First coalition budget see sector funds up 11%

Image Credit: Sinéad Mohan

The Department of Agriculture, Food and the Marine’s 2021 budget of €1.826 billion is an increase of €179 million on 2020. Interest groups, farmers and industry representatives have been generally approving of the allocation, which they hope will see the sector through continued market disruptions and the looming threat of a no deal Brexit. Noel Bardon reports.

The budget of 2021 can largely be described as a budget of extensions with limited expansion. GLAS, TAMS, ANC, BEEP-S and BDGP are all rolling over for one more year at the least, with CAP reform scheduled for the end of 2020 delayed by Brussels until January 2023. Of these extended programmes, €40 million is allocated to the two suckler payment schemes, with €250 million designated to the ANC scheme, and a further €80 million allowance for TAMS in the coming year. 

The largest announcements relate to agreements for €200 million in funding solely for agri-environmental schemes, such as GLAS. A further €79 million was specifically allocated to pilot initiatives in the areas of new agri-environmental schemes and farm safety measures. It is understood that the results-based pilot environmental schemes will focus dually on climate change and biodiversity, with options for all farmers, regardless of GLAS participation. €10 million of this fund is ring-fenced for the tillage sector, which is expected to face considerable challenges in the year ahead. 

The horticultural allocation of the budget for DAFM grew by 50% taking its total to €9 million while the organic farming segment had its portion of funds increased by approximately 30%. This should allow 400 to 500 new entrants into organic farming schemes, while the support of conventional horticulture will help a sector of the farming community many believed to be priorly underrepresented, and thus, underfunded.

The budgetary measures also include an extension of Stamp Duty Relief on land transfers in cases of consanguinity and farm consolidation, which were prolonged until December 2022 and December 2021 respectively. These reliefs reduce the effective rate of Stamp Duty to 1% on these transfers, rather than the 7.5% non-residential property classification which some feared these farmlands would lapse into in lieu of an extending action. Rosemary McDonagh, Chair of IFA’s Farm Business Committee, welcomed these measures as positive, commenting “they will encourage farm transfer and generational renewal”.

The second major change to taxation within the agri-food sector was an increase in the Carbon Tax by €7.50 per tonne, bringing the tax’s total to €33.50 per tonne, with the increase applicable to liquid auto-fuels effective from the 13th October. The increase is likely to be strongest felt by agricultural contractors, who will, in turn, relay the increased operation costs on to the farmer. The Carbon Tax is planned to increase for future budgets until the rate of €100/t is reached. Tim Cullinan, IFA President, expressed concern at the tax rise, stating “we need to be clear that carbon tax will impact disproportionately on farmers. The increase in the Carbon Tax will increase the burden on farmers by an extra €6m”.

€23 million of the funding announced for the aforementioned €79 million agri-environmental pilot will be sourced from Carbon Tax revenue according to Minister for State Hackett. Whether this ring-fencing will be viewed by producers as a worthy mechanism of the “Just Transition” has to be seen.

Some voiced concerns regarding what they perceived as an absence of Brexit-specific producer supports, perhaps in the context of prior CAP uncertainty and Covid recovery focus of the recent months.  Edmond Phelan, President of the ICSA, highlighted the continued need for a no-deal Brexit-orientated planning of supports; “If we don’t have tariff-free access to the UK in 2021, then there is nothing in this budget that will stave off disaster”. 

Minister McConalogue appeared confident that his department had made adequate preparations in light of the circumstances on this issue, however, announcing that he was “pleased that the government has set aside a €3.4 billion recovery fund to support sectors, including the agri-food and fisheries sectors, particularly affected by a no-deal Brexit and COVID-19” in an Oireachtas press statement. €39 million was additionally allocated for staff and infrastructure needed to cope with trade in the transition period following the UK’s expected departure for the EU in January.

Bord Bia was also among those to benefit from the budget, relative to 2020. An additional €4 million took the semi-state’s takings from the Exchequer to over €52 million. Teagasc and the Marine Institute also have increases on last year’s budgetary allocations.

A novel calf weighing scheme intended to aid calf-beef farmers in the post-quota calf rearing environment will receive €5 million, whilst a further €17 million has been assigned to the Sheep Welfare Scheme’s 19,000 beneficiaries. The forestry budget of €103 million was maintained.

The 2021 allocations are positive for the sector on the whole. It can only be speculated upon whether the €179 million increase in DAFM’s budget will suffice in filling the need for investment and income support, in these times lacking precedence.