Schemes funded by carbon tax sought for ‘contractors rather than farmers’

Any new scheme to be funded by carbon tax revenues should be used to incentivise farm and forestry contractors, rather than farmers, to purchase low-emission machinery, according to the Association of Farm and Forestry Contractors in Ireland (FCI).

The association has also hit out at the increase of €7.50/t in carbon tax, which it says “unfairly penalises” contractors.

Reacting to the budget announcement yesterday (Tuesday, October 13), FCI national chair John Hughes said:

“While the Budget 2021 has allocated €20 million of the proceeds of the increase in carbon tax to the Department of Agriculture, Food and the Marine for new environment schemes, remember this is being paid out of a total carbon tax contribution from farm and forestry contractors of €36 million from their fuel bills.

The FCI believes that, on this basis, any new schemes to encourage farmers to adopt lower emission forms of agriculture must now incentivise contractors rather than farmers to purchase new lower emission machinery – because it is contractors who are the ones funding such programmes.

“We cannot have a situation into the future where the carbon tax contributions from the fuel bills of farm and forestry contractor are being used to grant aid farmers to buy machinery so as to put contractors out of business.

“There has been enough damage done to the contracting sector so far with the current unfair approach to grant funding of Low Emission Slurry Scheme [LESS] that excludes contractors, that this cannot be repeated,” he added.

“Our FCI members will have no option but to pass on this substantial 28% carbon tax cost increase directly to our farmer customers.

This will equate to almost a 14% increase for all farm and forestry contractor current annual charges turnover levels of more than €700 million paid for by Irish farmers.

The FCI highlighted that contractor services provide a “unique value-added component” to the chain of Irish agricultural production “ensuring the competitiveness of Irish agricultural production through the use of efficient and modern lower carbon machinery systems”.

Today, Irish farm and forestry contractors now carry out 90% of the mechanisation work on Irish farms, the association contends.

Despite this, it said that such contractors remain excluded from the Carbon Tax Rebate System which is open solely to farmers.

This is despite the fact that, in carrying out 90% of the farm mechanisation work on Irish farms, their modern and efficient machine consume close to 350 million litres of green diesel annually valued at in excess of €262 million.

“This alone is 62% of the total energy bill for the entire Irish agricultural sector based on the total expenditure on energy and lubricants of €424.1 million in 2018,” the association concluded.