IFA seeks targeted measures to address agri inflation pressures

The backdrop of record food and drink exports totalling €13.5bn in 2021 is contrasted against the more or less static farm income position of the last decade.
IFA seeks targeted measures to address agri inflation pressures

Plantation carrots

The Irish Farmers Association is to be congratulated on creating such a comprehensive document for its pre-Budget submission.

From this reader's perspective, the complexity of the paper is mirrored by the attention to detail and statistical analysis evidenced within.

The standard of submissions over recent years has certainly stepped up a gear manifesting in this year’s 44-page submission.

The backdrop of record food and drink exports totalling €13.5bn in 2021 is contrasted against the more or less static farm income position of the last decade.

The IFA states that: "At an aggregate level, only one-third of Irish farms are considered economically viable – i.e. able to provide a financial return to labour employed at the minimum agricultural wage, plus a 5% return on non-capital assets’ with almost three in every five Irish farms earning less than €20,000 in 2021."

The paper also quite rightly identifies the multitude of headwinds facing Irish farmers, including: 

  • Increasing regulation;
  • Brexit-related trade disruption;
  • Climate action and reduced Common Agricultural Policy (CAP);
  • Direct payments receipts for some of our most productive farmers from 2023.


The IFA highlight the most immediate challenge is, however, the input price crisis, and it is in this context that IFA sets out its pre-Budget 2023 submission.

This is backed up by eyewatering statistics showing that farm output increases are outpaced by a long shot by farm income price increases.

Year-on-year farm aggregate farm input prices have increased by a massive 41.6%, including increases in certain fertilisers (+210%) and feed (+48%); fuel (+56%); and electricity (+41%), whereas, aggregate farm output prices (milk, beef, grain etc) are up 28%.

Meanwhile, whilst consumer price inflation has most recently exceeded 9%, isolating out Food Prices, the application inflation rate is less than 5%.

The term Agflation is quite appropriate with farmers facing runaway prices compared to what consumers are experiencing.

The IFA is seeking additional targeted, timely and temporary measures to address inflationary agricultural input price pressures.

Novel suggestions proposed by the IFA include consideration of a temporary reduction in the VAT rate for select agri commodities; temporary income tax reliefs; temporary suspension of excise duty on agri-diesel & LPG for farm use to help reduce production costs at farm level; and a restoration of indexation relief for Capital Gains Tax given the inflationary environment.

For contractors, the document suggests that contractors should be in a position to avail of a double tax deduction for the carbon tax element of green diesel, which currently comprises about nine cents per litre, to put them on the same footing as farmers.

The general stock relief of 25% relief should be temporarily increased to 50% until December 31, 2023.

The document cites that the increase in cattle prices of 25%, for example, could cause non-cash profit on beef and suckler farms.

Enhanced stock relief is called for in respect of registered farm partnerships. This could lead to tax issues for farmers in a year of high costs and poor cash flow and should be avoided.

On Stamp Duty, the IFA is requesting that Agricultural Land is differentiated from other commercial property and that rates equivalent to those applicable for residential stamp duty rates should be applied for agricultural land.

This would reduce the stamp duty rates on agricultural property from 7.5% to 1-2%. 

On gift/inheritance tax, the Government is called upon to fulfil its stated objectives of increasing the Group A tax-free threshold (parent to child etc) from 335,000 to 500,000.

The IFA is also seeking augmentation of the Agricultural Relief rules, those which grant a 90% reduction in the taxable value of farms.

To avail of Agricultural Relief, the IFA suggests the transferor or transferee, or a combination of both, must pass an active farmer test set out under the current Agricultural relief clause for a minimum of 15 years, with a view to limiting agricultural relief to genuine cases.

A request is also made to introduce a farmer-focused rainy day fund which would allow all farmers to put aside a small percentage of their gross receipts, whether in their co-op, specially assigned bank account or State Farm Volatility Fund.

The deferred funds could subsequently be drawn down within the next five years, and the tax due would be paid on the year of withdrawal.

The concept of a volatility fund has been circulated for many years now and seems more relevant than ever.

We will have to sit it out until Budget day to see if the Governments intransigence on this will wean.

The IFA submission is well worth a look, even if only to get a 'state of the nation' view on agriculture presently and for the future.

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