Bernard Durkan (Kildare North, Fine Gael)
Link to this: Individually | In context | Oireachtas source

The third Topical Issue matter is in the names of Deputies Carthy, Kenny and Mairéad Farrell.

Martin Kenny (Sligo-Leitrim, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

The other Deputies are not available so I will be raising this Topical Issue matter on my own. I raised this issue, and asked my colleagues to do so as well, because many farmers all over the country are concerned about the rise in the price of agricultural diesel.

Last night, I attended an Irish Farmers Association, IFA, meeting in Ballymote mart. There were many farmers there who are concerned about the rising input costs for their work. This morning I heard on the radio that farm incomes are up, and we welcome that. Farmers in some sectors are doing much better than they had been from the point of view of the prices they are getting. It was acknowledged by the farmers last night that cattle and sheep prices are up. Although those prices are up, they have not doubled. I say this because the cost of everything else seems to have doubled and more than doubled. Certainly, the price of fertiliser has doubled and, in some cases, tripled. The price of agricultural diesel was something that they had a particular focus on because we are coming into the time of year when many farmers are trying to get their silage cut and wrapped. All of those costs are going up as well.

The farmers focused particularly on diesel. They made the valid point that the price of agricultural diesel is approximately €1.50 per litre at the moment. Therefore, 1,000 l of diesel costs them €1,500. This time last year it cost €0.78 per litre. It cost €780 per 1,000 l. It has therefore doubled in price. There was a man present last night who is in the road haulage business and has trucks. He is buying white diesel as well. The cost of white diesel has also gone up, although it has not gone up to the same extent. If there was apro rata rise with agricultural diesel costs doubling, one would expect that road diesel would double as well and would be over €3 per litre now, but it is not. As we know, it is still very high, at approximately €2.10 to €2.15 per litre around the country. This is an issue on which there needs to be a focus. The Government may say that it has done little bits of tinkering around with excise duties but the reality is that enough has not been done to help this sector, which needs a break in regard to these costs, particularly the costs around agricultural diesel.

The other issue that was acknowledged by farmers last night is that there is pressure on the farming community across Ireland and indeed across Europe to be more self-sufficient, to grow more food and to produce more food. This is particularly the case in the context of the crisis in Ukraine. The outcome of that is that we have a food security crisis as well as a cost-of-living crisis and an oil crisis. That puts pressure on the farming community to produce the goods. If they can produce the goods, they will do so. They will do their very best to do that. They are prepared to do that. However, they need a break in regard to the input costs anywhere the Government can help them, particularly around the issues of fertiliser and diesel. The Minister of State will acknowledge that the same problems are found in his constituency, where farmers are paying very high prices for diesel. The Government needs to sit up and listen to this plea. It needs to do something to get that cost down. There is no point in taking it down by 5 cent or 10 cent per litre and then coming out with a carbon tax that puts it back up by 5 or 10 cent per litre, which has happened in the past. We need to get something real that will have a benefit to farmers so they can see that their Government cares about ensuring they will be in a position to increase their production, to grow more food and to ensure there will not be a food security crisis across Europe.

Damien English (Meath West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I thank Deputy Kenny for raising this important issue. As he correctly said, it is an issue in many parts of the country, including his area of counties Leitrim and Sligo and my own area of County Meath. Farmers, like anybody in business, are under extreme pressure with the price of energy, the price of fuel and the prices in general. The Deputy is right that there have been some good times, given the recent increases in the prices they get for their own products. However, those increases have been a long way off from being double, which is what the farmers are having to pay for fertiliser, foodstuffs or energy.

There is pressure on the agricultural sector. There is no doubt about that. It is an important sector to Ireland. We want to protect it and to continue to work with it. When we came out of the last financial crash, we saw that agriculture and food production were major assets to this country. They are playing a major role in the current jobs-led recovery too. We want to work with this valuable sector and to address some of the costs pressures it is under.

The Minister, Deputy Donohoe, could not be here today. I will give the answer on his behalf and on behalf of his Department. The Government understands the background to this Topical Issue matter and recognises that there is a real issue with the rising cost of fuel for the agricultural sector, as Deputy Kenny and others have genuinely raised. However, it has to be stated at the outset that we are living in unprecedented times. While the Government is doing everything within its power to assist the economy as a whole, including the agriculture sector, there are limitations to what it can do. In other words, it cannot completely insulate completely sectors of the economy from the impact of issues such as the war in Ukraine, which are completely outside of its control.

As regards the application of excise on agricultural fuels, the Finance Act 1999 provides for the application of excise duty in the form of mineral oil tax, MOT, to specified mineral oils used as motor or heating fuels. MOT is comprised of a non-carbon component and a carbon component. The carbon component is commonly referred to as carbon tax. The non-carbon component is often referred to as excise, fuel excise or fuel duty.

Diesel used for certain purposes, for example in agricultural machinery, may qualify for a reduced rate of MOT. Such diesel must be marked with prescribed fiscal markers and is referred to as marked gas oil, MGO, green diesel or farm-agricultural diesel. The current reduced rate of MOT that applies to MGO is €111.14 per 1,000 l. This is considerably less than the standard rate of MOT on diesel used as a propellant which is currently €405.38 per 1,000 l.

In March of this year, in response to the global fuel crisis, the Minister for Finance introduced cuts to MOT rates on petrol, diesel and MGO. He introduced a further cut to the MOT rate on MGO from 1 May to run until 11 October this year. This rate cut applies to the non-carbon component of MOT and fully compensates for the carbon tax increase. As a result of the measures introduced, all MGO users benefit from a cut of more than 5 cent per litre inclusive of VAT from 1 May until 11 October. In addition to benefiting from the reduced MOT rate on MGO, farmers may also claim a tax deduction for expenditure incurred on MGO.

In computing their taxable farming profits, farmers may also benefit from a relief provided under section 664A of the Taxes Consolidation Act 1997. This relief allows a farmer to claim an additional deduction for MGO, which amounts to the difference between the carbon tax charged and the carbon tax that would have been charged had it been calculated at the rate of €41.30 per 1,000 l of farm diesel, which was the 2012 baseline figure.

It is also worth mentioning that the MOT law provides for a relief from the carbon component of MOT for biofuels that are made of biomass of animal or vegetal origin. This means that a fuel that is entirely made from biomass would be liable for the non-carbon component of MOT only. In the case of such a biofuel used in place of MGO, the MOT carbon component would be fully relieved. For blended fuels containing biomass, the relief applies to the portion of fuel that meets the biofuel criteria set out in the MOT legislation. The biofuel relief is intended to promote a higher level of biofuel in fuel sales and supports the Government's commitment to incentivising the use of greener alternatives to fossil fuels.

In conclusion, and in response to Deputy Kenny’s questions, the Government will continue to engage with all our stakeholders and to work with our European partners to respond to this crisis, using all of the tools at our disposal. There will be more initiatives brought forward in the summer and in the budget.

Martin Kenny (Sligo-Leitrim, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

I accept the reply that the Minister of State has given on behalf of the Minister, Deputy Eamon Ryan. Changes were made. We can read out at length the data and the tables regarding the various taxes and tax rates, etc., but the reality for the farmer is that when they go to fill a 5-gallon drum with diesel, it is costing them twice the price. That is the reality. There needs to be a check on that.

From speaking to the farmers last night, and from speaking to other farmers since then, I emphasise that farmers need to see a reduction to below €1.20 per litre. That is what they are asking for. It is at €1.50 per litre now. It needs to go at least below €1.20 per litre. That is still a very large increase on what they had this time last year. However, that is what they are asking for. I am asking the Minister of State to bring that message back to the Minister for Finance. That is the message that we need to get through. We need a reduction in agricultural diesel, in green diesel, to below €1.20 per litre and to keep it at that in order that farmers will be able to be productive as they can be into the future.

If farmers cannot buy the diesel they need to be able to cut their silage, raise their animals and do all the things they need to do, there will be a fodder crisis next winter and there will be knock-on effects from that. One of those effects will be harvest problems. The question will then arise as to where we will get our food.

While there may be headline figures showing that farming family incomes are up, the reality for many farmers, certainly in my part of the country and especially for farmers who are dependent on sucklers and sheep, is that their incomes are very low. Even if incomes trebled from what they are now, never mind going up by 30% or 40% on last year, those farmers would still on low incomes. In fact, if one added up the hours they put into their work, they are on well below the minimum wage, as bad as it is in this country. They need a commitment that the Government will bring the price of agricultural diesel below €1.20 a litre, which is what I am asking the Minister to do.

Damien English (Meath West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

As the Deputy will appreciate, I cannot give that commitment tonight, as much as I might want to do so. I will take his very clear request back to the Minister for Finance and the Department. This issue has been flagged in the engagements that have been taking place with the agricultural community over the past few weeks. The Deputy has proposed a clear target of bringing the price below €1.20. I certainly understand the pressure farmers and contractors are under, as does the Minister. Like many others in various sectors, it is very hard to make ends meet and make business pay. Even though farmers can receive a decent price for their product, the input costs have increased dramatically for everybody in farming, as they have in other sectors.

This issue has been well flagged and identified by the Government. There has been a response, as I outlined, to try to take some off the pressure off, not just in regard to fuel costs but in different ways as well. The whole area is being kept under review by the Government. All the Departments have been feeding into the budget process over recent weeks and will continue to do so through June and July, focusing on how best we can respond to this issue and the pressures it is putting on the sector. The farming sector is very important, as the Deputy noted, because of the need for food security and the food shortages we will see coming out of what is happening in Ukraine. The matter certainly will get attention from the Minister and I will be sure to convey the points the Deputy has raised. I will make sure the Minister hears them first-hand.