Carbon tax to cost farmers €24m annually
The Teagasc analysis estimated that the average increase across all farms, including the carbon levy on all fuel types, will average €225 per farm. This takes account of the price increase for all fuel and lubricants used by farmers, agricultural contractors, hauliers, machinery hire and transport, including fuel in their private cars. In the analysis, no change in fuel use by farmers is assumed.
For marginal or loss-making farm enterprises, the tax is an additional burden making survival more difficult, said Teagasc researchers at the recent Agricultural Economics Society of Ireland annual conference.
They said the agri-food industry will experience additional cost inflation arising from the carbon tax though higher milk collection charges, and higher prices for bulky inputs such as feed and fertiliser due to increased transport costs.
They said their study highlighted the difficulty of unilateral policies addressing carbon emissions from sectors that are internationally traded. Where a country acts alone, it damages the competitiveness of the sector in that country, which may lead to production increasing elsewhere (carbon leakage).
Internationally co-ordinated action was more effective – but difficult in the EU, because agriculture is not considered as a big carbon emission problem in other member states. Emissions from agriculture account for 29.1% of Ireland’s emissions. However, even with the tax, the agriculture sector gains from a significant financial concession in the form of relief from excise duty on agricultural diesel, on which excise duty is 4.7 cent per litre, compared to 41 cent for auto-diesel.
