Time ran out for income volatility tool

Dairy incomes in particular have seen major swings.

Agriculture Minister Charlie McConalogue has said measures to introduce an income volatility tool for farmers, to protect against income fluctuations, are being worked on but the matter was “quite complex” and couldn’t be brought forward in this year’s budget.

In his budget speech on Tuesday, Finance Minister Jack Chambers said he was aware of the income instability in the farming sector and he is “keen to advance” an “income volatility measure” to support the farming sector for consideration in advance of next year’s Budget.

Speaking to reporters, Mr McConalogue said this was a “really significant step forward” for farmers adding that there is a “lot of work underway” in relation to the developing an income volatility tool to support stability in farm incomes.

He said the matter was “quite complex” in relation to the structure and the interrelationship between a volatility tool here and different pieces of legislation.

“It simply wasn't possible to have that delivered in time for this year's budget,” he said, adding that the Finance Minister has given a commitment that it will be considered in the context of next year's budget after his department’s work on the matter is completed.

“There is further work required on it but we want to ensure that we have stable, sustainable livelihoods in farming going forward and there's no doubt that income instability has been a key challenge,” Mr McConalogue said.

The commitment to address this matter was welcomed by the Irish Co-operative Organisation Society. However, the Finance Minister may not get a chance to follow through on this commitment as this is the last budget of this current Government and a general election is expected in the not-too-distant future.

In the meantime, Mr McConalogue said other measures in the budget will help farmers this year.

He said that an increase of over 8% in current expenditure for his department will see support increase across different farming sectors.

Among these measures include increased payments for tillage and field grown food crops, calves, and ewes. There is an additional €10m in funding for the Organics Sector as well as €10m for additional animal health measures and €2.5m in funding for farm safety.

The budget also laid out changes to the Residential Zoned Land Tax (RZLT) - which is a tax on unused residential zoned land. The rate of RZLT is 3% of the market value of the land which is self-assessed by the landowner.

It is due to come into effect on February 1 next year.

In the lead up to the budget, concerns were raised by farmers that they may be hit with the tax for land they are farming and have no plans to build houses on.

However, landowners will now be allowed to avail of an exemption next year to the tax if they seek to have their land rezoned to reflect the activity they carry out on their land.

On this issue, Mr McConalogue said that this will impact a minority of zoned land but the “key objective here is making sure that where farmers who want to actively farm, that they are accommodated”.

“That has been a commitment this Government has had in last year's budget, that's why it was deferred, and again, that's a commitment we have this year,” he said.

IFA President Francie Gorman said the farming measures announced in Budget ‘25 today would go some way towards addressing the pressures in farming, but they won’t do enough to address the income crisis.

“The increase in supports for suckler cows, sheep and dairy beef calves will be some help to farmers in the drystock sector. However, the reality is that these sectors need more support as they drive economic activity in rural Ireland,” he said.

The Minister has also confirmed funding for the tillage sector including potatoes and field vegetables.

“Our tillage sector has had a torrid two years. The number of acres under crops will be in serious jeopardy in the coming years. This payment will help farmers this year, but a medium and long-term plan is needed to protect and grow our tillage and horticulture sectors,” he said.

IFA National Farm Business Chair Bill O’Keeffe said that the budget was a cost-of-living budget, rather than a cost of doing business budget.

“Many measures in the budget will help families, including farm families with cost-of- living pressures, but will not do a lot to address the cost of doing business which for farmers has increased by 73% since 2017,” he said.

On the Residential Zoned Land Tax, he acknowledged the Government’s efforts to exclude genuine farmers from the tax. However, he expressed concerns about how the mechanism would work in practice.

On Agricultural relief on farm transfer, he said that changes to target relief towards genuine farmers were important and went a long way towards the proposals made by IFA in our budget submission.

“The increase in the threshold for inheritance will also be helpful for farm families who are in the process of organising the orderly transfer of their farms,” he said.

The IFA also welcomed the increase in the Flat Rate VAT refund from 4.8% to 5.1% and extension on the various agricultural reliefs.

The IFA has noted an allocation for the so called ‘forgotten Farmers and we are awaiting more detail on this.