Conacre, leasing, the budget and other options

Budget 2014 has in effect provided a free pass or amnesty to land owners who operated conacre in the past. Conacre leads to stagnation, poor land care, and inefficient farming.

I firmly believe long-term leasing and other models are more progressive and result in better land use.

As a farmer and adviser I see first-hand how leasing arrangements can really work for both land owners and active farmers.

The enhanced measures to incentivise long leases introduced in Budget 2015 are already generating additional interest in the leasing option.

For the land owner leasing is very tax efficient with up to 40,000 exempt from income tax, in addition the land owner can still qualify for Capital Gains Tax Retirement Relief providing relief from capital taxes on any sale or transfer of the land.

In my view the real game changer has been the free pass where by land owners who currently operate conacre arrangements can avail of the income and capital tax reliefs by disposing of their land or entering leases (minimum five years) before December 31, 2016.

Leasing is simple and clean, there is no risk to land ownership, both the land owner and active farmer have a degree of certainty and security.

I frequently see the benefit a lease can provide to both parties, the farmer can plan and build his business, the land owner sees his land improve and cared for. What I see with conacre is the complete opposite, short-term thinking and the land being abused.

It is time for all practitioners to encourage a move away from conacre, the land owner has nothing to fear, it is all upside. The key date is December 31, 2016.

I know for some owners leasing is not a suitable option in which case there are a number of other progressive options. Some owners want to stay involved or active, at least in the short term.

For many land owners tax is not an issue unless there is some off-farm income or a pension. I also come across fears associated with EU payments, this should not be an issue, I would just encourage farmers to get proper advice and remember 2015 is a reference year, any owners with their own SFP and considering their options may be best served by waiting until June 2015 before entering into any arrangements.

I help farmers and farm families with an array of different options. Where leasing does may not suit we have looked at partnerships, share farming, share milking, contract rearing and other farm to farm arrangement.

Partnerships work very well within the family in particular allowing for both the younger and older generations, also there are no negative tax or EU payment implications.

I am very excited about share milking, this provides an excellent option for land owners and young farmers a like. Share milking is where two or more people come together to farm the same piece of ground, usually involving a principal land owner and a share milker.

What I like from the land owners view point is that he/she can step back or get into dairying and not be doing it by themselves. There are a lot of nice dairy farms out there with good facilities, grazing blocks, and potential post quota where the land owner has no farming successor and wants to step back, the best long term and economic option is often to enhance and continue such farms.

This can be done through share milking. Share milking is a win win for all parties, the land owner has income security and sees his farm develop, the share milker gets to farm and develop a dynamic career.

I would encourage young people interested in farming to look at share milking, I come across a lot of very capable young people who have no land or only small blocks of land or who want to go farming and feel they have to buy or lease land.

We need to look beyond these traditional models and focus on the use of land rather than the ownership. I see young farmers getting themselves into financial difficulties and dead end situations by making investments on small land blocks, buying land or taking on non economic leases. Share Milking can be a much better option.

I would say to all, look at your options and be prepared to think beyond the obvious.

Austin Finn is programme manager for Macra na Feirme’s land mobility service


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