Stephen Cadogan: Government reiterates commitments to rural Ireland
Farmers are literally invited to borrow their way out of trouble in the hope of better times ahead.
The loan scheme has swallowed up the €11.1 million made available under the EU’s exceptional adjustment aid for milk and other livestock farmers.
That goes towards the funding of €25 million in partnership with the Strategic Banking Corporation of Ireland (SBCI), which provides combined leverage for the €150 million fund.
Its interest rate of 2.95% hopefully heralds a new age of cheap borrowing for Irish farmers.
Unfortunately, the climate for borrowing by farmers has rarely been worse, because of the increased risk to the Irish economy posed by Brexit, which got an early mention in the Budget speech of Finance Minister Michael Noonan.
The agri-food industry is more exposed than any other to Brexit.
It is already putting agri-businesses out of business, due to the Brexit effect on sterling-euro exchange rates, more than two years ahead of the actual date for Britain leaving the EU.
Even as farmers were trying to make sense of the Budget, late on Tuesday, sterling slumped to a seven-year low of 91.4p against the euro.
Sterling is predicted to remain under severe pressure, forecast to be at €0.93 by year-end.
That is likely to knock enough off farmgate prices here to negate any Budget gains for farmers.
As they tighten their belts, sheep farmers will welcome the €10 per ewe in the new €25 million sheep welfare scheme.
Increased participation in GLAS, BDGP and TAMS can also help them.
For the worst-off farmers, more favourable Farm Assist eligibility criteria, and a €5 weekly social welfare increase, plus 500 extra places on the Rural Social Scheme, will help.
A €400 increase in the ‘Earned Income Tax Credit’, changes to the USC, and a €9m increase in the flat-rate VAT refund will also help.
While some farmers may borrow their way out of trouble, an exceptional year opt-out from the Income Averaging tax system will help others.
Meanwhile, increased funding of Bord Bia and BIM, investment in R&D and innovation, are among the anti-Brexit measures.
The Budget process illustrates how Ireland has been hit by Brexit even as it tries to get off the floor after the bail-out knockout.
Our financial scope is very limited by EU bail-out restrictions.
On the other hand, the main measures in the Budget for farmers are EU-financed.
And preparing for the UK no longer being our main food export market has to be the way forward.
As Minister Noonan said, the country has overcome huge challenges, challenges that many thought were insurmountable, and he has to budget prudently in repairing public services after a period of underinvestment.
Minister for Public Expenditure and Reform Paschal Donohoe acknowledged that rural and regional communities are looking with most anxiety at the implications of Brexit — implications which only became clear after this Government was formed, with its pledge to pay particular attention to rural Ireland.
Minister Donohoe also acknowledged the particular Brexit concerns of people in rural areas, where alternative employment may be scarce, if they were to lose their jobs, or where investment has historically been lower than in our larger cities — in other words, a world apart from Dublin, for example.
It is reassuring to hear the Government reiterate such commitments for the long run, backed up in the short term by Budget measures, in so far as they are affordable.
