continue, in response to thelocationally selective nature of future enterpriseinvestment. The proposed NSS Gateways willbe significant centres in this process. RecentCSO population projections indicate that, on thebasis of recent trends, all regions will increasepopulation but the fastest rate of growth will bein the Mid-East.• Cluster development, involving, a critical massof companies benefiting from the advantagesderiving from pools of expertise, skills andspecialised support will be possible in limitedlocations. Important components of thisdevelopment will be enterprises engaged in highvalue-added manufacturing in food,pharmaceuticals, medical technology,communications and software technology, aswell as internationally traded services.• Rural economic and social viability will dependon the nature and strength of linkages to thelimited number of major urban centres, or on thecapability of providing an attractive livingenvironment with high amenity values.Commuting zones are unlikely to expandbeyond current catchments. Areas outside thesewill have low levels of entrepreneurship andpopulation decline. Any major downturn inbuilding construction could have very negativeconsequences for rural areas as workers in thissector have readily transferable skills and caneven move outside the country easier than theircounterparts in the industrial sectors.• The BMW region, especially the north-west,will continue to lag behind the economicperformance of the rest of the country, forseveral reasons, including:- its weak urban structure and the sectoral shifttowards an internationally traded serviceseconomy will continue to favour location inlarger urban centres- transition to even lower income agriculture- its continued high dependence on ‘oldeconomy’ enterprises with low rates ofinnovation• Associated with the spatial differentiation ofproduction, agriculture will experience furtherspatial contraction of commercial farming;spatial expansion of economically marginal andpart-time farming – even in traditional strongfarming areas; and further expansion of forestryin the west and north-west, particularly ifincentives are provided in the wake of thewithdrawal of commodity subsidies.• Roadway reconstruction and improvements willbe confined to the major routes along whichhousing will continue to locate, with poor accessremaining the lot of areas served by secondaryand minor roads.8 In the BMW region the percentage increased from 41% to 83% between 1995 and 2003. The corresponding increase in the S and E region was from28% to 58% (CSO 2002, 2004).50

3. Some Spatial Dimensions4. ATTAINABLE PERSPECTIVE TO 2025A preferred and attainable scenario for rural spatialand demographic development by 2025 wouldinclude the following:• There will be reduced disparities in economicperformance and social progress across thecountry’s regions. This degree of greaterregional convergence requires acceleratedeconomic development in the different ruralsub-regions.• The NSS concept of selected ‘Gateway’ centres,dispersing development to linked sub-towns andrural hinterlands, will be realised. ‘Neweconomy’ enterprises will be a significant partof Gateway centre development outside theDublin region.• County (and city) development strategies,already agreed, will be successfullyimplemented.• Rural towns and villages will be attractive asplaces of residence because of quality localamenities, infrastructures and services (e.g.schools, childcare, access to medical services).• The special circumstances of the marine sectorand of coastal areas and communities will berecognised in regional development plans, andcoastal zone management will be a prominentfeature of spatial planning.• While rural areas face particular problems withhigher energy costs, significant developmentswill be underway in harnessing the potential ofthe country’s natural resources for energygeneration, e.g. in the marine sector, forestryand biofuels.• Advanced high-speed broadband will be widelyavailable to homes and businesses.• While there will be costs associated with a widerange of environmental regulations, themaintenance of a high quality physicalenvironment and associated ‘green image’ willoffer new market opportunities in areasspecialising in food production and tourism.5. INITIATIVES FOR A BETTER FUTURE1) Linked Spatial and Sectoral Planning: A firstinitiative is to declare a clear operationalprogramme for implementing the NationalSpatial Strategy. As the Strategy has nolegislative basis, commitment to it can beexpressed by sustained and transparent actionsto implement it. In addition, the NSS needs to besynchronised with future National DevelopmentPlans (NDPs). These NDPs need to retain thegood practices already established under EUprogramming, e.g. by setting measurable targetsand performance indicators, and maintainingregional monitoring systems. Equally important,NDPs should have a regional focus at a levelequivalent to the current Regional Authorityregions (i.e. at NUTS 3 level). The presentdivision of the country between the BMW and Sand E regions – devised as a political stratagemin the context of EU funding – is an unrealisticcategorisation for responding to Ireland’s spatialdifferences. Institutional arrangements may alsoneed to be revised (see No. 6 below).2) County Strategies: Councils have alreadyprepared detailed multi-sectoral countystrategies for 2002 – 2012. Some of themomentum behind the preparation of theseseems to be lost. It needs to be restored by there-affirmation and renewal of commitment bythe stakeholders.3) Local Economic Development in Outlying RuralAreas: With the development of gateways andhubs under the NSS, and urbanisation trendsgenerally, the old designation of ‘disadvantagedareas’ 9 has less meaning. The importantdistinction over the next two decades will bebetween rural areas linked to urban centres ornetworks, and the areas lying outside thesecatchments and their urban generated labourmarkets. There is a clear case for a focussedprogramme of local economic development for‘outlying’ areas, many of which are still highlydependent on agriculture, marine and other localresources. The typology presented in Map 1showed that some outlying areas are capable ofincreasing population. What is called for is atailored approach in which agencies such asCounty Enterprise Boards and LEADERcompanies would take a more proactive role instimulating local development. In this context,account can also be taken of the particular needsand potential of coastal communities.9 Generally some amalgam of counties in the West and North West.51

Rural Ireland 2025 - Thematic PapersIn some areas, easily identifiable from thepopulation census, the demographiccircumstances are such that the focus will not beon economic development primarily but on thedelivery of services such as healthcare and localtransport.4) Collaboration Across AdministrativeBoundaries: Spatial variations manifested indifferent rural economies cut acrossadministrative boundaries (coastal areas,outlying areas, etc.). The ‘packaging’ ofnuanced strategies for local economicdevelopment will need closer collaboration bydifferent county and regional administrations.5) Urban Networks and Inter-Urban Corridors:Linkages and exchanges between urban centrescan be effective in consolidating regional andsub-regional development. This polycentrismcan exist at different sizes of centres and spatiallevels. Such networking should be fostered(examples are Tralee – Killarney, Sligo –Letterkenny). In particular, a western interurbancorridor linking Cork, Limerick, Galwayand Sligo could be promoted as a balance to theGreater Dublin Region.6) Revise Institutional Arrangements: Institutionaland administrative systems tend to becomerigid, inward-focused and self-serving. What isrequired in terms of rapid change is adaptability,responsiveness and flexibility. There is a need tocritically assess existing structures as to theiradequacy to oversee the design andimplementation of a programme of regionalpolicies and spatial strategies.7) Knowledge Building for Spatial Planning:Spatial planning requires (i) a long-termstrategic approach and political commitment,(ii) a dedicated research support system to guidethe optimal use of rural space, especially inmanaging competing claims and conflicts overspace use (which will most likely increase withmore diversified development in the ruraleconomy). There is currently an acute shortageof data to support the NSS, such as informationon the flows and exchanges between ‘rural’ and‘urban’ areas, modelling of likely future trendsunder different events or scenarios, or factorsinfluencing locational decisions by majorstakeholders in space use.REFERENCESCSO. (2002); (2004). Regional Accounts forAgriculture. CSO, Dublin.Commins, P. and Walsh, J.A. (2004). Agriculture andRural Development in Ireland: HouseholdAdjustment Strategies and Trends. Papersubmitted to ESPON Project 213 on theTerritorial Impacts of the CAP and RuralDevelopment Policies. NUI Maynooth.Department of Agriculture and Food (1999).Ensuring the Future: A Strategy for RuralDevelopment in Ireland. White Paper.Department of Agriculture and Food, Dublin.Forfas (2005). Annual Employment Survey 2004.Forfas, Dublin.Lafferty, S., Commins, P. and Walsh, J.A. (1999).Irish Agriculture in Transition. Teagasc, Dublinand NUI Maynooth.McHugh, C. (2001). A spatial analysis of socioeconomicadjustments in rural Ireland 1986-1996. Ph.D. Thesis, Department of Geography,NUI Maynooth.National Economic and Social Council (NESC).(1997). Population distribution and economicdevelopment: Trends and policy implications.NESC, Dublin.52

3. Some Spatial DimensionsAPPENDIX TO THEMATIC PAPER 3:MAPS OF SPATIAL DISTRIBUTION PATTERNS1. Rural typology, 19962. Demographic vitality ratio3. Education ceased at third level4. Persons 15+ at work5. Female labour force participation6. Persons travelling 30+ miles to work7. Households with Internet access53

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4. Foresight Study of the Agri-Food Sector4. Foresight Study of the Agri-Food SectorE. Pitts 11. DRIVERS OF CHANGE IN THEAGRI-FOOD SYSTEMInternationalThe major driving forces for change in agricultureand food are defined by de Witt (2003) as• Increasing globalisation and liberalisation• Changing food demands of a growing worldpopulation• Increasing concerns with the ecosystem• Rapid developments in life sciences andinformation and communications technologyNational• Changes in agricultural policy• Impact of the "Celtic Tiger" phenomenon and inparticular of relatively full employment2. KEY TRENDS AND EMERGING ISSUES(a) Farming structureTrends in the structure of agricultural sector havebeen reviewed by Crowley et al. (2004) and aresummarised below.The period between 1991 and 2002 Irelandwitnessed significant social, cultural and economicchange. The population boom of the late 1970s fedinto the labour force at a time when the economy wasgrowing at record rates. During the period thepopulation grew by 11.1%. Population growth wasnot confined to urban centres but also encompassedrural areas. Despite the increase of population in ruralareas, fewer inhabitants were employed in traditionalrural economic activities, such as farming, forestryand fishing.Income from agriculture, forestry and fishinggrew by only 24.4% between 1990 and 2002compared with a 200% increase in non-agriculturalwages, salaries and pensions. (Central Bank ofIreland (2003). In spite of population growth in ruralareas, the numbers employed in the traditional ruralactivities, including agriculture, declined. At thesame time, income within the non-farming economygrew dramatically. The decline in farmer numbers hasbeen partly due to the booming Irish economy, withattractive alternative careers for young people,together with continuous decline in farmingprospects. Even some of the best farmers are leaving,because of the relatively poor return on assets andpoor opportunities for added value. These changessignal the progressively weakening role agricultureplays not only nationally but also in rural areas andtheir economies.All counties exhibited an increase in the averagefarm area between 1991 and 2000. The largestpercentage increases occurred in the northwest andalong the border, in regions associated with smallerfarm size. Higher rates of land leasing occurred in thesouth and east, which already have, on average, thelargest farms.The vast majority of areas saw increases in theaverage scale of farm business between 1991 and2000, around a State average increase of 78%. Areasexhibiting the largest percentage increases in scale offarm business appeared to correlate with those thathad the largest increases in farm area.Between 1991 and 2000, the area of agriculturalland used remained almost unchanged (Departmentof Agriculture and Food 2003). While the number offarms declined, and numbers employed in the regularfarm labour force fell and total time spent on farmwork declined, the average farm size rose by 21%suggesting that, overall, agriculture became lesslabour intensive (CSO 2002).The key trends shown by this analysis aretherefore(a) substantial decline in farm labour force andreduced labour intensity in farming(b) substantial structural change in terms of farmsize, even in a period of relative stagnation inthe sector as far as output is concerned, and withlittle actual land sales1 Email address: eamonnpitts@hotmail.com61

Rural Ireland 2025 - Thematic Papers(c) substantial increase in the participation offarmers and their families in the wider economythrough part time or full time jobs(d) more substantial structural change in lessintensive areas of the North and West and amodest closing of the differences in scalebetween these areas and the South and East.(b) Food processing industryThe Food and Drinks sector has shown steady growthin the value of output. Gross Value Added in foodgrew at an average growth rate of 6% per annumbetween 1995 and 2001. Gross Value Added inDrinks and Tobacco has shown a similar level ofgrowth. With the faster growth in the wider economyin the late 1990s, the combined share of food, drinkand tobacco of GDP fell from 8.7% in 1995 to 6.0%in 1999 and to 5.5% in 2002. Employment in theFood Drinks and Tobacco industry grew from 45,100in 1995 to 47,200 in 1999 and 51,600 in 2002,accounting in that year for 2.9% of total employment.In recent years the food processing industry hasbecome increasingly dependent on immigrant labour.(c) Emerging worldwide trendsDe Witt synthesises the assessments made in anumber of future studies made by FAO, IFPRI andOECD about developments in the agriculture andfood sector. The main results are• World demand for agricultural products willcontinue to grow but slower than in previousdecades, because of a slower growth inpopulation and the fact that many have enoughfood already. There will be progress in meetingnutritional needs because of increasingproduction and increasing purchasing power• Patterns of food consumption are becomingmore similar, because of increased income,changing preferences, globalisation andtendencies towards convenience. The volume ofhigher quality and more expensive foods (suchas meat and dairy products) consumed willincrease• Free trade will increase integration, productivityand income growth. Developing countries willin general become net importers of food, despitetrade liberalisation. This will arise partly frompoor transmission of higher world market pricesto their farmers and because productionpotential will be limited by agro-ecologicalconditions• Cereals supply and demand will continue toincrease. Production growth in developingcountries is not likely to satisfy increasedinternal demand, which will be supplied bytraditional exporters. Yield improvements willaccount for about 70% of production increaseand land expansion for about 20%.• Meat and dairy products will provide a growingshare of the human diet, with poultry expandingmost rapidly. The increased demand will be metby a movement away from extensive grazingsystems to more intensive industrial systems,using improved genetic material, modernfeeding systems and skilled management.• In relation to forestry there will be a movementaway from poorly regulated wild forests towardsforests, which are managed in a sustainable way.• Land degradation will remain a serious problem.There is no reason to fear for water shortages.Loss of wildlife habitats to farming will proceedbut at a slower pace. Environmental policies andsustainable farming practices will help to reducethe conflict between intensification andenvironmental protection.• Greenhouse gas emissions from agriculture areexpected to continue to increase. But theexpected increase in crop production could leadto an increase in carbon locked up in croplandsoils.• Because of its potential impact on food security,research into biotechnology and ICT isimportant for developing countries. Bothtechnologies offer huge potential for increasingcrop yields, conservation, and improvement ofnutrition.• In developed countries there is a growingdemand for food products aimed at improvinghealth and the focus of agriculture here needs toswitch from production in the narrow sense to abroader concept of providing health-promotingand safe food.• Food hygiene is expected to improve throughuse of biotechnology in food processing. A rapidincrease in use of convenience foods and inelectronic home shopping is foreseen.• Major new markets will emerge fornutraceuticals and functional foods.62

4. Foresight Study of the Agri-Food Sector• The relationship between agriculture and theenvironment is seen as out of balance in mostcountries. Intensive food production leads tohabitat fragmentation and destruction,atmospheric acidification, eutrophication,desalinisation, erosion and desertification. Neweconomic planning tools will be needed to takeaccount of these factors.• Global environmental monitoring is on the way.Soon it will be possible to detect minuteenvironmental changes and farmers will be ableto anticipate weather conditions several monthsahead. These technologies and precisionfarming techniques will allow optimum use ofnutrients, water and energy and minimisenegative environmental impacts of agriculture.• Biological methods will replace chemical inplant protection and nutrition.• The requirement for society to become lessdependant on non renewable resources, whileincreasing its demand for energy and materials,will provide new markets for the agriculturalsector. Alternative energy sources could includegas derived from plants, wood or straw, fuelfrom micro-organisms and algae, fuel derivedfrom vegetable oils or methanol. There are alsopossibilities for development of materials suchas plastics and glues from renewable cropsrather than fossil fuels.(d) European policy trendsWithin the European Union there is a substantialchange in the policy environment with increasedemphasis on the multifunctionality of agriculture.Policy is no longer based on considerations ofproduction alone but also on a range of public goodsgenerated by the agricultural sector, includingbeautiful landscapes, resources for recreational andleisure activities, and bio-diversity. The precisepolicy instruments to reflect this change of emphasisare only beginning to be worked out and one canexpect a considerable impact in the medium term ofthese measures, starting with the decouplingmeasures announced as part of the Luxembourgagreement. In general in Europe the policyenvironment is less sympathetic towards agriculturaland food production than in the past. This trend isreplicated in Ireland with the declining share of thesector in total output, the corresponding growth inother economic activities and increasing interest inenvironmental and heritage issues at the expense ofthe purely economic.3. PROJECTIONS TO 2015(a) Farm numbers: Projections of farm numberswere made in the Report of the Agri Vision 2015Committee. These included• Total farm numbers to fall to 105,000 from136,000 in 2002• Of these 40,000 will be economically viable butthree quarters will be operated on a part timebasis i.e either farmer or spouse has an off farmjob• 45,000 will be economically non viable buteither spouse will have an off farm job• dairy farm numbers will fall to 15,000(b) Agriculture in economy: Including forestry andfishing, agriculture accounted for 2.9% of NationalGDP in the year 2002, (Department of Agriculture,Food and Rural Development, website, 2004),However its share of some regional economies isconsiderably greater. The highest level in 1999 was8% in the Border region.Taking a conservative estimate of 3% per annumgrowth in the volume of output in the rest of theeconomy (nationally or in a region), and a 3% perannum rate of inflation, the nominal growth of therest of the economy in a 10 year period would be over70%. Such a growth in the rest of the economyaccompanied by a static output in nominal terms inagriculture, (see below for projections from FAPRI-Ireland project) would lead to a further reduction inthe share of agriculture in overall output. Acontinuation of these trends to 2015, would mean thatthe contribution of agriculture to Border and nationaloutput could fall to 3.5% and 1.5% respectively.It should be noted that the value of agriculturaloutput would have to double that projected for 2015for the sector to retain its current share of nationaloutput.(c) Aggregate impact of Luxembourg agreement:Analysis by the FAPRI- Ireland team shows that withthe implementation of the Luxembourg agreement,63

Rural Ireland 2025 - Thematic Papers• Aggregate nominal income in farming (withdecoupling) will in 2012 be close to the averagelevels achieved in 2000-2002.• Relative to the average of 2000 to 2002, by2012, there is a decline in livestock value of 6percent under the Baseline, and a decline in milkvalue of 14 percent. Relative to the baseline, thevalue of goods output from agriculture declinesby over 1 percent under the full decouplingscenario.• On the inputs side, relative to the 2000 to 2002period, Baseline input expenditures increase by3 percent by 2012. Under the two maximumdecoupling scenarios input expendituresdecrease by 8 percent and 7 percent respectivelyrelative to the Baseline in 2012.• Changes in the values of outputs and input meanthat under the Baseline between 2000-2002 and2012, sectoral income is projected to decline by9 percent. Under the two maximum decouplingscenarios, income levels in 2012 are higher thanin the corresponding Baseline period due, in themain, to the reduction in input expenditure.Consequently, in 2012 nominal income levelswith full and almost full decoupling remainclose to the 2000-2002 level.• Using the projections of agricultural activityalready described, projected future GHGemissions from agriculture are projected to fallrelative to current levels, as milk yields rise anddairy cow numbers decline. Lower numbers ofdrystock and lower fertiliser use also contributeto the reduction. The maximum decouplingscenario results in lower levels of GHGemissions from agriculture. Relative to theBaseline, emissions are projected to fall by 8percent by 2012.These projections were made using the bestavailable econometric estimation of the likelyreaction of farmers to changes in prices of inputs andoutputs. It is possible that there are dynamic or othereffects, which could lead to a different outcome.Alternative Scenarios: The new policyarrangements provide freedom to farm what onewants, some (perhaps a substantial) reduction inbureaucracy and an environment where profits arederived from the marketplace, after a decade where"farming subsidies" was of increasing importance.This may provide a new dynamic not captured in theeconometric models.The potential for expansion of the dairy sector isfrequently cited. For this to become a reality quotaswould have to disappear. Current policy has them inplace until 2013. Belief in the capacity to expand isbased on a presumed comparative advantage in dairyproduction.A recent study of the competitiveness of the dairysector (Thorne, 2004) compared with seven other EUcountries reveals that• Using partial productivity indicators such asyield per cow or per hectare Ireland had one ofthe lowest levels of productivity• Using "cash costs as a percentage of output" asa measure of competitiveness, Ireland had a lowlevel of costs and therefore a high degree ofcompetitiveness. This measure is appropriate forjudging response to reductions in output prices,and indicates Irish dairying would survive betterthan most of its EU neighbours in the expectedenvironment of the next few years.• Using "economic costs" (including return onowned land and labour) as a measure ofcompetitiveness, Ireland had a high level ofcosts and therefore a low degree ofcompetitiveness. This was particularly due tothe high price of land in Ireland (excluding landprices, Ireland is competitive). This is the mostappropriate measure of competitiveness, if oneis considering ability to invest and expand forthe long term.This study suggests that the ability of the dairysector to expand if quotas disappeared will be limitedby the high price of land. This result also applied tobeef and cereals markets.Another scenario, with specific environmentalimplications relates to the possibility of trading inenvironmental goods, which is a reality in somecountries. Already under the Kyoto protocol there isprovision for trading in the right to emit greenhousegasses, and there have been reports of US farmersbenefiting from these provisions. In the mediumterm, markets may develop for carbon sinks or forrenewable crops for energy production (with orwithout public subsidy). The concept of payingfarmers for environmental goods is already accepted.Given the speed of policy change seen within the EUin recent years, provisions such as these are likely by2015.64

4. Foresight Study of the Agri-Food Sector4. PERSPECTIVES TO 2025For a period as far ahead as twenty years,conventional projection techniques have severelimitations. They are usually based on continuance ofexisting policies and trends. In twenty years,discontinuities can be expected. That is why we speakof perspectives in the plural.4.1 Conventional perspectiveLet us however start with a conventional perspective,which assumes that the future will see a continuationof past trends. The global drivers of change over thelast 20 years have caused in Ireland• Replacement of labour by capital in farming andconsequent decline in farm labour force• Increasing scale of farming and the foodindustry• Increased incidence of part time farming• Lower real agricultural prices and increaseddependence by farmers on subsidies (A USstudy indicates that real commodity prices havefallen by over two-thirds over the last fiftyyears)• Failure of farm incomes to match off farmincomes, and rural depopulation• Relative stagnation in farm output• Substantial decline in the relative share ofagriculture in national output.• Growing markets for added value food products.• Our perspective to 2015, assumed acontinuation of these trends. The review carriedout by De Witt of a number of future studiesmade by FAO, IFPRI and OECD shows a broadcontinuation of current trends.Such a future to 2025 would involve acontinuation of the past trends in Irish agriculturewith continuing• perhaps as few as 10,000 full time commercialfarmers in 2025• further lowering of real agricultural prices.(Irish farming with its undifferentiated productmix will be particularly negatively affected byreductions in commodity prices)• further reduction in importance of agriculture inwider economy• significant land area occupied by nonagricultural interests for “lifestyle” reasons.While land use for energy production, for forestry,and for leisure uses will increase at the expense offarming, less productive land will be abandoned, asalready occurs in France, USA, and Australia.Continued reduction in real agricultural prices wouldthreaten the economic viability of farming, even insectors such as beef and dairying, where we arethought to have some competitive advantages. Thisparticularly would apply in the context of continuedstrong economic growth in the home economy,providing good and secure incomes from working a 5day week in the industrial or service economy, whilethe farming sector was subjected to fluctuating anddeclining world prices and required 7 day working.The pig and poultry sectors could decline toinsignificance, while food processing would also beunder severe pressure because of declining costcompetitiveness.The competitiveness of the main dairy and beefsectors in a largely free trading environment willdepend either on attainment of massive scale tocompete with other countries (a minimum milkdelivery of 1 million litres has been suggested) or theabandonment of commodity production in favour ofproviding specific beef and milk products for specificconsumer markets on a consistent supply basis, andthereby attaining higher producer prices. The pursuitof competitive scale would see a very dramaticreduction in farmer numbers and in employment inthe food processing industry.The primary processing industry would besubjected to the same pressures of declining pricesand the continuing problems associated with thepower of the retailers, requiring increasing scale andcapitalisation to remain competitive. It would inaddition be severely affected by any reduction inoutput volume of the agricultural sector. If theprimary producer does not produce, the first stageprocessor cannot survive.The secondary processing and prepared consumerfoods sector is already purchasing significantvolumes of raw materials on the world market. Itsfuture is not so dependent on the native agriculturalsector. However it is already using, in addition toimported raw materials, substantial volumes ofimported labour. In strategic terms it might find itoptimal (as is the case with other manufacturingsectors), in time, to relocate its production to cheaperforeign locations eg in New Member States.65

Rural Ireland 2025 - Thematic Papers4.2 Alternative perspectives in 2025As stated earlier, in a twenty year perspective oneexpects discontinuities and emergence of new trends.Below are some of the possibilities, which couldaffect the global or food economy or specifically Irishsociety in this timeframe which could contribute to adifferent future.Scarcity of water: An IFPRI study suggests thatin a business as usual scenario, world demand forwater for non irrigation uses will rise by 62% by 2025over 1995. Farmers use of irrigation water willincrease by only 4%. Developing countries unable toincrease their food production will dramaticallyincrease their reliance on food imports, some poorcountries being hit particularly hard. A genuine watercrisis is possible if current trends worsen. Decliningfood production will lead to increased prices for riceand cereals, but reduced trade and increased foodinsecurity. It is probable that such a scenario wouldlead to higher agricultural prices in Ireland. (Concernabout water availability also appears in studies fromAustralia)Attitudes towards the environment: Theconventional perspective incorporates an increasingconcern for and regulation of the environment. Onecan envisage a situation however where concern forthe environment replaces production as the mainconcern of society (a recent French study exploredsuch a scenario). This can arise either at national levelor through international pressure. In such a situationthe countryside would be viewed by society asprimarily a store of environmental assets to beconserved and developed. Agricultural productionwould have a lower status, and be valued only in sofar as it contributed to such an objective. Intensiveagriculture would be seen as antithetical and wouldbe severely constrained. Such a scenario cannot beconsidered unlikely. The extent to which societyalready is willing to preserve toad or grass species atconsiderable economic cost is considerable.Climate change: Global warming is broadly nowaccepted as a fact by most scientists. Conventionalwisdom suggests that the most severe effects(whether positive or negative) will not be seen forfifty years. Nevertheless there is a large unknownfactor. Studies have suggested that global warming inIreland, while bringing greater weather variabilityand more frequent storms, would bring warmersummers and higher cereal yields and could force achange in agricultural production patterns, with thepossibility of wine production and possible need tocontrol water use. However an alternative scenariosuggests that the Gulf Stream, the principal source ofour mild climate could reverse its flow bringingconsiderable climate change with much harderwinters and warmer summers.Growth of the Chinese economy: In recent yearsthe Chinese Economy has grown at an extremelyrapid rate making China an important global producerand market. The current high oil prices (and those ofseveral other commodities) are being maintainedbecause of high demand levels from China. Thegrowth of a Chinese middle class, numbered inhundreds of millions, has important implications fordemand for food products, as they aspire to higherlevels of consumption of meat and dairy products.Dramatic increases in dairy consumption havealready taken place, from a low base. At the sametime China is increasing its own production of foodproducts, not wishing to be too heavily dependent onimports. China is now the largest world producer ofWhole Milk Powder.In a twenty year perspective it is impossible togauge what the precise impact of its dramaticeconomic growth will be (and whether it cancontinue). In particular it is not possible to gauge theimpact on world meat and dairy products markets ofincreasing supplies of food products and ofincreasing demand from China. If their supplies keptpace with internal demand growth, there might not bemuch of an impact on world markets. However ifdemand growth substantially exceeded supplygrowth, this could have a substantial positive impacton world commodity prices.Knowledge economy: Economic growth,particularly in developed economies, is increasinglyseen as dependent on new technologies, arising fromthe application of the results of research anddevelopment in industry and services. The typicalapplications cited are in information technologies andbiotechnologies. The development of biotechnologiesis seen as still in its infancy, with dramatic annualdevelopments eg in reading the human and othergenomes. Industrial applications using thesediscoveries are likely to transform the pharmaceuticalindustry and may have significant impacts on foodproduction, accelerating the recent trends intofunctional foods.66

4. Foresight Study of the Agri-Food Sector5. PREFERRED PERSPECTIVE FOR 2025– A MARKET LED AGRI-FOODSECTORThe preferred perspective for the agriculture and foodindustries in 2025 is that the sector then is• a valued supplier• of branded products• which are differentiated.This preferred position is a long way from thecommodity orientation of much of the farming andfood sectors in the past. It is deemed necessary as (a)the ability of the agricultural sector to supplycommodity products competitively in a free tradingworld is considered doubtful (b) the returns generatedfrom commodity production would not provideadequate income levels, particularly in the context ofcontinuing prosperity.It is presumed that most output would be suppliedto a sophisticated European market, which providespremia, for specialised, niche and branded products,above the levels achievable from commodityproduction. These markets would require, in general,all year round production.In this scenario, both farmers and processors arehighly focussed on meeting the precise demands ofthe target market and their production and logisticsystems are integrated. While scale is not as criticalas in commodity production, the sophisticatedproduction, logistic and marketing systems required,will require a degree of management and other skillsunlikely to be found among smaller firms. Theconcentration on specialised markets will not removethe necessity to achieve significant scale.6. INITIATIVES FOR A BETTER FUTUREFOR 2025A review of the requirements to achieve a marketingled agri-food sector, described above, produces somerelatively surprising results.The Beef sector does not have a strong marketposition in EU markets, being seen as a residualsupplier. Processors have limited market power, lowmargins and face declining supply. Nevertheless it isfelt that the oft criticised beef (and lamb) sector hasmade substantial advances in recent years and is nowwell on the way to supplying product for real ratherthan intervention markets. The structure of theprocessing sector has improved, with four leadinggroups, each of which is orienting towards supply ofspecialised products, with noticeable achievements inselling Irish branded beef in Italy and Netherlands.The change in the subsidy system should bring anincreased marketing focus at producer level. There istherefore a degree of optimism that the beef sectorcan be oriented to meet the short, medium and longerterm needs required to achieve a better future in thefarming and food sectors by 2025.The outlook for the dairy sector is not seen sopositively. Neither at producer or processor level isthere a commitment to change to production ofspecialised consumer products requiring all yearround production. Competitors have higher levels ofproductivity, reinvestment, R&D, Marketing spendand value added. The sector is still very substantiallydependent on production for commodity markets andon export subsidies.The “Conventional Perspective”, described inSection 4 above, is quite pessimistic for the agri-foodsector. In order to avoid the worst outcomes actionneeds to be taken in the following areas.Cost reduction: In the farming sector the costs ofcompliance with various EU Directives inhibitsinitiative and reduces incomes. The transition to thenew subsidy scheme provides an opportunity todesign compliance mechanisms, which ensure thatEU objectives in the areas of the environment, animalhealth and food safety are met, while not placingunreasonable demands on producers. In the foodprocessing sector the recommendations made in themost recent report of the National CompetitivenessCouncil are particularly relevant. Costs have beenincreasing at a faster rate here than in competingeconomies and this will in the short or long termaffect competitiveness of the sector. The food sectoris a relatively heavy user of energy and requires amore deregulated and competitive energy supplyindustry. Continued availability of immigrant labourwill assist competitiveness. Given the regionallocation of most food companies, and the growingdemands of retailers for more efficient supply,continued development of the road infrastructure iscritical.Land market: Consolidation of land holdings (inmanagement if not necessarily in ownership) isnecessary if a competitive farming sector is to bemaintained. Reintroduction of roll over relief in thecapital gains tax code would assist farmers seeking toenlarge their holdings, as would concessions in thestamp duty code. Land prices, however, are nowsubstantially determined outside the sector.67

Rural Ireland 2025 - Thematic PapersCompetition law: Given the requirement for scalein the food processing industry to compete in thefuture, a review of the operation of Irish competitionlaw as it is applied to the industry is required.Milk quotas: The administration of the milkquota regime favours smaller holdings and restrictsthe growth in scale of the enterprises, required tomeet future needs.Production techniques need to be developed toenable the sector to produce to consumerrequirements of easy access to their preferred foodproduct characteristics throughout the year. Newnutritional strategies may be required to complementour grass resources and enable us to provideconsistent supply to market specification. Newpricing structures to encourage such supply will berequired.Innovation: Innovation is an essential element infuture competitiveness of the food processingindustry. Research for the sector, which is currentlysupply driven, needs to develop a more demandoriented approach, if it is to meet the needs ofindustry. Innovation needs to be focussed on areas ofcomparative advantage, bearing in mind that thebases of this advantage have been changingdramatically.Industry structure: The recommendations of the“Prospectus report” on the future of the dairy sectorshould be implemented. These can be summarised as(a) a significant increase in scale, productivity andcost efficiency and a need to increase the volume ofhigh added value products on the market.Food biotechnology: Products based onbiotechnology are expected to have a substantialincrease on their low market share in the period to2025. The sector, which is in its infancy, is seen asone in which Ireland has the ingredients forcomparative advantage. This sector needs to bedeveloped through the right mix of skill building,foreign direct investment, technology developmentand acquisition, and market research.Functional Ingredients represent a majorworldwide development opportunity in the period to2025, with high levels of disposable income,increasing concerns for health, and an aging andtherefore more illness –prone population. The sectorin Ireland is at an early stage of development but haspositive characteristics in its dairy ingredientbusinesses, its close contacts with the babyfoodindustry and its strong beverage sector. This sectoralso needs a long term development strategy.Many of these recommendations coincide withthose of the Agri Vision 2015 Committee.68

5. Foresight Report on the Forestry Sector in Ireland5. Foresight Report on the Forestry Sector in IrelandJ. Fennessy 1Forestry is a complex activity – a renewable resourcewith a minimum 40 year cycle, an alternativeagricultural land-use, an agent of landscape change, awildlife habitat, an environment for recreation, acarbon sink, and, not least, the source of raw materialfor a range of timber-based industries. It requires longterm planning and foresight - decisions made todaywill impact on wood production, delivery ofenvironmental services, and the social effects offorestry over the next four to five decades.Government forest policy is set out in Growing forthe Future 2 . Along with a range of measures acrossthe forestry sector, it targets an afforestationprogramme of 20,000 ha per annum from 2000, toachieve a forest area of some 1.2 million ha by 2030or 17% of the land area, leading to a critical mass ofannual roundwood production of some 10 to 12million cubic metres by 2035. Critical mass is definedas achieving economies of scale to provide for aninternationally competitive, world class, processingsector.In the period since 1996 the importance of theenvironmental and social dimension of forestry hasgrown, mainly as a result of instruments such as theKyoto Protocol arising from the Rio process, thesupport for the principles of sustainable forestmanagement (SFM) and changing societal views onforests and the practice of forestry. The key challengefacing forestry in the period to 2025 could thereforebe formulated as: how to deliver expectedenvironmental public goods, while at the same timedeveloping a world class processing sector, andaddressing social issues such as rural developmentand recreation. Meeting this challenge will require aninnovative and holistic approach involving all sectorstakeholders, public sector intervention as well asprivate sector investment. Foresight is a useful tool inthe process of determining the nature and scale of theactions required to meet this challenge.1. DRIVERS FOR CHANGEForestry is not a stand-alone, self-contained sectorbut has linkages with agriculture, rural development,industry, finance, trade and the environment. Thereare a number of drivers of change operating in theforestry sector, some of which are unique to forestry.These include the Ministerial Conferences for theProtection of Forests in Europe (MCFPE), the UnitedNations Forum on Forests (UNFF), forestcertification, sustainable forest management demandsfor an internationally legally binding instrument(LBI) on forests, globalisation, economic andstructural constraints, international, European Unionand national legislation/regulation and existingnational policies and proposed new policies.1.1 Economic/structural pressures• Costs and overall competitiveness of the sector(including the wood supply chain)• Increasing competition from lower costsuppliers from eastern Europe and the southernhemisphere• Price of wood energy relative to fossil fuels andother renewables• National, regional and global wood and woodproducts supply/demand dynamics• Relative strength of the agricultural sector• Effect of increasing urbanisation and populationgrowth on the demand for recreationspace/leisure activities and public purposeforestry• Growers’ expectations and demands, includingthe issue of cessation of state premiumpayments post year 20 and the need for incomefrom wood sales• Roading/access to forest plantations andefficiency of processing and haulage of timber1 Email address: john.fennessy@coford.ie2 Department of Agriculture, Food and Forestry (1996) Growing for the Future: A Strategic Plan for the Development of the Forestry Sector in Ireland69

Rural Ireland 2025 - Thematic Papers• Emergence of markets for carbon and otherenvironmental products and services.1.2 Regulatory/legislativeThe debate on the conservation and sustainablemanagement of forests worldwide takes place invarious processes and initiatives, which are jointlycalled “the international forest regime”. This includesglobal processes such as the UN Forum on Forests(UNFF), and regional processes such as theMinisterial Conference on the Protection of Forests inEurope. Other elements of the international forestregime are conventions and processes, such as theConvention on Biological Diversity (CBD), theConvention on Trade in Endangered Species(CITES), the UN Framework Convention on ClimateChange (UNFCCC) with its Kyoto Protocol, and theUN Convention to Combat Desertification(UNCCD). Forests are also dealt with under the UNCommission on Sustainable Development, whichprepared the World Summit on SustainableDevelopment (WSSD).In 2000, the international community created anew international arrangement for the forestdialogue, comprising the UNFF and theCollaborative Partnership on Forests (CPF). Heads ofrelevant multilateral organisations formed the CPF tocomplement the intergovernmental UNFF. It consistsof all major forest related international governmentalorganisations. The UNFF has adopted a Plan ofAction to facilitate the implementation of the IPF/IFFProposals for Action and in 2005, is expected toproduce recommendations for “parameters of amandate for developing a legal framework on alltypes of forests”. Other regulatory and legislativefactors that influence forestry include:• EU Rural Development Regulation as itimpinges on forestry and the whole ruraldevelopment sector• EU Renewable Electricity and Liquid BiofuelsDirectives• Draft EU Energy Efficiency Directive fordomestic and industrial construction• Biodiversity and Climate Change Conventions(including carbon sequestration in forests)• National forest legislation• EC environment directives (such as the WaterFramework Directive and the NitratesDirective) and related national legislation• Health and safety at work legislation• Product and process-based national andinternational (CEN - Comite Europeen deNormalisation European Standards Committee)standards.1.3 Institutional• Institutional capacity to provide the completerange of support and extension services to thedynamic and growing forestry sector• Co-ordination among state agencies anddepartments relating to forests and forestindustry development.1.4 Existing national policies and policyappraisals• Strategic Plan – Growing for the Future• Consideration of findings and recommendationsof A Review and Appraisal of Ireland’s ForestryDevelopment Strategy 3 .• National Sustainable Development Plan• National Climate Change Strategy• National Spatial Strategy• National Biodiversity Plan• National Development Plan• Relativities between rural developmentmeasures such as the Rural EnvironmentProtection Scheme (REPS) and forestrymeasures, especially forestry premiums• CAP Rural Development Plan 2000-20061.5 Research and development• Impact and implementation of public andbusiness-related R&D findings across the sector2. KEY TRENDS AND EMERGING ISSUESThe key trends and emerging issues in the forestrysector are outlined in this paragraph. Their specific3 Bacon, P., and Associates (2004) A Review and Appraisal of Ireland’s Forestry Development Strategy.70

5. Foresight Report on the Forestry Sector in Irelandimpacts are dealt with in sections 2.1 and 2.2. One ofthe key trends over the past decade has been theinfluence of global, regional and internationalagreements, such as the Rio Process, on forest policyand practice. Increasingly, the multiple functions offorests are being recognised in national forest policiesand strategies. Forestry is no longer regarded as astand-alone activity but is more and more seen inrelation to other sectors such as conservation andhuman health and welfare. This is reflected inchanges in societal perceptions of forestry and how itvalues forests.The role of the state in providing new areas offorest has all but disappeared over the past decadewhile there is a greatly increased role being played bythe private sector and in particular farm forests.2.1 Trends and issues that may have a negativeimpact upon forest industry development• Fall off in the afforestation programme andconsequent reductions in wood supply andpublic goods provision, if level of afforestationgrant is not maintained at 100% of cost• Lack of any statutory forum to guidedevelopment, monitor policy implementation orprovide high level advice to the state authority• Increased competition on home and exportmarkets from emerging economies and nontraditional suppliers• Growth in forest area, especially in the farmforestry sector is dependent on developing anefficient cost-effective harvesting andtransportation system across the national roadnetwork• Natural growth rate advantage has been erodedthrough an increased cost base; to maintaincompetitiveness will require increasing costefficiency along all segments of the woodsupply chain• Need for co-ordination of initiatives targeted atrural development across different stateagencies and government departments• Increasing difficulty in attracting new entrantsto the forest workforce in the absence of anyform of career structure as in other countries• Need for integrated forest management planningfor private forests to be co-ordinated at nationallevel• Requirement for forest certification (public andprivate forests) to allow full access to domesticand export markets• Land-use designation needs to be defined atcatchment, county and regional levels, linkingforest to productivity, provision ofenvironmental goods/services includinglandscape issues2.2 Trends and issues, which may have apositive impact on forest industrydevelopment• Forecasted growth in domestic roundwoodsupply, particularly in the private sector, and itspotential and future utilisation• Use of high technology processes to add valueand place wood and engineered wood productsin non traditional market segments• Growth in number of farm forestry owners• Growing importance of environmentalgoods/services provided by forests, such asbiodiversity, carbon sequestration and recreation• Growing demand for and increased awarenessof wood for renewable energy generation• New measures in post 2006 Rural DevelopmentRegulation targeted at forest management• Integrated one-type-fits-all forest model for theprovision of biodiversity, roundwood, carbonsequestration, recreation space etc., orsegregated model using separate areas for woodproduction on the one hand, and areas for publicgoods such as biodiversity and water protectionon the other• The likely impact of the Single Payment(Decouplement) Scheme on farm managementpractices, with a consolidation of intensivemanagement on to larger farm units. Extensivefarm management will be more widely practisedwith farmers moving to off-farm employmentwhich may be either full or part-time• Ability to charge for non-market services suchas biodiversity enhancement and carbonsequestration (forest sinks)71

Rural Ireland 2025 - Thematic Papers3. CHALLENGES, OPPORTUNITIES ANDTHREATSThere are many challenges; opportunities and threatshave been dealt with in a general way in the previoussections. Here they are specifically listed to aid theforesight process.Challenges• Developing the forestry sector in a manner andto a scale that it is internationally competitive• Developing the necessary forest contractor andsupport infrastructure to enable the sector tomeet national targets for afforestation and toharvest the increasing wood volumes from theprivate sector• Realising the production and processingpotential of the state and private forestry sector,particularly the 190,000 ha planted by theprivate sector since the mid 1980s• Development of alternative markets for smallroundwood suited to the nature andgeographical spread of the resource• Application of knowledge economy to add valueto wood and wood products• Increasing competition from low cost woodeconomies• Retaining and attracting new entrants to thecontractor and forest workforce• Growing quality wood, fit for market, at a pricethat is internationally competitive that cansecure increased market share for home-grownforest products in domestic and export markets(including the energy market)• Development of a national and fully integratedinventory, forest management planning andforecasting system that is user friendly andsuited to the needs of the sector• Developing policies and measures that enablethe provision of public goods by forests (such asrecreation, biodiversity and carbonsequestration) to be rewarded and reconciliationof a competitive forestry sector with theprovision of such goods under governmentpolicy• Securing continued EU and state investment formeasures that will bring more land owners toforestry and will encourage effectivemanagement of forests• Developing a market for forest land throughinvestment by pension funds and privateindividuals• Promoting the marketing of wood and woodproducts – possible need for the establishmentof a new body similar to An Board Bia• Securing continued and increased investment(particularly from business) in innovation in thesector• Meeting regulatory demands in a cost-effectiveway and where possible reducing regulation andred-tape• Encouraging farm forest owners to becomeproactive in managing their forest asset.Opportunities• Changes to CAP, consequent reduction in landprices to lead to increased land availability forforestry• Farmers wanting to diversify, who see forestryas an acceptable and valuable land use option• The inclusion of forest carbon sinks in EUEmission Trading Scheme (ETS) for the secondcommitment period of the Kyoto Protocol• Need for Ireland to be Kyoto-compliant andrecognise opportunities for carbon storage inforests and wood products• New measures identified in the draft RuralDevelopment Regulation such as restoringforestry production potential, forestenvironmentpayments etc.• Growth in demand for renewable energy andpotential for this to be partly met by woodenergy• Use of home-grown timber in timber-framehouses allied to continuing building boom withassociated increased demand for wood andwood-based systems, and greater acceptance ofwood (timber frame housing) in houseconstruction• Expand timber processing into value addedareas such as Engineered Wood Products (EWP)• Increased leisure time and population withincreasing demands for recreation activities thatforests can fulfil (such as walking and hunting)and potential for specialised urban woodlands72

5. Foresight Report on the Forestry Sector in Ireland• Growing importance of biodiversity provisionof which woodlands are accepted as a majorsource• Need for riparian management under the WaterFramework Directive and emphasis of thepositive role that forests play in protecting andenhancing water qualityThreats• Dramatic fall off in afforestation programmepost 2006 if level of afforestation grant is notmaintained at 100% of costs• Possible loss of tax-free status for the operationof forests• Over-regulation of sector resulting in erosion ofcompetitiveness• Coming on-stream of wood supply from newEU Member States with lower costs and pricesand the possible impact on current markets• Fall in the real price for roundwood• Increased volume of recycled paper and woodresulting in the depression of the market forvirgin fibre and small roundwood• Unsustainable raw material supply pattern basedon continued under achievement in theafforestation programme• Substitution of wood by other products• Reduction in the level of house building longterm,resulting in decreased demand forstructural timber• Over reliance on Sitka spruce (an exotic species)and the ever-present danger of introduceddisease and insect attack• Impact of climate change on productionpotential of current species mix.4. BASELINE PERSPECTIVE IN 2025The baseline perspective as presented here assumes acontinuation of present policy but recognises thepossibility of reduction of government and EUsupport with the possible removal of grants andpremium in a total doomsday scenario. The baselineperspective also assumes the afforestation target asset by Growing for the Future and recently endorsedby the Bacon Report, but it recognises the averageannual levels being achieved at present 4 .• No afforestation grant, and no annual premiumleading to reduced level of annual plantingarising from policies such as the proposed RuralDevelopment Regulation• Inadequate infrastructure and forestmanagement planning resulting in farm forestrybecoming a stand-alone enterprise with limitedthinning/harvesting in private sector forests• Limited contribution of forestry to ruraldevelopment through the provision of ruralbased employment despite the under utilisedpotential• Small, scattered private forest resource withholdings of 8 ha average size• Afforestation based on designated land use atregional and catchment level• Approximately15% of land area covered byforests (see Table 2), based on 15,000 ha perannum afforestation from 2007, as presented bythe Strategy Plan Growing for the Future• Little investment of private, no-farmer equity inafforestation• Land prices significantly lower in real termsthan current levels due to a weakness in demandfor land• Continued dominance by state sector of woodsupply (Table 1)• Real price of roundwood lower than currentprices• Limited development of home market timbershare by processing and panel sector, andtimber-frame construction at 40-50% of housingmarket with home-grown component mainlypanelboard• Limited use of wood energy and biomasscontributing little to national energy supplybased on current trends.• Greater recognition of public goods provided byforests and incentives available for theirmanagement and provision in state and privateforests (for example water quality improvementthrough the use of riparian woodlands).4 The Report Growing for the Future assumes an annual afforestation level of 20,000 ha per annum from 2000 onwards, however approximately 15,000ha per annum has been achieved to date.73

Rural Ireland 2025 - Thematic PapersTable 1: Forecasted roundwood supply in the Republic for year 2025.AssortmentOwnerPulpwood Small sawlog Large sawlogTotal000,000 m 3Coillte 0.66 1.02 1.61 3.29Private 0.90 0.90 0.80 2.60Total 1.56 1.92 2.41 5.89Source: Phillips, H (2003). Economic impact of forestry. Unpublished paper, COFORD.Table 2: Forest area in 2025 (assuming planting at 14,000 ha 2004 and 15,000 ha 2005 and thereafter).OwnerArea (ha)Coillte 406,000Private 611,000Total 1,017,000Percent total land area 14.4%• Part-certified forest estate with barriers to entryfor uncertified private producers.• Forest contractor and services supportinfrastructure continues to be at best marginallyprofitable and having difficulty recruiting andmaintaining workforce.5. PREFERRED PERSPECTIVE IN 2025• Operation of a Farm Forestry Forum to overseethe development of the sector and to monitorpolicy implementation• The identification and separation of production,protection and public purpose forests in terms ofmanagement, support and infrastructure• Increased contribution to rural developmentthrough the provision of sustainable rural basedemployment of 20,000 and diversification ofincome for farm forest owners• Achievement of forest cover of 1.0 million ha• The development of a comprehensive EU ForestStrategy• Full recognition and financial support by state ofrole of state forests in the provision of publicgoods and a public goods incentive scheme forprivate forests• Increased institutional capacity to deliver onextension services, national development andsupport mechanisms• Greater species diversity with sound basis forpreferred species mix• Diversified supply of roundwood from privateand state forests with strong supply-sidecompetition• Internationally competitive wood productmanufacturing with strong internal competitionfor roundwood• Wood energy supplying 15-20% of heat demandby 2025• Implementation of economies-of-scale inharvesting and wood processing and fullyintegrated supply chain• Fully certified forest estate with no marketaccess barriers for home-grown wood• Maximum penetration of the home timbermarket, with timber-frame manufacturingaccounting for 60-70% of home construction,with home-grown timber supplying the bulk ofthe demand• Continued development of home market shareby processing and panel sector through addedvalue and wood technology• Expansion of existing panel mills and theattraction of one new entrant at world-classscale.74

5. Foresight Report on the Forestry Sector in Ireland6. INITIATIVES FOR A BETTER FUTUREIN 2025• Management planning in all forests supportedby Forest Service inventory and area relateddatabases• Comprehensive designation of forest land-use ata national, regional and catchment level takinginto account environmental, productive andscale issues, including a critical review of peatlandforestry• Recognition, quantification and reward by stateand EU for public goods provided by forests• Critical examination of current role of state incommercial forestry• Continued state and EU investment inafforestation• Integration of REPS and Forest ServiceEnvironmental Guidelines on farms with aforest enterprise• Commitment from Government to longer termmulti-annual budgeting for sector• Support for improved silvicultural systemslinked to forest management and wood quality• Development of mechanisms, tools and/ormethodologies that can be used to maximise thecontribution of forestry to rural development• System of support for sawmilling sector toupgrade and keep abreast of changingtechnology• Public-private partnerships to encourageinvestment by private sector companies andpension funds in afforestation and woodprocessing• Integrated promotion and support for woodenergy by government agencies anddepartments, fully capturing the environmentalexternalities in levels of grant aid and pricingmechanisms• Management practices to be led by state-of-theartR&D findings, and increased investment bystate and business in research and development• Promotion by state and industry of benefits offorestry to the public, policy makers andlegislators• Development of long term contracts betweenprocessors and forest owners, to include forestaccess, thinning, clear-felling and reforestationoperations• Creation of a forest owners association and/orforest owners co-operative to facilitate forestmanagement planning and timber production atthe macro level• Continue capacity building through training andeducation of farm foresters and forestryprofessionals (e.g. Continuous ProfessionalDevelopment)• Put in place a structured comprehensiveapproach to education and training at forestoperative and contractor level.7. ACKNOWLEDGEMENTSThe author wishes to acknowledge therecommendations made by the many participantswho contributed to the drafting of this paper. Inparticular, those who attended the stakeholdersmeeting held in the Glenview Hotel, Co Wicklow on2 November 2004. The contributions of HenryPhillips (Irish Forest Industry Chain), Prof. J.JGardiner (UCD), Donal Whelan (Irish TimberGrowers’ Association) are gratefully acknowledgedas are the contribution made by colleagues inCOFORD, Dr Eugene Hendrick and Joe O’Carroll.75

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6. The Rural Environment6. The Rural EnvironmentO. T. Carton 1 , H. Tunney 2 , J. Finn 3 and L. Downey 4INTRODUCTIONThe objective of this chapter is to provide a summaryof the stakeholders opinion on the challenges for therural environment by 2025 and the step(s) required toachieve a vision or preferred option for it comparedwith an outcome based on a business as usualscenario. The goals for the major elements of ruralenvironment (e.g. water, air, soil, etc) are discussed asthese set the parameters for the preferred option. Theimpact of the drivers of change on the stakeholders,particularly agriculture, and the consequentialimplications for the rural environment are presented.Finally, some initiatives that are considered necessaryto ensure the preferred option can be achieved areproposed.1. DRIVERS OF CHANGEThere are existing and emerging international andnational drivers of change determining the future ofthe rural environment. These provide the context forthe business-as-usual and preferred option scenarios.1.1 International drivers of changeThe following are the important international driversthat will determine the economic, social andenvironmental sustainability of the rural environmentin the years ahead:• Further reform of EU Common AgriculturalPolicy (CAP) and EU enlargement.• Outcome of negotiations under the World TradeOrganisation which are expected to result inmore liberal world trade and much greaterglobalisation of markets.• Compliance with existing and new EUDirectives in relation to the quality of water, air,soil and biodiversity.• Decreasing fossil fuel reserves and increasedenergy demands.• Climate change is acknowledged as a verysignificant international challenge for the ruralenvironment in the twenty first century. Actionsrequired to achieve compliance with the Kyotoprotocol will impact by 2025. However, theimpacts of actual changes in climate onagriculture are not fully expected before 2025.1.2 National drivers of changeThe national drivers reflect the international driversof change as a consequence of our participation in theEU. However, some national initiatives/agendas thatwill impact on the future shape of the ruralenvironment include:• Implementation of the National Spatial Strategywith its strong focus on the development ofUrban Gateways and Hubs.• Increasing conflict in relation to land use in therural environment, leading to decliningconsensus on the location of housing, utilitiesand infrastructure as well as public access torural landscapes, archaeological and otherheritage resources.• Projected demographic changes, especially theoverall ageing of the population.2. THE CHALLENGES FOR THE RURALENVIRONMENTThe preferred option for the rural environment in2025 is one that is healthy and safe for humans,protects and preserves the natural and builtenvironment and maintains the productivity of theecosystem in its broadest sense. Seven majorelements within the rural environment will contribute1 Email address: ocarton@johnstown.teagasc.ie2 Email address: htunney@johnstown.teagasc.ie3 Email address: jfinn@johnstown.teagasc.ie4 Email address: liam.downey@mail.com77

Rural Ireland 2025 - Thematic Papersto creating this vision and are considered briefly inthis section of the study:• Water Quality• Air Quality• Biodiversity• Soil Quality• Waste Management• Cultural EnvironmentThese are briefly reviewed in terms of theobjectives for these elements and the factors that maydetermine whether or not they are achieved.A major focus is the growing recognition of theseelements in terms of public goods. In this regard,access to rural landscapes, archaeological and otherheritage resources are issues of importance andconflict. There will be a need to quantify the relativevalue of these public goods and develop theirpotential to contribute to the local economies in termsof creating a sustainable rural environment for allstakeholders.2.1 Water qualityThe objective is for water resources that areecologically sustainable, safe for drinking, contributeto the water-conserving function within the landscapeand provide recreational functions.• Agriculture in the rural environment willcontinue to exert considerable pressure on waterresources. This will be associated with thediffuse loss of nitrogen and phosphorus, andincreasingly with pathogens. Other activities orland uses in the rural environment such ashousing, utilities, infrastructure etc will alsocontribute to contamination of the waterresources.• There is consensus regarding the significantimpact of agriculture on water quality. However,there is some debate regarding the contaminantsources within agriculture i.e. farmyards andfields.• Over the coming decade, strategies will beimplemented at farm level to reduce thevolumes of dirty water produced as well asmanagement systems, including irrigationsystems, short term storage facilities andwetlands.• Increasing legislative requirements, (e.g. underthe Nitrate Directive and the Water FrameworkDirective) and the availability of farm supportsystems will result in the elimination of slurrystorage deficits that might contribute to waterpollution risks from farmyards.• Diffuse losses from agriculture to water willcontinue to decrease as a consequence of acontinuing fall in fertilizer nitrogen andphosphorus inputs arising from the decline inthe size of the national herd and improvednutrient management at farm level.• Delineation of areas considered to create or be atrisk of creating high levels of water pollutionwill help reduce the potential for waterpollution. However, these will also haveimplications in terms of the suitability of highrisk areas for the development of intensiveagricultural production systems. This will be acontentious area between those farming the landand those involved in managing the waterresources.• In the coming decade resolution will be requiredfor potential conflict between the proposedmodel of low cost grass based systems forintensive agriculture and improvements in waterquality.• The contribution of urban wastewater treatmentplants to water pollution will decline as aconsequence of the significant investmentprogramme under the National DevelopmentPlan. There will be an associated increase insewage sludge requiring management optionsincluding land application. However,contamination of water resources by septic tanksis likely to increase especially with thecontinued growth of “one-off” houses in therural environment.• The increased pressure of the growingpopulation will bring water supply into sharpfocus. In a country not known for its watershortages, recent summer droughts have putsome public water supplies under pressure andhighlight the potential fragility of the situation.2.2 Air qualityThe objective is to provide clean air so that there is nounacceptable risk to health of humans, animals,plants or cultural assets.• Currently, there are no serious air pollutionproblems in Ireland. However, the continuedgrowth in road traffic and overall energy78

6. The Rural Environmentconsumption pose the biggest threat to airquality in the immediate years ahead but thiswill have greater relevance in urban comparedwith rural areas.• The stability of our climate is being threatenedby the build up of greenhouse gases (GHG) inthe atmosphere. The impact of this climatechange on the rural environment is nowunavoidable. Therefore, the need to developnew models that will accommodate therequirements of a sustainable rural environmentshould receive consideration in the short ratherthan the longer term.• Ireland is committed to initially limiting itsnational contribution to GHG emissions to 13%above 1990 levels in the period 2008 – 2012.Considering our 2002 emissions were 29%above 1990 levels it is inevitable thatimplementation measures must be applied in theshort term to achieve compliance. Measures willbe imposed on agriculture to reduce its GHGcontribution as it represents 30% of totalnational emissions.• From an agricultural perspective, measures toreduce GHG emissions include reductions inboth stock numbers and the use of inorganicnitrogen fertilizer. The recent de-coupling ofpayments under CAP reform may contribute to areduction in the size of the national herd and theassociated reduction in nitrogen fertiliser usemay help agriculture achieve its GHG targets.However, this represents just the start of alonger term process of limiting GHG emissions;new and more stringent measures willeventually be applied to agriculture, and thesewill have implications (particularly on the moreintensive farms).• The sequestration of carbon dioxide by themuch expanded forestry programme of the pastdecades should be beneficial. COFORDestimates suggest that the potential directcontribution by forestry towards a reduction incarbon dioxide levels in air may be of the orderof 8.4% in the period 2008-2012. With otherforestry activities contributing a further 3.6%this would amount to a 12% reduction in total.• Emission limits for substances (sulphur dioxide,nitrogen oxides and ammonia) that contribute toacidification, eutrophication, and ground levelozone have been set under the EU NationalEmissions Ceiling Directive. Reducingammonia emissions associated with agriculturewill have the greatest impact in the ruralenvironment. The decline in animal numbers inresponse to changes in agricultural policy willcontribute towards the achievement of theammonia emission targets. However, someconcerns have been expressed about thefeasibility of this objective. A change over fromthe conventional splash-plate to low slurryspreading techniques such as the trailing shoe orband spreader may ensure our emission targetsare met. While there are logistical and costproblems with the changeover, there should bethe additional benefits to the rural environmentof reduced odour emissions from the landspreading operation and an improved potentialfor crop recovery of the nitrogen in the manure.2.3 BiodiversityThe objective is to protect and enhance variousaspects of biodiversity within the rural environment.This includes the agricultural landscape and the landfarmed for food production as well as its biologicaldiversity. The rural environment encompasses otherfeatures of the landscape including wetlands, peatlands, forestry and mountain landscapes that havebiological, water conservation and recreationalvalues.• Although Ireland’s biological heritage hassuffered, much of it is still relatively intact.Much of the Irish flora and fauna is dependenton traditional farming practices, and lessintensive farming in some regions of the countryis helping to maintain Ireland’s biodiversity.However, the number and scale of threats areincreasing.• The EU has already agreed ‘to protect andrestore habitats and natural systems and halt theloss of biodiversity by 2010’ (GothenburgCouncil, 2001). The achievement of this aim islikely to last for a much longer time, but clearlyindicates a high-level commitment toconserving and protecting biodiversity. TheBiodiversity Action Plan for Agriculture isevidence of EU determination to integratebiodiversity considerations into the CAP.• The European Environment Agency haspublished a first set of EU headline biodiversityindicators which has gained widespreadstakeholder support. These will underpin79

Rural Ireland 2025 - Thematic Papersreporting by the Commission to Council andParliament on progress of the EC BiodiversityStrategy and its Action Plans.• To date, the Birds and Habitats Directive havedominated the conservation of biodiversity, andhave focused on the designation of sites of highconservation value. There is increasingrecognition that a network of geographicallyseparated,designated sites is inadequate toprotect and conserve biodiversity, and that thereneeds to be more effort at conserving wildlifehabitats more generally. This is translating intoan increased emphasis in CAP on theconservation and enhancement of farmlandwildlife habitats. These include: streams andrivers, riparian zones, field margins, hedgerows,woodland areas, mature trees, small areas ofspecies- rich grassland, ponds and lakes, and soon. Although of a more modest conservationvalue that makes them ineligible fordesignation, the accumulative area and wildlifediversity (plants, mammals, invertebrates, birds,mosses, lichens etc.) of these farmland wildlifehabitats make them a highly importantbiodiversity resource.• Toward the latter aim, CAP reform will place anincreasing importance on the conservation offarmland habitats. There will be increasedfunding available to pay farmers for theircreation, maintenance and enhancement. Therewill also be increased funding available for thetraining and provision of relevant advice byfarmer advisory services. Coupled with theseincreased payments and opportunities, however,will be a demand for increased rigour inensuring that wildlife measures areappropriately designed and implemented, andmonitored to ensure their effectiveness.• The expected spatial differentiation inagriculture with the concentration ofcommercial farming in east Munster and southLeinster and the progressive reduction of fulltime farming in the regions with sub-viablefarms will impact on the biodiversity of bothrural areas. In the commercial farming areas thegrowing competition for land combines withincreasingly intensive agricultural productionsystems, will lead to greater levels of habitatloss and decline in natural population. In theseareas the conflicting goals of ensuring thecontinued international competitiveness ofcommercial farming and conservation of thenatural and built environment will presentimportant challenges in reaching a consensus onthe correct balance. In the longer term (after2050) climate change may result in someintensive grassland farming moving towards thewest and north to avoid summer drought.• In the regions with predominately sub-viablefarms there will be a need for developments ofalternate methods of land management tomaintain and conserve biological populations.Ideally such land management systems shouldfacilitate the development of improvedenvironmental goods and novel economicparadigms that would contribute to theeconomic and environmental sustainability suchregions.2.4 Soil qualityThe objective is to protect soil quality which providesthe foundation for life in the terrestrial ruralenvironment. Soil quality refers to the status of a soilwhich will support its multiple properties andfunctions, within natural or managed ecosystemboundaries, in a sustainable manner.• The need to protect soil quality will receiveincreasing attention in the coming yearsfollowing the 2002 publication of the EuropeanCommission’s communication “Towards aThematic Strategy for Soil Protection”. Thereare links between soil and the otherenvironmental media, for example, the linksbetween soil fertility levels and water qualityand soils may either act as sources or sinks forGHGs.• While Irish soils are generally considered to beof good quality, there is growing pressure onthem from land use changes, agriculturalactivities, erosion, disposal of organic and otherwastes, industrial development andurbanisation.• The first major implication of soil protection inpolicy occurred in 2003 with the mid-termreform of the Common Agricultural Policy.There is now a requirement to maintain allfarmland in good agricultural andenvironmental condition. Criteria such aserosion, organic matter and soil structure areincluded in these regulated cross-compliancemeasures.80

6. The Rural Environment• An EU Soil Protection Framework is expectedby 2008 and will outline what is known aboutsoil quality in Europe, the current threats to soil,the importance of soil and the way forward inrelation to guaranteeing their sustainable use. Itis expected that this document will provide aframework for future EU soil protection.2.5 Waste managementTotal waste generation in Ireland was estimated at 75million tonnes in 2001. Agriculture contributed 75%to this total. It consists primarily of animal manuresand contaminated water from animal yards andfacilities.• The objective is to ensure that both wastes aremanaged using land spreading in such a waythat the nutrients they contain are used for cropproduction and negative impacts to theenvironmental media are avoided. Landspreading (recycling) represents a recoveryrather than waste disposal option. The quantitiesproduced are likely to decline in the comingdecade as a consequence of the expectedreduction in the size of the national animal herddue to the evolution of CAP. However, securingsustainable manure management strategiesbased on land spreading, for intensive pig andpoultry farms remains an immediate priority.Manufacturing, building and municipal wastescurrently account for 7%, 5% and 4% of nationalwaste production, respectively. As their generation islinked with economic growth, the levels ofproduction will tend to increase.• The landfill option accounts for the bulk of the8.2 million tonnes per annum of these wastes.However, the remaining national capacity of thisoption is less than eight years. This clearlyindicates not only the need to significantlyincrease the recycling of wastes but also theneed to develop new landfill facilities.Generally these will tend to be larger with theneed for buffer zones around them.• Waste thermal treatment plants are proposed insome of the regional waste management plans.The location of these new waste managementfacilities is already, and will continue, to createa significant tension in the rural environment.The manufacturing sector is the largestgenerator of hazardous wastes especially thepharmaceutical and chemical enterprises. Theimplications of the management of these wastesfor the rural environment are considered to besmall.2.6 Cultural environmentThe objective is for rural areas to provide a good,healthy living environment and contribute to regionaland global environments. Cultural assets, in additionto natural assets, must be protected and developed.Buildings and amenities in the rural environmentshould be located and designed in a way thatpromotes the sustainable management of itsresources.• Demands on rural space will increase. Inparticular inter-facial areas between urban andrural areas will experience pressures fromcompeting spatial demands. Also high amenityareas, especially coastal regions, will experiencedevelopment and population growth.Developments in the marine industry will inparticular affect the economic viability ofcoastal regions and these could conflict in someinstances with other land-based activities.• With the amalgamation of smaller farms, thelongstanding familial association withtraditional buildings and archaeological siteswill be significantly eroded. Thus the immediateyears ahead constitute a high risk period forIreland's built and archaeological heritage.Some evidence suggests that the rate ofdestruction of archaeological sites may beincreasing in the more commercial farmingcounties due mainly to land improvements(removal of banks and ditches, etc.) associatedwith more intensive grassland farming.3. THE 2025 VISION OF THE RURALENVIRONMENTThere are difficulties in predicting accurately a visionof the rural environment in 2025. However, anintegral part of the Foresight process is to attemptsuch a vision. There are two parts to this process. Thefirst concerns the 2025 baseline or a vision of therural environment in a business-as-usual scenario.The second element concerns the preferred vision, ifit is different from the baseline. The economic andsocial context of the vision has been described (c.f. B.Riordan – Section in this report).81

Rural Ireland 2025 - Thematic Papers3.1 The baseline perspective• Agriculture will continue to be a majorstakeholder in the rural environment in 2025.• It is now generally accepted that there will be atmost between 15,000 and 20,000 full-timecommercial farmers by 2015. The majority ofthese will be intensive dairy farmers in the mostproductive south and east of the country.• The intensive dairy farm may continue to bebased on the well-established Moorepark modelof a “cow per acre” producing 5,000 to 6,000 kgof milk from a grass-based diet. However, someconcerns in relation to the seasonality of Irishmilk production and herd fertility may result inalternative production systems.• The baseline vision for 2025 agriculture in therural environment is the continued geographicconcentration of the intensive full time dairyfarmers with numbers falling to about 10,000.There will be an associated increase in the scaleof farm units, and perhaps eventually theappearance of an even more industrialised scaleof “company farming” involving corporateownership of multiple highly specialisedproduction units. Such a radical rationalisationcould occur, partly in response to the need forincreased scale, and partly in response to thecomplexities of adherence to legislative controlsand the difficulties of maintaining the necessarylevels of labour on the traditional family farm.• A small number (about 1000) of intensive beefproducers using some type of “feed lot”operation is also likely to emerge, again perhapswith the eventual emergence of company-basedownership.• The number of full-time tillage farmers willdecline resulting in a much smaller number(about 500 to 1000) of large-scale (>400 ha)tillage farmers, mainly utilising contractedmachinery and labour.• The role of biotechnology in the development ofintensive agriculture will continue to expandwith the potential for negative market andenvironmental implications.• Increasing energy costs will have implicationsfor agriculture and will provide challenges andopportunities for the rural environment.• The future of intensive pig and poultryproduction appears to be very uncertain withincreased competition from producers in cheaplabour regions both within new EU memberstates and beyond. Stringent environmentalregulations, and the need for cost effectivemanure management strategies will bechallenges going forward.• By 2015, there will be 35,000 part time farmers,deriving 50% or more of their income fromfarming. In general, these will be located in lessagriculturally productive regions of country thatinclude parts of the western seaboard. These willoperate at a range of scales from relativelyintensive beef production systems to thoseessentially providing and being paid fordesirable levels of environmental goods.• Increasingly, the main income to sustain thelatter will come from the provision of directpayments to maintain systems of sustainableland management that provide multifunctionalbenefits and services in support of landscapeconservation and the preservation of natural andcultural heritage. The provision of these higheradded-value public goods will be supportedthrough REPS-type schemes, justified on thebasis of being necessary for a wide range ofenvironmental, social, and cultural reasons. In atleast some regions, they will have a beneficialinfluence on other areas of economic activitysuch as recreation, sport and tourism. In thisscenario there is potential for abandonment ofland for farming in some areas of the country.• The 2025 baseline perspective for marginalproduction areas where part-time farming willpredominate is less clear. However, there will bea drystock component ranging from semiintensivesystems to very extensive, sub-viableproduction in areas of marginal productioncapacity.• In tandem with these agriculturally-relateddevelopments within the rural environmentother stakeholders will continue to extend theirinfluence on it. For example, the area underforestry will continue to expand with potentialfor both positive and negative impacts on waterand air quality, biodiversity and landscape.• The rural environment will come underincreasing pressure as agricultural employmentdeclines and urban generated employment andactivities increase in their importance. Theseimpacts will tend to be greatest in the regionsassociated with the greater Dublin area which82

6. The Rural Environmentwill continue to account for up to 40% of thenational population. This will create additionalland use and environmental conflicts becausethese are the areas in which intensive agricultureis expected to develop.• The high amenity rural areas will experienceincreased pressures in terms of housing andtourist developments. Resolving conflictsbetween public access to land in privateownership and the payment for public goodswill require solutions.3.2 The preferred 2025 optionThe 2025 vision for the rural environment is a placethat is healthy and safe for humans, protects andpreserves the natural and built environment andmaintains the productivity of the ecosystem in itsbroadest sense. This can only be achieved through themanagement by all the stakeholders of theenvironmental resources that represent the ruralenvironment.• The preferred vision of Irish agriculture in 2025is one where the wider industry fully achieves amulti-functional role as both the supplier of safeand high quality food and the means of fulfillinga complimentary range of environmental andpublic goods objectives in order to sustain ruralviability in both an economic and environmentalsense. Indeed, this truly multifunctional view ofagriculture sees the maintenance of a ruralenvironment of the highest possible quality, asan essential requirement for the successfulproduction and marketing of safe, premiumquality food, which many European consumersare increasingly likely to demand.4. INITIATIVES FOR A BETTER FUTUREIN 2025There is a need for the creation of a national ruralenvironmental forum (REF) to provide leadership,strategy and integration in the drive forenvironmental knowledge. This is one of threeoverarching strategic initiatives that should beundertaken collaboratively by the public and privateorganisations responsible for and engaged ingenerating economic activity in rural areas. Theimplementation of the required policies to achieve the2025 vision of a sustainable rural environmentrequires environmental knowledge. This knowledgecould be generated through a REF and transferred sothat society can achieve a just and equitableresolution to the conflicts that will arise where theenvironmental capacity of the rural environment canbe best matched to the demands of its multi-userstakeholders.Some of the key challenges identified that must beaddressed by such a national rural REF to achieve thepreferred rural environment option include:• There is a need to recognise and identify thepublic good value of the environment, whichagriculture, marine and forestry provide. Thiswill be essential to achieving the optimumbalance between the economic dictates of theEU policy of international competitiveness andenvironmental sustainability.• There is a requirement for the continueddevelopment and identification of indicators andtargets for these, particularly in relation to themaintenance of the rural environment and theirassociated natural, aesthetic and culturalfeatures.• The need to resolve the growing conflictbetween the price competitiveness of theagriculture and food industries and society'sconcerns in relation to food safety and quality,the environment, animal diseases and welfareand, to an increasing extent, developments inbiotechnology.• Production intensity will continue to increase inthe most agriculturally productive areas of thecountry unless steps are taken to developalternative models for “competitive” agriculturewithin a wider European context. These modelswill not only be in terms of the lowest possibleunit costs and commodity prices, but will alsocapitalise on the already strong environmentalvalue-added image of Irish food production inmany of Europe’s most important markets.These same areas are also likely to be the mostdesired for alternative economic development.Such combined pressures will result in increasedenvironmental pressures.• In marked contrast, agricultural activities inmarginal production areas are likely to beabandoned, resulting in depopulation and theloss of traditional landscapes unless appropriateincentives are provided to reverse this trend. Inspite of a continued decline in its nationaleconomic importance, farming activities (or83

Rural Ireland 2025 - Thematic Paperstheir absence as dictated by agricultural policy)will continue to have a profound influence onthe face of the Irish countryside and the qualityof the rural environment.• Waste management infrastructure will continueto develop and is and will continue to beinextricably linked with the quality of the ruralenvironment. The generation of the knowledgenecessary to inform the policy makers andpublic in relation to these developments will bean important pillar in a sustainable ruralenvironment.• There will be a requirement to developstrategies to address the conflict between theneed to protect the water resource from farmingactivities and the needs of agriculture. Thesewill include strategies to mitigate the pollutionpotential of the production system (e.g.development of precision farming techniquesand treatments for manures to reduce pathogenconcentrations) or to recompense the farmerwhose production activities must be restricted toprotect the water (i.e. for the provision of aquantifiable environmental service).• The likely impact of climate change on futureagriculture is a topic that requires much moreresearch-based consideration. While the detailsof exactly how and when climate change willstart to impact remain unclear, it is now widelyaccepted that it will happen. Changes in rainfallpatterns in southern and eastern areas where themost intensive production systems areconcentrated could increase the demand forwater for crop irrigation and the potential fornitrate leaching due to summer droughts andlower winter rainfall. Potential problems withflooding in low-lying coastal areas as aconsequence of global warming and changingpatterns of agricultural use need to be assessed.It may be prudent to initiate the researchnecessary to provide the strategies andtechnologies required to sustain the ruralenvironment sooner rather than later.• Increasing energy costs will have a verysignificant impact on the 2025 vision ofagriculture. This relates most obviously toimpacts on the costs of the main drivers ofproduction such as fuel, fertilisers, pesticidesand mechanisation. While it may appear to offeran opportunity to agriculture in terms of the useof land for energy crops, wind turbines, waveenergy and other forms of energy generation, theimpacts of the high cost of energy on productionmust not be underestimated. Indeed the potentialimpact of energy costs on the achievement ofenvironmental goods/services will also have tobe considered. For example, where will thebalance lie in terms of peat land conservationand its use as an energy source?• The encroachment of new housingdevelopments into the countryside andparticularly “once-off” housing developmentwill have important implications for the price ofagricultural land in the most desired and somepotentially most productive areas, and willcause significant negative environmentalimpacts and create high levels of conflict andpublic concern on both sides of the debate. Inthe same vain, public recreational and touristaccess to land that is owned and managed byfarmers will give rise to conflict.• Consideration will have to be given to theimpact of carbon emission targets andagriculture in 2025. There are potentiallypositive and negative aspects to this. Thepositive aspect is the role of agriculture in actingas a sink for carbon. It appears that the expectedfall in animal numbers will go a long way toachieving our national air emission targets by2012. However, it should be remembered thatachievement of these targets represents only afirst step, rather than an end point. It is thereforelikely that the proposed more stringent reductiontargets for 2020 and beyond will significantlyimpact on agricultural practices.Manure management problems remain in regionsof the country with high concentration of pig, poultryand mushroom production units, notably Cavan andMonaghan. Achieving economically viablemanagement options (transport to other regions,processing etc), will determine the viability of theseenterprises.84