Northern dairy farmers push for income averaging
Parity is needed with the Republic’s five-year income averaging for dairy farmers, the Ulster Farmers Union President has said.
In a meeting with Liz Truss, the Secretary of State for Environment, Food and Rural Affairs in London, Ulster Farmers’ Union President Ian Marshall, highlighted the cash flow concerns being experienced by many Northern Ireland dairy farmers.
One proposal he put forward was on ‘averaging’, where profits for two consecutive years are added together and divided by two. He said the idea is that when prices have fallen, rather than paying a hefty tax bill following a good year, you can spread it out over a longer period.
“We used this meeting to highlight directly to the Minister the fact that Northern Irish dairy farmers are facing more volatile milk prices than our British counterparts, such is our exposure to commodity markets,” he said.
“Commodity prices have been falling since the beginning of the year, with the drop exacerbated by the Russian import ban and rising world milk production unmatched by demand. We also raised our concerns in relation to the 5p/L difference between Northern Ireland and British farmgate milk prices at present.”
He said that due to its nature, Northern Irish dairy farmers often face a volatile profit and loss cycle, with high prices dropping quickly in a relatively short period of time and as seen currently, even falling to below cost of production levels. “Unfortunately it was very clear from the outset that the Minister would not support the meaningful introduction of the more usual EU market measures such as intervention at a more realistic price level, but I did put forward a number of alternative proposals to Mrs. Truss as to how current cash flow pressures on dairy farms could be relieved.”
Another proposal discussed was the introduction of a Farm Management Deposit (FMD) Scheme similar to the one currently operating in Australia. “We believe that if implemented, the FMD scheme would allow farmers to set aside pre-tax profit from a year of high income which can then be drawn down in a low income year. This would be a new scheme in the UK and one which could be of great benefit to Northern Ireland dairy farmers.”