Willie Penrose (Westmeath, Labour)
Link to this: Individually | In context

Question 47: To ask the Minister for Agriculture and Food if her attention has been drawn to the continuing increase in the price of farm land identified by the Central Statistics Office, which is running considerably above the level of general inflation; her views on the implications of this rise for farmers who wish to expand or persons who wish to enter farming for the first time; and if she will make a statement on the matter. [14185/05]

Mary Coughlan (Donegal South West, Fianna Fail)
Link to this: Individually | In context

Low levels of land mobility have been a long-term feature of Irish farming. The substantial increase in land prices in recent years and the relatively small acreage that is placed on the market annually demonstrate that this situation has not changed. Agricultural land prices have increased by almost 300% from €4,967 per hectare in 1993 to €14,379 per hectare in 2003, the latest figure available. In addition, both the volume of land available for purchase and the average parcel of land sold has decreased significantly. The increase in price reflects a combination of a shortage of land on the market and increasing levels of demand from both agricultural and non-agricultural purchasers. According to the Central Statistics Office, in recent years less than 0.2% of agricultural land has been placed on the open market for sale. The means by which land has changed ownership is through gift or inheritance within families.

Irish farmers have responded to this by altering their behaviour. Rather than buying, they are now leasing the land they need to expand. The high cost of purchasing land has encouraged many farmers who wish to expand their enterprises or enter agriculture to opt for leased land. Almost one fifth of all agricultural land is leased, with one third of Irish farms leasing in some portion of land. For meaningful farm planning, leasing is best done on a long-term basis. The Government has a number of incentives in place to encourage this and to improve the overall levels of land mobility. To this end, my Department operates an early retirement pension for retiring farmers who dispose of land either by sale, transfer or long-term lease.

There are generous income tax disregards for farmers who lease out land on a long-term basis. Lessors aged over 40 years of age can currently avail of annual exemption thresholds of up to €7,500 for leases of five to seven years and up to €10,000 for leases of seven years or more. This has undoubtedly encouraged the better utilisation of land and facilitates better long-term planning by farmers who wish to increase their scale of production at a reasonable cost without having to purchase. There is also a series of measures in place to help reduce start-up costs for new entrants. These include a number of generous grants and tax reliefs. For young, suitably trained farmers there are a number of attractive schemes, including an installation aid grant of €9,520, 100% stamp duty relief on land, a 90% relief from capital acquisition tax and 100% stock relief for four years for eligible farmers.

These are pragmatic solutions to allow those farmers who wish to do so to expand production. Anecdotal evidence points to further increases in land prices in recent times caused by the implementation of the Luxembourg Agreement and the financial platform to be provided by the single farm payment. The Government will continue to review its measures to improve land mobility and is always conscious of the need to encourage production farmers to be able to expand.

Mary Upton (Dublin South Central, Labour)
Link to this: Individually | In context

Having such a small percentage of agricultural land being offered for sale is clearly one of the factors that will influence the price. Leasing the land is one of the options, as the Minister pointed out. The early retirement scheme is now in place and we have had long discussions recently on that. We would like to be assured that any retirement schemes in place will be appropriate to the needs of those people who opt for them.

Does the Minister think that the installation grant, at €9,250, is adequate given the high start up costs for farming? There are other reliefs as well, but the grant still seems a very small amount.

Mary Coughlan (Donegal South West, Fianna Fail)
Link to this: Individually | In context

This has been an issue of considerable debate over the past few years. Macra na Feirme has been anxious to increase installation aid. It is an issue for review and consideration. I am concerned about the early retirement scheme. It is part of the rural development package and we have to see how much money will be made available for the next tranche of EU funding. However, we are trying to encourage most people to stay in employment until they reach 65, yet at the same time we are trying to encourage others to transfer land to allow younger people into farming. We need to develop a partnership approach where young people can be encouraged to take up farming while at the same time leaving 50 to 55 year old farmers in a position to farm adequately.

The early retirement scheme is driving people crazy because it is not index linked, nor is any other scheme in Europe. When people get an entitlement to social welfare, they often do not realise that they must advise the Department of their eligibility. There are also issues with overpayments and so on. Early retirement was very important when self-employed people did not pay PRSI and did not pay into an adequate pension scheme. I am anxious that farmers get involved in private pension schemes as well as paying a PRSI contribution. We will have to look at this, although not in the short term because a new scheme is being introduced.

I do not know if we are doing the right thing by encouraging early retirement because that discourages people who are active and who might change their minds in a few years time. At the same time, we want to encourage young people to be part of a farming enterprise. We have considered partnerships with regard to milk production and they seem to work well. Perhaps we should look at the issue that way and reflect it in some of our taxation policies.

Séamus Pattison (Carlow-Kilkenny, Labour)
Link to this: Individually | In context

I remind the House that supplementary questions and answers are subject to a maximum time limit of one minute.

Denis Naughten (Longford-Roscommon, Fine Gael)
Link to this: Individually | In context

Will the Minister circulate her initial response to the National Roads Authority because what that authority offers people for land purchased by CPO is a gross insult to them?

With regard to the issue of leasing, has the Minister had any discussions with her colleague, the Minister for Finance, regarding tax relief on intra-family leases? There is no exemption on these although the majority of transfers are on those lines. Has the Minister had any discussions with her colleague, the Minister for Social and Family Affairs, particularly as she is well up to speed in that area, regarding the existing restriction on people on a non-contributory old age pension who lease land? If they lease land, any income generated from that land causes a reduction in their old age pension. Therefore, there is no incentive for them to lease land.

With regard to installation aid, in light of the fact that the cost of an industrial job here is far in excess of the approximately €9,000 installation aid grant, will the Minister consider increasing that grant in line with grant aid for industrial jobs?

Mary Coughlan (Donegal South West, Fianna Fail)
Link to this: Individually | In context

On the issue of leasing and social welfare, it is better for a person to lease his or her land than to have it set down as a capital assessment. Even though the capital value was changed in last year's budget, it is always worth confirming that a leasing agreement is better from a non-contributory pension point of view.

Denis Naughten (Longford-Roscommon, Fine Gael)
Link to this: Individually | In context

There is no financial incentive for leasing.

Mary Coughlan (Donegal South West, Fianna Fail)
Link to this: Individually | In context

Over the next few years, particularly when people begin to retire, they will get a contributory pension. I remember the Deputy raised this issue previously when I was in the Department of Social and Family Affairs and it did create some angst. The issue of leasing, particularly intra-family leasing, and changes from leasing agreements into partnership agreements appear to cause some bother. Much of this area has been fleshed out as a consequence of the single farm payment. As people cannot transfer their entitlement this year but must wait till next year, many leasing agreements are taking place. Many of the changes we see and the issues being raised at clinics reflect the changes taking place with the single farm payment. This is something we must evaluate from the taxation point of view in our discussions with the Minister.

I agree there are issues that need further discussion with the Minister for Finance. He did much work regarding five issues we raised and agreed on them in the last budget. The implications and changes currently taking place will be, as issues always have been in Fianna Fáil, reflected in the generous tax reliefs made available to the farming community.

Dan Boyle (Cork South Central, Green Party)
Link to this: Individually | In context

Given the Department of Justice, Equality and Law Reform purchase of land at Kilsallaghan in north County Dublin on the Meath border at a cost of €200,000 per acre, does the Minister feel the Government is a driver of price inflation with regard to agricultural land? What does the Minister think will be the effect of that price on agricultural land?

Mary Coughlan (Donegal South West, Fianna Fail)
Link to this: Individually | In context

I do not agree and I will not get into that argument.

Denis Naughten (Longford-Roscommon, Fine Gael)
Link to this: Individually | In context

There would be plenty of land available for that price in County Roscommon.

Mary Coughlan (Donegal South West, Fianna Fail)
Link to this: Individually | In context

No more than in Donegal. I was told when we started with conacre that there would be so much land available that prices would be a disaster and we would not get any money. However, prices have gone through the roof. If we look for 20 or 30 hectares now to activate an entitlement, it cannot be got. Where do we go from here?

Deputy Boyle knows that on an issue people do not want to know about, the price of land goes through the roof. Perhaps the Deputy should put his question regarding the price of land to the Minister for Justice, Equality and Law Reform.

Dan Boyle (Cork South Central, Green Party)
Link to this: Individually | In context

I intend to.

Mary Coughlan (Donegal South West, Fianna Fail)
Link to this: Individually | In context

The price of land in north Dublin and south county Meath is much more expensive than land where the Deputies are from or land in Aranmore.