Mr. Martin Stapleton:

I thank the committee for this opportunity to outline the views of the IFA on the cost of doing business in Ireland. I am chairman of the IFA national farm business committee. I am joined today by Mr. Damian McDonald, IFA director general. Mr. Joe Healy, president of the IFA, sends his apologies for not being here today but he had to go to Argentina for the Mercosur discussions. I acknowledge the presence of our colleagues from the Restaurant Association of Ireland and the Construction Industry Federation, particularly our former president, Mr. Tom Parlon.

IFA is the representative organisation for over 70,000 members throughout the country and is the recognised voice of Irish farmers in Europe and internationally. The association promotes the ongoing development and competitiveness of Irish agriculture and the food industry which is making an important contribution to Ireland's economic recovery. Farming and the agrifood sector is Ireland's largest indigenous productive sector, exporting food and drink worth over €11 billion in 2016 and providing employment to over 300,000 people directly and indirectly. It has been a key driver in Ireland's economic recovery and it is the backbone of economic activity across the rural economy. A strong agriculture sector is critical to the achievement of a more balanced economic recovery in this country.

Agriculture provides employment and generates earnings across the country not just at farm level but in the thousands of regionally based jobs dependent on and linked to the sector. Many of these jobs are located outside of the main urban centres. For those of us who live and work in rural Ireland, it is a really good place to live and work. However, there are many challenges facing farmers, in particular the challenges of Brexit and CAP post 2020. Consolidation of farm holdings and increasing the scale of farms are necessary to operate efficient and competitive businesses. It is, therefore, important that this would be taken into consideration in the new review of agri-taxation measures due to commence in early 2018. The IFA has identified key areas where barriers exist for farming enterprises to doing business. First, access to credit at a competitive rate is critically important to support farm investment and improve efficiency. There is an ongoing market failure within the Irish banking system which is placing Irish farmers at a competitive disadvantage to their EU counterparts. The lack of competition between the financial institutions and the legacy of historical banking losses is resulting in higher interest rates being charged on new lending. The high demand in 2017 for the agri cashflow loan scheme demonstrated the need for competitively priced working capital on Irish farms. The funding of €25 million in budget 2018 for a low-interest loan package for farmers provides some recognition of the market and income difficulties facing farming enterprises in 2017. This fund needs to be rolled out as soon as possible. The high costs of registering a legal charge is resulting in a barrier for customers to move between banking institutions, further contributing to a lack competition between the banks. Another area of concern to farmers is the new Central Bank requirements around the valuation of farm landthat is being used to secure funds. IFA understands that such valuations may have to be reviewed every two to three years, and that valuations must be obtained from a list of auctioneers selected by the bank. This has the potential to add significant unnecessary cost to the finance being borrowed.

Second,Ireland faces significant challenges in delivering on 2020 EU renewable energy and climate obligations, which may result in fines over €400 million being imposed on Ireland. Farm businesses are considerable users of energy. In recent months, IFA has developed a clear strategy to displace fossil fuel use in the agriculture sector with energies from renewable sources. In a recent submission to Government, the IFA called for 20% of the public service obligation, PSO, levy paid by all consumers, which is equivalent to €100 million, to be ringfenced to support the development of farm scale, roof-mounted and farmer led community energy projects. The current strategy of exclusively using this levy to support the construction of thousands of large-scale wind turbines across our natural landscape is no longer acceptable to rural communities. It has also resulted in the transfer of millions of euros paid by Irish citizens to enrich multi-national energy companies. The IFA's proposal to ringfence 20% of the PSO levy would contribute to energy savings for the sector by displacing fossil fuels and will, in turn, assist in addressing climate and renewable obligations. Over time, the competition this would create among service providers must deliver further energy cost-savings for Irish businesses.

Third, a shortage in labour supply has emerged in the last number of years in the agriculture sector due to a number of factors, including the fall in unemployment in Ireland, which is leading to a labour supply shortage, particularly for lower paid employment. This is particularly relevant for the horticulture sector. There is an increased demand for skilled farm workers, particularly in the dairy sector, arising from the expansion in milk supply and the dairy herd since the abolition of milk quota in 2015. A recent Teagasc survey indicates that there is potential for 6,000 extra jobs to be generated on dairy farms in the next few years. The improvements in the economies of newer member states has reduced the supply of workers who have traditionally filled jobs in the horticulture sector since EU accession over a decade ago. There is an increasing demand for skilled farm workers in the pigmeat and poultry sectors arising from increased output and increased scale in these operations. The shortage of labour supply at farm level is restricting the ability of the sector to achieve its growth targets over the next decade. We urgently need a scheme to facilitate the issuing of work permits to non-EU workers in the agriculture sector. The IFA has raised this serious issue with the Minister for Business, Enterprise and Innovation and the Department is currently reviewing the criteria for non-EU work permits.

On the earned income tax credit, the failure of the Government to increase the earned income tax credit to match the PAYE credit to the level committed to in the programme for Government maintains the inequity in the income tax system between employees and the self-employed, including farmers. The €200 increase in the earned income tax credit does not go far enough. The Government has chosen to continue the discrimination between employees and self-employed in the income tax system for yet another year. It is simply not right that a farmer earning €16,500 will be paying €500 a year more in income tax than a person in employment.

It is simply not right that a farmer earning €16,500 will pay €500 a year more in income tax than a person in employment. The Government has reneged on a clear commitment in the programme for Government that the PAYE and earned income tax credits will reach parity, at €1,650, by 2018.

I refer to incentivising apprenticeships in rural SMEs. A skills shortage is emerging due to the lack of availability of trade-based vocational training programmes. The IFA recognises the commitment in the programme for Government to double the number of apprenticeships by 2020, with a significant increase in the number of traineeship places and the development of a mechanism to recognise a person’s practical work experience and expertise to qualify him or her to take on an apprentice. The IFA has proposed to the Government that SOLAS and the Apprenticeship Council should target a specific number of apprenticeship places and provide the supports required for small business employers who take on apprentices in an approved programme.

With regard to the rural fibre broadband network, while some progress has been made, the Government needs to swiftly conclude the tendering process for the new rural broadband scheme. It must ensure every home, school, farm and business in rural Ireland will have access to high-speed fibre broadband, no matter where they are located.

The vast majority of rural businesses are micro-enterprises, employing ten or fewer people. These businesses struggle with administrative costs and regulations which often act as a disincentive to increasing the number of employees. The IFA has a number of recommendations to make to address these issues. The Leader programme has an important role to play in supporting enterprise development and job creation in rural Ireland. However, the current programme is proving to be inappropriate for administering and progressing the approval of project funding. The Government needs to undertake a review of the application process for Leader funding, with the target of simplifying the process for applicants and significantly reducing the turnaround time between project proposal and approval. In addition, a review needs to be undertaken of the new local community development companies, LCDC, structures at local authority level to determine what their impact has been to date.

The Commission for Regulation of Utilities, CRU, as Ireland’s independent energy and water services regulator, has important economic and customer protection responsibilities. The timelag in reducing retail energy prices when wholesale prices are declining is a significant source of concern for farmers. We call on the committee to consider granting legislative powers to the CRU to intervene in energy pricing policy where it is clear that wholesale price savings are not being passed on businesses and domestic consumers.

Insurance and transport are two sectors that need to be monitored to maintain competitiveness. I hope what I have outlined demonstrates some of the key areas where farmers find difficulty and meet barriers in their day-to-day farming activities which prevents them from doing business in the most efficient way.