Farming Budget 2010

There was a sense of relief among farm organisations yesterday in the aftermath of a draconian budget that did not hit farming as hard as recent efforts. In his post Budget press briefing, Minister for Agriculture Brendan Smith was also in relatively upbeat mood. The fact that agriculture was spared harsh cuts was seen as an acknowledgement of the dreadful income crisis affecting the sector and the cuts to major schemes already inflicted in October 2008 and April 2009. The cloud over the Suckler Cow Welfare Scheme has been removed and it will be paid at the reduced €40 rate in 2010. It is a sign of the crisis in income that so many farmers have stayed loyal to the scheme, despite the payment rate being halved from its original €80 level. For those completing their REPS plan in 2010, the Minister signaled a new scheme “with up to €5,000 available”. The Minister for Agriculture told the Irish Farmers Journal that it is likely to be January of February before the details of the scheme are agreed. Applications will close on May 15. It is set to be a menu based scheme that will require major environmental improvements to attract payment. Forestry has been boosted by a commitment towards a planting target of 7,000 hectares. Minister Tony Killeen told the IFJ that payment rates are currently under review, but there is no further cut to already reduced premia payments to those already in forestry. The new carbon tax of 4.9 cent per litre does not apply to agricultural diesel until May 1 so we can expect a major battle to secure an exemption to what is effectively a 10% increase in green diesel costs. Fine Gael’s Michael Creed has already joined in that battle. “Farming is a carbon heavy process where there is no alternative to farm machinery and vehicles. By failing to exempt agricultural diesel from this carbon tax the Government are merely taxing farm activity,” he said. There was some good news in relation to the income levy – depreciation of buildings constructed under the Farm Waste Management Scheme can now be offset against the income levy. This is a significant concession on what was a costly anomaly. Further details on the exact calculation will be provided by Joe Hickey of IFAC in next week’s Irish Farmers Journal. Funding for Teagasc and Bord Bia came through the Budget relatively unscathed, although all of their staff will face significant cuts in their pay, as outlined by the Minister for Finance in his Budget speech. The Minister for Agriculture said that an additional €2.5m has been granted to Bord Bia in order to undertake additional marketing efforts next year. The Minister has allocated €200m to pay the remaining 40% payment due in Farm Waste Management Scheme payments. “By the end of January, over 90% of our FWMS commitments will have been honoured,” the Minister said. He pointed out that the overall reduction in his allocation for 2010 had to be seen in the context of the exceptional allocation required in 2009 for the pork recall scheme and the FWMS.