Budget 2017: Low-cost loans and investment for sheep - what's in it for farmers

THERE WERE A number of measures announced in the budget today that will be of big interest to farmers across the country.

Changes in income tax, investment in sheep welfare and an increase in rural development funding will all have an impact.

Farmers and agri-food businesses have been worried about Brexit and the implications it could have on their sector.

The UK is by far the largest export market for Irish agri-food and drink, with over 40% of all exports going there last year.

In his budget speech today, Finance Minister Michael Noonan said weakness in the value of sterling could have a huge effect on farmers.

“This poses a competitive challenge for farmers and agri-food companies that sell a great deal of their output into the UK market,” he said.

These are the Budget 2017 measures on the cards:

A ‘step-out’ option for farmers who are income averaging

Income averaging involves a farmer paying income tax on their average income over a period of five years.

Under the new measure, farmers who have had a particularly bad year for income will be able “step out” of this tax averaging and pay the income tax due on that year alone. This will reduce the overall amount that they have to pay should they have a particularly lean season.

Increase in flat-rate addition for farmers not registered for VAT

The flat-rate addition for farmers not registered for VAT will increase from 5.2% to 5.4%. This scheme compensates the cohort for any VAT incurred on their farming inputs.

Farm restructuring relief extended 

Farm restructuring relief – which was first introduced in Budget 2013 – has been extended until 2019.

Introduction of low-cost, €150 million loan fund

Noonan announced that a low-cost loan fund was being developed using EU exceptional adjustment aid. He added that this loan would be:

“Low cost, below 3% per annum, and highly flexible.”

Agriculture Minister Michael Creed announced later that there was a loan fund of €150 million being introduced at an interest rate of 2.95%.

Improvements to farm assist and rural social schemes

Public Expenditure Minister Paschal Donohoe announced that there would be 500 new places introduced on the Rural Social Scheme for low-income farmers.

He also said there would be there would be “improvements” to the Farm Assist Scheme – saying that Social Protection Minister Leo Varadkar would announce further details.

Increased funding for the Rural Development Programme 

Spending in the Rural Development Programme will be increased by €107 million to a total of €601 million next year.

Included in this will be a €25 million sheep welfare scheme.

Other areas of investment include:

• €242 million for agri-environmental schemes
• €202 million for areas of natural constraint
• €52 million for the beef data and genomics programme
• €50 million for Targeted Agriculture Modernisation Schemes (TAMS)
• €25.6 million for the knowledge transfer programme

Comment

Farmers’ groups broadly welcomed the measures in today’s budget.

Irish Farmers Association president Joe Healy welcomed the introduction of the low-cost loan fund, saying 2016 had been a very difficult year for farmers.

He also praised the restoration of funds previously cut from the Farm Assist Scheme, and the move on income averaging.

Written by Cormac Fitzgerald and posted on TheJournal.ie