Measures taken by Minister for Finance described as disproportionate, unfair, regressive and bruising

When Minister for Finance Michael Noonan made his Budget speech in the Dáil last Wednesday, one of the first areas he singled out for mention was the agri-food sector. And it all sounded good – the retention of stock reliefs, concessions on capital gains tax to encourage the consolidation of farms and measures to encourage farmers to get involved in farm partnerships.

But, as always, the devil is in the detail, and it didn’t take long before the cutbacks were pinpointed by farm groups. Before the Budget, Minster for Agriculture Simon Coveney told farmers at the ICMSA conference that he hoped farmers would think it was a “reasonable” budget. But “reasonable” isn’t a word that has been used to describe it. Words that have been bandied about include disproportionate, unfair, regressive and bruising.

Disadvantaged

Most anger has focused on cuts to the disadvantaged areas scheme, and the ending of the suckler cow welfare scheme. Almost 75 per cent of the State’s total land area is designated as disadvantaged and so the majority of farmers – some 100,000 – receive payments under the scheme. Any cuts to this scheme were bound to be opposed.

The Budget has reduced the maximum area payable, from 34 to 30 hectares, or about 70 acres. Explaining this change, Coveney said he wanted to focus on the protection of the most disadvantaged farms. The 32,000 farmers in mountainous areas will be protected from this cut. “Nearly 73 per cent of farmers in disadvantaged areas won’t be affected by these changes at all,” he said.

Before the Budget, farm groups had lobbied for the retention of the suckler cow welfare scheme which was due to end this year. This scheme paid farmers for adhering to certain standards in areas such as animal welfare, record keeping and breeding. Suckler beef production is the most widespread farming activity in Ireland and about 25,000 farmers were in this scheme, receiving some €25 million a year.

Despite the intense lobbying, the scheme will be scrapped as planned and replaced with a beef data programme. The new scheme was rejected by farm groups who said it was a poor substitute for the suckler cow scheme and farmers would see payments greatly reduced.

Budget analysis carried out by IFA in recent days has found that drystock farmers fared worst in the Budget, with a 10 per cent cut in direct payments. IFA president John Bryan said cuts to these schemes showed a failure to understand the importance of the national suckler herd to the €2 billion beef sector.

He pointed to a typical farm with 40 cows and 200 ewes. As a result of these cuts, their payments under farm schemes will reduce by 10 per cent.

“The farmer will lose €1,200 on his suckler herd; €400 has been taken from his sheep grassland payment and €320 from disadvantaged areas. With an income of €20,000, this means a hit of €2,000,” he estimated.

“It is very unfair of the Minister to target the low-income drystock sector with his cuts on the farm schemes.”

He said the Government’s value for money review of the scheme found it had met its objectives. “The decision to effectively close it down undermines the efforts to maintain the valuable suckler herd. There has been a concentrated effort with Bord Bia to enhance the quality and image of our beef. This cut flies in the face of that strategy”.

But there was better news for Bord Bia, which saw a 6 per cent increase in its grant aid, to €29 million. Coveney said he was prioritising the food board “because they are the body that’s helping us to find and develop new markets”.

And the news was good for young farmers, with a focus on measures designed to help them get established. There was a brief panic when young farmer stamp duty relief was not mentioned in the Budget and it was assumed that it had not been renewed but Coveney later clarified that it had been retained.

Macra na Feirme president Alan Jagoe said this measure was important to facilitate farm transfer and to support the next generation of Irish farmers.

“The retention of these tax reliefs in their current format is critical to the ongoing restructuring of primary agriculture and allowing the industry to capitalise on future growth potential,” he said.

There was also a welcome for the widening of the definition of registered farm partnerships. Instead of just dairy farm partnerships, farmers involved in beef, sheep and tillage can avail of enhanced stock relief by setting up partnerships.

Partnership

Prof Cathal O’Donoghue, head of Teagasc’s rural economy and development programme, said this was a welcome change as many farmers had expressed an interest in farming together. He said Teagasc would be announcing a plan early next year to further increase the uptake of farm partnerships and other collaborative arrangements such as share farming, leasing and producer groups.

Teagasc’s collaborative farming specialist Ben Roche, who helped to establish the milk production partnership scheme, said farmers working in partnership were likely to have a more sustainable future. This was due to factors such as the opportunity to increase scale, better management decisions, improved skills mix and a better lifestyle.

While acknowledging the positive measures in the Budget, ICMSA president John Comer said that farmers and the wider agri-food sector would consider it to be regressive and to have added to farmers’ woes.

He said farm families were paying for the “don’t touch” guarantees given to public servants in the Croke Park agreement. “The untenable nature of the Croke Park agreement has been illustrated once again and its core principle underlined. Those who are already untouchable will remain untouchable and all the rest must take the pain,” he said.

“It’s grossly unfair.”

Budget 2012 The good news

• Taxation measures to encourage the transfer of land and the restructuring of farms
• The extension of the farm partnership scheme
• Relief from excise duty on auto diesel for licensed road hauliers
• €116 million for a 7,000 hectare forestry planting programme
• Increased funding for animal welfare organisations

. . . and the bad

• The suckler cow welfare scheme has been abolished
• Lowland farmers with more than 70 acres will lose out in the disadvantaged areas scheme
• Farmers' flat rate VAT rebate cut from 5.2 per cent to 4.8 per cent from January
• Reduced funding for sheep grassland scheme
• More restrictive criteria for the Farm Assist income support scheme