Mr. John Bryan:

Chairman and members, I want to thank the committee for giving the IFA the opportunity to make this presentation. Agriculture has been one of the sectors in the Irish economy that has stood up best in the post-boom period and has delivered on jobs and exports. The last couple of years have been tough for the Irish economy and agriculture has been one of the few sectors where employment has been maintained and the 300,000 jobs in the agriculture and food sector are very important. We outlined to the committee during our pre-budget presentation last year that there are opportunities arising from the protection of agriculture. The recent announcements by the Kerry Group, McDonald's and Kepak are all real and sustainable jobs. It is important that this committee supports the IFA in its efforts to protect agriculture.

In the upcoming budget, there are a number of key issues of concern for Irish farmers. The clear message from the farming sector is that support for agriculture is critical to underpinning economic growth. Over the past few years, the agri-food sector has delivered real employment growth, with potential for further expansion and employment creation in the coming years. Underpinning this growth is a primary agriculture sector that is delivering a high quality, sustainable raw material to the food sector. Agriculture contributes to economic activity in every part of Ireland and is of particular importance in the rural economy.

Farming, however, remains a low income sector, and the importance of farm schemes in underpinning farm income and production cannot be forgotten. REPS, AEOS and the suckler cow scheme account for 50% of cattle and sheep farmers' incomes on average. In addition, as the committee is aware, farming is experiencing a very difficult year in 2012. A combination of dreadful weather conditions, soaring input costs and falling prices in some commodities is impacting on profitability and output at farm level. In its mid-year outlook, Teagasc estimated that farm incomes could be back at 2010 levels, which would represent a fall in incomes of close to 30%. In addition, the impact on farm incomes of previous cuts to farm schemes is now being seriously felt. These cuts impact directly on farm income and have a negative knock-on effect on production decisions on-farm.

The cuts in funding for farm schemes in last year's budget, in REPS and the disadvantaged area schemes were far in excess of the cut in the overall agriculture budget. These came on top of cuts that have been imposed on farm schemes since 2008, including the closure of REPS to new entrants, cutbacks for the disadvantaged areas, suspension of the early retirement and installation aid schemes, halving of the suckler cow premium and cuts to the forestry premium. Like all other families, farm families have been negatively impacted by increased taxes and charges that have been introduced and will be affected by any new taxes in the budget. They cannot be hit on the double by further cuts to farm schemes. There is no justification for this in the upcoming budget.

I want to outline now the priorities for agriculture in the budget. The proposed reduction in funding for the agriculture budget of €114 million, or 8% of the budget, represents a greater reduction in funding than that required, on average, across all of the Government Departments. The IFA believes that there should be an increase in the expenditure ceiling allocated for agriculture in Budget 2013 in line with the level of employment created by the agricultural sector. Where savings must be found, these cannot be from the farm schemes.

The main IFA proposals on expenditure for budget 2013 are to maintain funding and payment levels for disadvantaged areas, rural environment protection and agri-environment options schemes, all of which provide critical support for low-income farmers. We also propose the continuation of the suckler cow scheme in 2013 to build on the achievements of the scheme to date and the maintenance of forestry premiums for those who have already committed their land. If savings are required to forestry premiums, a limited afforestation programme must be introduced. Funding to support the roll-out of the compulsory bovine viral diarrhoea, BVD, eradication programme should be maintained, as should the current allocation for disease compensation schemes. There can be no reduction in compensation amounts. The Government should revise the targeted agricultural modernisation scheme, TAMS, and horticulture and aquaculture grant schemes to ensure national and EU funding is fully utilised. It should also extend funding for discussion groups to other sectors, particularly sheep and grain, to improve on-farm efficiency and management practices.

For agriculture to achieve the Food Harvest 2020 growth targets, it is critical that taxation measures are retained which support restructuring, farm investment and land mobility. There must be no further taxation increases that undermine competitiveness or negatively discriminate against the self-employed. The income tax system already severely discriminates against the self-employed. A single farmer earning €20,000 currently pays €3,900 or 19% of his income in income tax, PRSI and the universal social charge. By comparison, a PAYE employee on the same income pays only 10% or €1,955.

The IFA's farm taxation priorities in budget 2013 are retention of 90% agricultural relief to encourage farm transfer - applying to all agricultural property - with no further reductions in the capital acquisitions tax threshold. Relief from capital gains tax for disposals for the purpose of farm consolidation should also be retained. Farm fragmentation presents a serious challenge for Irish agriculture and undermines efficiency at farm level. A major remaining obstacle to land mobility is the capital gains tax which applies on the disposal of farmland. Stamp duty relief for young trained farmers should be renewed and stock relief should be implemented to encourage expansion. The 50% stock relief should be extended to registered farm partnerships in all enterprises.

In the upcoming budget it is critical that the expenditure and taxation decisions taken support economic growth and protect the lowest income sectors. The growth in agriculture and the agrifood sector in 2010 and 2011 demonstrates the ability of the sector to respond positively to market signals and contribute to economic recovery through increased earnings and job creation. Significant potential remains for the sector to continue this growth and capture the opportunities presented by a growing global population and increasing demand for sustainably produced food. However, the volatility in prices, input costs and weather conditions experienced in 2012 demonstrate how important farm schemes and a supportive taxation system remain to underpin stability and growth in the sector. Undermining these elements by cutting funding for farm schemes or removing important taxation measures will cause long-term damage to the sector and jeopardise its ability to maximise its growth potential.

I ask the joint committee to support agriculture in the upcoming budget through the maintenance of funding for farm schemes, which are a critical support for farm income and production, and the retention of key taxation reliefs to encourage farm transfer, land mobility and investment. Critical negotiations on the future of the Common Agricultural Policy and pillar 1 and pillar 2 funding will take place in Brussels in the coming months. Proposals have been made for savage cuts in both pillars. We are informed that the Commission intends to examine the level of expenditure in member states. The maintenance of all schemes under pillar 2 is critical in the coming years as these years may be considered when calculating the pillar 2 envelope for Ireland.

The IFA welcomes the support it received from the joint committee last year. The opening of a third agri-environment options scheme was helpful and this will be reflected in funding in future. Agriculture has much to offer. When critical decisions are being made in Cabinet it is vital that the Government does not decide simply to reduce certain expenditures by this or that percentage. It is essential to maintain jobs and exports.