Ireland’s largest beef processor – the Larry Goodman-owned ABP – is to stop the blanket collecting of levies from farmers, a move that will severely hit IFA income.
It is understood that meetings took place this week between ABP and farming organisations to discuss the change and that farmers will now have to ‘opt in’ to pay the levy.
According to Agriland’s sources, ABP will write to farmer suppliers and offer them the option to ‘opt in’ to the collection of farm organisation levies.
Prior to this, farmers have had to opt out from levy collection by meat factories, marts and dairy processors.
It is estimated that the levy collection across all income sectors is worth €4.7m to IFA every year, which it describes as ‘voluntary’.
ABP processes 22pc of the beef kill and this is set to increase to 28% should a proposed deal to take over Slaney get approval from the Competition Authority.
IFA is the main recipient of the controversial European Involvement Fund (EIF) levy, which is collected by meat factories from farmers.
The EIF levy was introduced in the 1970s, to help fund representation for farmers in Brussels. It has been continued since and the main beneficiaries of it are the IFA and ICMSA, with the IFA thought to be in receipt of over 90% of the levies collected from processors.
IFA has come in for criticism in recent times over the levy, which many detractors have said weakens its hand in negotiating with the processors.
In its most details accounts, for 2014, the IFA said levies accounted for approximately one third of its €12.9m income.
In June this year IFA announced that it would continue to collect levies from farmers, stating that joint membership and levy system is the fairest and most appropriate mechanism for funding the Association and maintaining services to farmers.
It said the current system of funding allows farmers to contribute, proportionately and fairly, based on the size of their farm and value of their output.
In March this year it forecast that it will lose 12% of its income from levies this year, valued at approximately €564,000, as farmers chose to opt out.
The figures which were presented by IFA at its National Council showed that 300 people have requested levy refunds, which will make up part of the €564,000 reduction.
The IFA said that the European Involvement Fund (EIF) contribution is voluntary and it has received approximately 300 refund submissions since November 2015.
However, it did not detail how much the 300 refund totals, which would be on top of the loss of €564,000 through cancelled levy payments.
It said at the time that due to a number of factors (time lag, frequency of payment, change in market prices etc) it will take some time to establish an accurate picture of the impact on the levy income.
ICMSA is understood to receive approximately €100,000 annually from levies.