Mr. Seán Finan:

I thank the committee for giving Macra Na Feirme the opportunity to attend today’s meeting to discuss issues we feel need prioritisation in budget 2017. As national president, I have the pleasure of being joined here today by my esteemed colleagues, agricultural affairs committee chairperson, Mr. James Barber; agricultural affairs committee vice-chairperson, Mr. Thomas Duffy; acting Macra na Feirme CEO, Mr. Derry Dillon; and agricultural policy officer, Mr. Paul Smith.

Everyone here will agree that the Irish agricultural sector needs young farmers to survive. Young farmers and generation renewal within the sector are essential to ensuring the long-term competitiveness and sustainability of the industry. As well as playing their part as the future of the Irish agri sector, young farmers are the lifeblood and future of rural Irish economies and communities.

Their farms provide both direct and indirect employment in rural Ireland, thereby helping prevent the depopulation of the Irish countryside. Young farmers should be viewed as prized assets by the Government because they yield jobs, growth and investment for the sector. With the weight on their shoulders of being the future of the Irish agricultural industry and at the heart of rural Ireland, it is vital that the necessary resources and supports are made available to young farmers to fulfil this expectation. An injection of youth into the sector to regenerate and rejuvenate Irish agriculture and ensure its survival and expansion is essential and will only be achieved with an increase in the attractiveness of the industry to the younger generation.

Luring more of Ireland's youth into this exciting sector must be seen as a twofold approach. First, the relevant avenues must be explored and support provided to young farmers. Second, the availability of land for young farmers to establish their businesses must be a priority. Access to land is a primary requirement for any agricultural or farming activity as without land there is no farming. To contribute to the agricultural sector in the most efficient manner possible, young farmers need to be installed on holdings at a young age when they have the energy and time to develop their enterprises. Furthermore, for the successful passing on of land, all schemes need be inviting to the older generation to encourage the exchange of land. Despite the need for change in the demographic of Irish agriculture, challenges still exist in supporting young farmers in terms of agricultural education, training and advice, which also helps deliver efficiency, innovation and productivity at farm level. Such investments in education, skills development and advisory resources are vital in ensuring young farmers play their role in delivering on the targets set out in Food Wise 2025, for the creation of 23,000 jobs and in increasing the value of primary agricultural output to €10 billion by 2025.

Macra na Feirme's pre-budget submission outlines productive tax and resource proposals with the dual aim of benefiting young farmers and Irish agriculture. Macra acknowledges the Government's extension of stamp duty relief to young farmers in last year's budget to the end of 2018. Stamp duty relief is extremely advantageous as it puts persons in a significant and beneficial financial position after the purchase or transfer of land. The moneys saved via stamp duty relief allow for considerable investment in a property to improve its productivity. Currently, 35 is the maximum age at which a young farmer can avail of stamp duty relief, yet the EU definition of a young trained farmer is up to a maximum age of 40. Macra proposes extending the required age to avail of stamp duty relief for young trained farmers on the purchase of land to 40. As a result of the considerable cost of purchasing land, a young farmer will struggle to avail of much of the benefit of stamp duty relief before the age of 35. By extending the maximum age to 40, Macra feels young farmers will be in a better position to take advantage of the benefits of stamp duty relief.

In terms of capital allowances, with tough years like 2016 becoming more regular, many farmers meeting high loan repayments are further crippled by large tax bills. Investment, jobs and growth go hand in hand. The working group report of the 2014 agri-taxation review revealed a 10% increase in capital input is likely to increase agricultural output by 1.6% to 4.2%. The Government, in the upcoming budget, should reward those willing to take risks and invest in their businesses. Their risk benefits both themselves and the wider agricultural community by improving farm efficiency and output. An increase in agricultural output has the ability to generate additional jobs in rural communities, thus helping to keep the Irish countryside populated. Macra proposes the implementation of an annual investment allowance similar to the UK model whereby a portion of a year's capital expenditure can be written off in the first year, with the remaining balance written off over the normal period.

Currently, the Irish system allows machinery and motor vehicles to be written off at 12.5% per annum over an eight-year period and buildings, reclamation, etc., at 15% over a seven-year period. The UK system allows a maximum of £25,000, which is approximately €30,000, to be written off against income in the first year. The UK model applies to all types of capital expenditure and does not, therefore, favour one enterprise over another. Such a system will at worse be cost-neutral, with the money farmers invest normally spent in local areas. Simply put, Macra's proposal will allow farmers to manage loan repayments better, thereby providing the finance for more on-farm investment, with the additional benefit of creating jobs for the sector.

In terms of capital acquisitions tax, to promote the establishment of young farmers on agricultural holdings, Macra is calling for an increase to the current capital acquisitions tax thresholds by 25% for category A, therefore increasing it from €280,000 to €350,000, with an equivalent increase to categories B and C. Historically, capital acquisitions thresholds were as high as €521,000 in 2008 and at the same time the capital acquisitions tax rate was 20%, compared to today's rate of 33%. Thus, the increase proposed by Macra is moderate and much less than pre-recession levels.

It has also come to Macra's attention that some high-wealth, non-farming individuals could potentially be using farmland as a way of sheltering wealth from capital acquisitions tax when passing the property on to their children, who have no intention of ever farming it. The present capital acquisitions tax relief reduces the market value of "agricultural property" by 90% so the gift or inheritance tax is calculated on the "agricultural value" of the asset. Macra welcomes the revised criteria of the Finance Act 2014 to ensure those who avail of capital acquisitions tax agriculture relief hold an agricultural qualification or spend a minimum of 50% of their time farming. To prevent the use of agricultural property as a way for non-farmers to shelter wealth, further measures may need to be introduced to ensure the relief remains farmer-focused.

In terms of tax relief on the leasing of farmland to family members, every effort should be made to facilitate young farmers' access to land. Relief needs to be not only focused at young farmers, but also aimed at the personnel who supply the land. Rewarding those who transfer the land to young farmers will both encourage and speed up the accessibility of land for young farmers. The current tax code goes against natural justice in that tax relief on the leasing of farmland only applies to non-related parties. A parent who leases his or her land to a son or daughter is at a distinct disadvantage when it comes to leasing his or her land to a third party. The total cost of leasing relief to the Irish Exchequer, as identified in the agri-tax review of 2014, is €5.2 million, making it the sixth least expensive agri-tax cost. Macra feels the introduction of agreements between parents and their children and between siblings to qualify for tax relief on land leasing is one measure which should be undertaken to decrease the range of factors which has caused the low uptake of leasing relief. As a result, Macra is calling for the extension of tax relief on the leasing of land to include agreements between parents and children and between siblings who are young trained farmers. However, the relief should be available on a one-term lease of no longer than seven years and available to those up to the age of 35. We call on the Government also to prioritise the approval of the family transfer partnership, which was announced in last year's budget.

In terms of young farmer stock relief, the extension of stock relief to young trained farmers to the end of 2018 in last year's budget is welcomed by Macra. Stock relief to young trained farmers goes a long way in allowing young farmers to expand their herd by offsetting the increase in herd value against the tax liability, yet there are limits to the reliefs benefit. As the relief is only applicable for the first four years after the issue of the herd number, not all young farmers are in a financial position to grow their herd rapidly and to get the full benefit of the relief. Infrastructural constraints and compliance with nitrates directives may also limit young farmers in their expansion initially. Macra calls on the Government to allow for greater flexibility around the activation of the four years of the 100% stock relief. This flexibility would allow young trained farmers to select the four years they wish to apply the 100% stock relief, consequently allowing the relief to come in line with their long-term business plans. Indecon outlined the positive and statistical correlation between increasing stock numbers and the impact on farm productivity. This, combined with Indecon's estimated 12% higher levels of output by trained farmers compared to untrained farmers, makes the outcome of a more flexible approach to stock relief for young trained farmers nothing but positive. Macra calls for an increase to the amount eligible for the relief from €75,000 to €150,000 for those farming on their own and from €7,500 to €75,000 for those in a farm partnership. Macra believes this is a justified increase due to stock relief to young trained farmers being the third least expensive agri-tax cost to the Irish Exchequer, with Indecon estimating the cost to the Exchequer being €0.9 million. This proposed increase to €150,000 equates to a 100 dairy herd.

We are willing to share with the committee our thoughts on income volatility. I will briefly conclude by summarising our last couple of points. We believe in education as an organisation and that additional resources should be supplied to Teagasc to allow for the implementation of the Education Strategic Vision project, as the Teagasc model is a unique model in integrating research, education and advisory within the one organisation.

From a productive point of view, we would encourage the Government to consider putting in place a grass utilisation measures fund for young farmers. We suggest the Government put a €2 million Exchequer fund in place to subsidise the provision of grass measuring equipment for young farmers to the value of €500 per farmer. This would mean 4,000 young farmers could benefit from the financial backing to purchase such equipment. Grass utilisation is a major target of the Food Wise report and we would encourage the committee to work with the Minister and try to implement a measure of this nature.

We would like TAMS, under the Rural Development Programme, to focus more on grazing infrastructure. Therefore, Macra calls for this to be included as part of any future TAMS because we realise the value and importance of focusing on investment in the productive assets which farmers have on their farms, being grass and soil fertility.

I thank the committee for inviting us here to day to present Macra's pre-budget submission. While it is not necessarily a budgetary issue, we would also call on the Government to make a national reserve available in 2017 as a priority, as 2016 saw no reserve. The national reserve is seen by Macra as fundamental for young farmer's development and future contribution to the sector.

The uncertainty facing the Irish agricultural sector surrounding Brexit makes budget 2017 one of the most paramount budgets of the century for the agrisector. It is pivotal that the budget puts the framework in place to instil confidence, trust and belief in the sector for young farmers as they are the ones who will live with the implications of Brexit in five, ten and 20 years' time. We would also welcome a discussion as part of the questions on the more strategic issues in the sector, such as those that have been talked about by the previous speakers in their presentations. I thank the committee for its time.