The backdrop to Budget 2018 is one of uncertainty, not least because of the negotiations around Brexit. IFA has identified a number of proposals to support farmers and their businesses.
Farming and the agri-food sector continue to deliver significant employment and export growth. Following a difficult second half of 2016, food and drink exports have grown strongly in early 2017, recording growth of 8% in the first four months of the year.
However, investment uncertainty and pressure on competitiveness, due to the weakness of sterling, are proving significant challenges for the sector arising from the UK Brexit decision.
The market disturbance is impacting unequally on different member states and different sectors, depending on their exposure to the UK.
Ireland and the Irish agri-food sector in particular are hugely impacted by the exchange rate movements that have occurred as a result of Brexit.
EU state aid limits must be extended in member states that have been disproportionately
impacted by the depreciation of sterling, and whose competitiveness versus their EU trading partners has been undermined.
IFA believes that the Government should be making a strong case at EU level for greater flexibility and an increase in state aid limits.
At the same time, farming remains a low-income sector, as shown by the Teagasc farm income figures for 2016. Average farm income in 2016 was just over €24,000, with incomes on livestock and sheep farms significantly below this.
In addition, income volatility, through product price, input cost or weather related disturbances provides an ongoing challenge to farm viability.
Thus, Budget 2018 provides an opportunity for the Government to provide direct and positive support to farming enterprises.
Delivery on these proposals will contribute to tackling low farm incomes, underpinning the contribution of the farming and agri-food sector to the economy, including the Foodwise 2025 targets, and supporting economic activity in rural communities.
At the same time, farming remains a low income sector, with average farm income of €24,000 in 2016.
In this environment, Budget 2018 provides an opportunity for the Government to provide direct and positive support to farming enterprises. Delivery on these proposals will contribute to tackling low farm incomes and underpinning the contribution of the farming and agri-food sector to the economy,
IFA recognises the increase in funding allocated in Budget 2017 for farm schemes under the Rural Development Programme (RDP). These schemes are vital in supporting farm incomes and economic output on lower income farms in particular, and support important capital investment across all farming sectors.
It is vital that sufficient funding is allocated across the different programme headings, under the RDP to ensure full disbursement of funding during 2018.
IFA has identified further expenditure proposals which will positively impact on farm enterprise competitiveness and will support farm family incomes and viability.
Expenditure priorities for farm enterprises and farm families in Budget 2018 are:
Budget 2018 provides an opportunity to address ongoing challenges in farming through the taxation system.
These include income volatility, the discrimination between self-employed and employees in the income tax system and the need for ongoing farm investment, intergenerational transfer, and farm restructuring.
In addition, tax measures are required to support and deliver upon Government policy in renewable energy, through the development of renewable energy projects using farmland.
The key priorities identified for farm taxation in Budget 2018 are:
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