Main outline of Budget 2014 for agriculture, cuts of €37m

The main features of the Department of Agriculture’s allocation in Budget 2014 were outlined by the Agriculture Minister Simon Coveney TD in a press briefing this afternoon.

The main announcements

Spending of €1.203bn has been allocated for 2014, compared to total actual expenditure of €1.241bn in 2013, amounting to cuts of €37m.

A €40m for the beef sector package announced, comprising €23m for a new Beef Genomics Scheme, when, taken together with the Beef Data Programme worth €10m, will allow the equivalent of payments worth €60 per calf for some 32,000 herds covering up to 550,000 Suckler calves. Continuation of the €5m Beef Technology Adoption Programme. Almost 5,500 farmers received an annual payment of €925 each under the 2012 Programme.  Separately, €2m is being provided to cover remaining payments under the Suckler Welfare Scheme.

 

No extension of AEOS for new entrants in 2014

No rollover of payments for 13,000 REPS 4 participants whose contracts end in 2013

Scheme closures-REPS Early Retirement and Suckler Cow confirmed, ‘savings’ of €37.6m.

Disadvantage Area Scheme allocated €195m, same level as 2013.

Grassland Sheep Scheme allocated €15m.

Reduction in animal health and market support areas by €12.4m, mainly due to good TB eradication levels.

Taxation measures  

Adjustment to Capital Gains Tax Retirement Relief (CGT)

Until now, retirement relief from CGT was only available where a person had farmed the land for the previous 10 years, except in the case of transfer to a child, in which case a long-term lease was permitted prior to transfer.  This new measure extends CGT retirement relief to include farmers who lease their land out on a long-term basis (a minimum lease of five years) in the period prior to retirement, and intend transferring their land to a person other than a child.  The main purpose of the measure is to encourage older farmers who have no children to lease out their farmland over the long term to younger farmers, the department outlined.

Vat – Increase in farmers’ flat rate addition from 4.8 per cent to five per cent

The farmer’s flat-rate addition is being increased from 4.8 per cent to five per cent with effect from 1 January 2014.  The flat-rate scheme compensates unregistered farmers for Vat incurred on their farming inputs, and is reviewed annually in accordance with the EU Vat Directive.

The 100 per cent reliefs for young trained farmers on stock relief and stamp duty relief have been maintained, and three new courses have been added to the list of qualifying courses for these reliefs.

Review of Farmers Taxation

A review of all farmers taxation was announced. Minister Coveney confirmed it will be an independent cost-benefit analysis of existing tax reliefs in the agriculture sector.

Measures which will benefit the food industry

The new Capital Gains Tax relief for entrepreneurs will be of benefit to start-up food businesses.  This measure will complement ‘Food Works’, the inter-agency programme which was developed in line with Food Harvest 2020 specifically to target and accelerate the development of a new generation of High Potential Start Up food companies.

The extension of the nine per cent Vat rate for the tourism and hospitality sectors will greatly benefit rural tourism and food hospitality enterprises.

Other announcements in the Budget which will benefit existing food companies and encourage food and on-farm diversification start-ups include:

  • A start your own business employment activation measure;
  • Improvements in the research and development tax credit.

Capital programme

An increased capital allocation of €10m to maintain the infrastructure at the departments’ fishery harbour centres and local authority fishery harbours, which makes a valuable contribution to Ireland’s marine sector. The capital allocation to the Marine Institute is being increased to  €10 million to cover the cost of its ongoing research programme as well as upgrading its research vessels while capital funding to Bord Iascaigh Mhara will be increased to €6.5m to assist in the implementation of the revised Common Fisheries Policy.

Significant capital funds have been allocated again in 2014 to the Forestry sector, amounting to some €101m. The allocation will be predominantly allocated to meeting the annual commitment to forestry premiums but will also allow the funding of some 7,000 hectares of new planting.

A provision of €4.2m has been made for the horticulture sector.

Public Sector Reform Programme

Since 2008 the cost of running the department and its related state agencies has fallen by more than €100m since 2008. The department’s staffing level has fallen by some 1,600 since 2005 (from 4,800 to 3,200), a reduction of 33 per cent. Bord Bia and Teagasc allocations for 2014 have reduced slightly to take into account ‘pay savings’  through the Haddington Road Agreement, €2.9m in total. The minister confirmed recruitment is still on hold, but it hopes to employ key advisor staff over the next year.

Reactions from farming organisations to follow.

 

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