Brendan Griffin (Kerry South, Fine Gael)
Link to this: Individually | In context

Question 39: To ask the Minister for Agriculture, Food and the Marine the effect that budget 2012 will have on young farmers; and if he will make a statement on the matter. [38938/11]

Brendan Griffin (Kerry South, Fine Gael)
Link to this: Individually | In context

Question 47: To ask the Minister for Agriculture, Food and the Marine the effect that budget 2012 will have ion those looking to get involved in farming, particularly young farmers; and if he will make a statement on the matter. [38939/11]

Simon Coveney (Cork South Central, Fine Gael)
Link to this: Individually | In context

I propose to take Questions Nos. 39 and 47 together.

The taxation measures announced in Budget 2012 reflect this Government's commitment to the agri-food industry and in particular to the expansion planned in the Food Harvest 2020 strategy. The measures announced have been designed specifically to:

· Encourage farming as a career for young people

· Incentivise farm partnerships and greater productivity at farm level

· Stimulate land sales and land transfers

· Facilitate new enterprise opportunities in farming

· Help agri-food businesses innovate and export

The main measures in the Budget which will benefit the agri-food sector are as follows:

Incentive for Farm Partnerships

One of the most significant new measures introduced in Budget 2012 is the new stock relief incentive to encourage farm partnerships. For registered farm partnerships, the current rate of 25% stock relief will increase to 50%, and, for certain young trained farmers entering such partnerships, a rate of 100% stock relief will be available. This new incentive will run until December 2015.

I am supporting farm partnerships because I believe that collaboration through partnership can improve farm structures generally, facilitating farms to operate more efficiently, increasing scale on farms, and bringing more innovative and energetic young prospective farmers into farming. More farming partnerships are required to increase productivity and meet the Food Harvest 2020 targets.

I am confident that providing an additional incentive to farm partnership formation will encourage farmers to consider more closely the benefits of farm partnerships to their farming business and in providing a better work-life balance.

Encouraging farm partnerships will also support the dairy herd expansion required over the coming years, enabling Irish farmers to avail of the opportunity presented by the abolition of EU milk quotas in March 2015.

Stamp duty reduction

I am particularly pleased that Budget 2012 reduces the stamp duty rate on agricultural land from 6% to 2%, with immediate effect. In addition, half the rate (1%) will be applicable on transfers to close relatives until the end of 2014.

This change will substantially reduce the stamp duty payable on transfers of farm land by gift or by sale. It should stimulate a stagnant land market – currently only 0.5% of total agricultural land is offered for sale annually – and ensure that land transfers to more active producers. It will also promote inter-generational transfer, as the cost of lifetime transfer to transferees who do not qualify for the young trained farmer stamp duty relief has reduced considerably.

I am confident that this measure will give younger, progressive, commercial farmers a greater opportunity to purchase land and thereby increase their farm size, which will make the farm more competitive.

Capital Gains Tax retirement relief Budget 2012 has restructured the retirement relief available on Capital Gains Tax in order to incentivise the earlier transfer of farm assets to the next generation, and to encourage the sale of land by those farmers with no successors. As of 1st January 2014, for those farmers aged 66 and over, an upper limit of €3m will be introduced on family transfers, compared to an unlimited amount currently. On non-family transfers, the current upper limit of €750,000 will be reduced to €500,000. Applying the new limits from 1st January 2014 allows farmers already aged 66 and over to plan the orderly transfer of assets in advance of that date.

It is important to remember that these new measures do not mean that a farmer has to cease farming altogether beyond the age of 66, but it allows them to plan for a phased gradual transfer of assets to the next generation.

We are restructuring retirement relief in order to encourage farmers around the normal retirement age, who have successors, to transfer their land and holdings to young, innovative, ambitious, prospective farmers. This restructuring will also encourage farmers with no successors to sell some of their land before normal retirement age. This measure will encourage an improvement in the age profile of farmers, and should ensure that farmland is put to more productive use.