Mr. Tim Cullinan:

I would like to thank you for inviting the IFA to address you today. I am joined by Ms Rose Mary McDonagh, who is the IFA farm business chairman; and Mr. Karol Kissane, who is the IFA farm business senior policy executive. As the largest and oldest indigenous industry, the Irish agriculture sector has been the foundation stone on which economic activity and employment, both upstream and downstream, has been built in towns and villages throughout rural Ireland. In line with its positive and growing status on global markets as a consistent supplier of high-quality sustainably produced food, many Governments have prioritised agriculture and food as a major economic driver for the Irish economy. Farm families and industry stakeholders have delivered on this. This also explains in part the large suite of tax relief measures that are currently in place to support the sector, spanning multiple facets, including land mobility, inheritance and measures to complement wider agricultural policies and schemes. For example there are schemes aimed at improving competitiveness, assisting new entrants and young trained farmers, promoting environmental sustainability, supporting improved on-farm efficiency, promoting alternative farming models and advancing income volatility measures.

Undoubtedly, there are numerous and broader challenges ahead for Ireland and its citizens. This prompted the establishment of the Commission of Taxation and Welfare and the review of existing taxation and welfare systems for the new realities. The IFA regrets that we were not afforded the opportunity to have a representative on the commission, despite numerous attempts on our part. While we acknowledge the work of the commission and appreciate its challenging remit, there are a number of proposals, some within the chapters we will be discussing today and others in the wider report, that the IFA would have serious concerns about, and strongly oppose.

There are concepts in the report, too, which we very much agree with, such as preserving the integrity of the agricultural relief, and adopting equity or fairness – taxing people according to their ability to pay – as the key and core principle in the design of our future taxation and welfare system. In this regard, it is essential that the full economic impact of any proposed amendments is thoroughly understood not just in isolation but also from a composite or cumulative perspective, which means examining their combined impact on farm families. This needs to take account of the availability of obvious alternative inputs and practices where relevant, which will help to avoid the creation of economically unviable family farms. If introduced, many of the proposals within the commission report – for example, the progressive removal of reduced VAT rates, and capital taxes and charges - will undoubtedly have a disproportionate impact on farmers.

The IFA understands the comprehensive report prepared by the commission is not in any way intended as an exhaustive list from which the Government is to merely implement measures in future budgets. Instead, it represents a series of considerations which the Government will ultimately decide on and implement those it perceives most appropriate and fair. The reality is that the drip-feeding of proposals through media leaks and, subsequently, the report itself have created a cloud of uncertainty for farm families. We have anecdotal evidence, for example, of farmers transferring farms earlier than anticipated, purely out of fear that agricultural relief and existing capital acquisition tax thresholds will be significantly eroded and their children left with a considerable tax bill. Thankfully, numerous senior Government officials have eased concerns somewhat more recently, rejecting the commission proposals and confirming these key supports will very much be protected going forward. We are not here today to comment on the report in general, but rather on chapters 13 and 15, so I will concentrate on those chapters now.

To be clear, the IFA recognises the climate challenge we face. Farmers are on the front line and changes to climate affect our daily lives. We support all reasonable proposals to reduce emissions and decarbonise the economy. However, we will not support measures that may make family farms unviable, especially where there are no practical alternatives. One instance where this arises is in chapter 13, on moving to a low-carbon economy, where a recommendation is made to levy excise duty and other taxes on marked gas oil, MGO, or agricultural diesel at the same rate that applies to unleaded petrol. If these were to be equalised, at today’s prices and rates it would see at least an extra 50 cent per litre added to the price of agricultural diesel. With 1,147 million l of MGO used in 2022, this would mean an extra cost of over €570 million having to be shouldered by primary Irish agriculture in the main. As most understand, agriculture is a business with very tight margins, and the difference between a farm being viable and unviable can be small. As price-takers, in the vast majority of situations farmers cannot pass on cost increases to those who purchase their products. One of the sectors within Irish agriculture with the highest use of MGO is the tillage sector. Stated Government policy is to see the expansion of this sector. If so, then such a move would run counter to this policy. In areas such as private motoring there are viable alternatives to fossil fuel vehicles. However, this is not the situation in agriculture, and until viable and affordable alternatives are available, such a move must not be considered. At a time when a cost-of-living crisis is adding uncertainty, adding any extra costs into the food chain would be irresponsible.

A further recommendation involves road usage charges based on distance, location and time on the road. This would be a tax that would unfairly hit persons, including farmers, living in rural Ireland. Often people living in rural Ireland have greater distances to travel to work or to access services compared to people living in large urban centres. The provision of public transport options as an alternative is not comparable. The report recognises that Ireland has a mandatory target of at least 16% of gross final energy consumption coming from renewable sources by 2030, and that we are currently projected to fall short of that target. It recognises the need for sufficient investment, in a timely manner, if there is to be a chance to reach this target. Agriculture and farmers stand ready to assist in meeting this target. We acknowledge that policy changes around rooftop solar in the past 12 months have made this a much more attractive option for farmers. There is a large interest in the farming community to be involved in the generation of electricity by solar, both for on-farm use and to supply back into the grid. It must be ensured that there are no impediments present in enabling farmers to generate and supply electricity by these means. The Government needs to ensure that where required, the grid is brought up to a standard to support this supply, with no restriction on the percentage that is generated that a farmer can supply and get paid a fair rate for into the grid.

It is stated Government policy is to have biomethane generated through anaerobic digesters as a means of decarbonising our gas network. Unfortunately, other than announcing this aspiration, no tangible supports, policies or solid plans have been set out. The IFA is available to consult the relevant Departments on potential policies and plans that may be put in place to support anaerobic digestion, AD, in Ireland. If such plans are to be successful, farmers must be front and centre of all discussions, with options for involvement all along the value chain, and not seen as just a source of feed stocks for AD plants.

Moves by farmers, if they so wish, into the generation of renewable energy must not result in negative tax consequences for either them or their successors. All tax reliefs relating to agriculture such as capital acquisitions tax, retirement relief for capital gains tax, young trained farmer and consanguinity relief from stamp duty and relief on long-term leasing of farmland must also be available for these farmers.

We broadly support the measures in chapter 15 that assist in promoting good public health in Ireland. As noted in this chapter, after tobacco use, risk factors often associated with obesity and poor diet and lifestyles are of particular public health concern. As outlined, countries with high availability of ultra-processed foods have correspondingly high rates of obesity and, unfortunately, Ireland is one such country. Ultra-processed foods have ingredients such as hydrogenated fat, high fructose corn syrup and other additives that are not used in domestic kitchens. Here in Ireland, we have a sugar sweetened drinks tax, which in 2021 realised just over €30 million. The IFA supports a strengthening of the use of the proceeds of this tax for the promotion of healthy diets in Ireland. The report recognises that those in the lowest socioeconomic groups are more likely to have a poorer diet. The IFA believes that from a young age children should be introduced to healthy, wholesome foods, for example, through the Food Dudes initiative run by Bord Bia and the school milk scheme run by the National Dairy Council. Further Government funding should be allocated to these initiatives to ensure that all children have access to them, and that these healthy eating initiatives are available in all schools.

Links should also be built up between schools and the producers of Irish food such as the Farmer Time programme run by Airfield Estate which links farmers and schools virtually. Where schools provide meals for children they should also be encouraged to purchase the ingredients locally, where available, to further strengthen children's understanding of a healthy, wholesome diet and where food comes from.

The agriculture sector represents the foundation stone on which economic activity and employment, both upstream and downstream, revolve in many towns and villages throughout rural Ireland. Data suggest that aggregate direct expenditure from Irish-owned firms is comparable with foreign-owned firms at €27.6 billion versus €29.8 billion, respectively, with significantly higher proportions of food, drink, and primary production sales consumed locally relative to foreign-owned firms at 75% versus 9.7%, respectively.

Irish farmers, across all sectors, are facing into an increasingly uncertain future. Increasing input prices and regulation and pressures to meet climate ambitions, along with substantial cuts in European Union direct payments as a result of a new Common Agricultural Policy, CAP, reform for many, create enough stress and complexity in normal day-to-day operations, not to mention making planning and future investments all the more difficult.

With almost 60% of farm families earning less than €20,000 in 2021, in the interest of fairness and equity it is incumbent on the Government and all Department officials to ensure that additional cost and tax liabilities are not placed on already low-income farm families, now or into the future. Instead, where possible and appropriate, support through the taxation system, for example, should be given to assist the sector in reducing its emissions and enhancing its sustainability.