Monday, December 5, 2011

Budget Day - and €105 taken out of Irish Agriculture, what does it mean for farmers and food producers?

Round One of Budget 2012 happened earlier today, with the axe falling on €1.4 billion of public spending by the Irish Government. The main headlines were changes to child benefit, increased registration fees for students and changes to health spending. But across the country many from the farming and food sector anxiously watched Minister Brendan Howlin's budget speech for news on what would happen to farm incomes. Then it was announced that €105 million is to be taken out of the agriculture budget, a move that will affect 50,000 full and part-time farmers. In that respect it could have been a better day. But to be honest it could also have been a hell of a lot worse.

I've outlined the main points of the cuts below. On the positive side (yes there is one), farmers countrywide are relieved to see no change in the suckler cow welfare scheme, which aids those producing beef animals. There's also beef discussion group funding and money for the BVD scheme. The main cut is to the Disadvantaged Area Scheme where €30 million is to be taken out of the system. This will really be felt by the farm families who farm in less productive parts of the country, where in short, it can be very hard to make money. Uplands, wetlands and bog is all too common in Ireland and while it might look poetic, it certainly isn't poetic trying to pull an income out of it.

Also notable is the €6 million being cut from the agri and food bodies such as Teagasc, Bord Bia and BIM which offer invaluable support to farmers, food producers and promote Irish food both here and abroad. In reality a lot of this €6 million saving will occur anyway through employees not being replaced and changes to funding models. But it may still mean a merging of some agri-food bodies which was what had been rumoured.

Summary of the cuts:

Disadvantaged Area Scheme
ƒThis will be implemented through reduction of those entering the scheme via eligibility and
qualifying criteria. The proposed amendments are subject to approval by the
European Commission. Planned saving - €30 million

ERAD, Disease eradication scheme
ƒSavings from anticipated lower disease incidence and operational changes. €10 million

ƒImplement reduction in expenditure through changes in the payment of transaction costs to scheme participants. The proposed amendments will require Commission approval.
€19 million in savings over 2012

Administrative Budget of the Department of Agriculture
"ƒD/AF&M rigorously reviews every area of expenditure and is committed to further staffing reductions and reductions in costs, including in procurement and shared services."
€12 million in savings

Non Commercial State Sponsored Bodies (NCSSBs)
Total grants-in-aid to five non-commercial State bodies (Teagasc, Bord Bia, BIM, the Marine Institute and the Sea Fisheries Protection Authority) amount to some €200 million per annum. "While the emphasis in 2012 will be non-pay expenditure cuts, funding models and overall levels of funding will be examined critically, particularly in the context of the Government’s commitment to streamline the number of State bodies."

The announcement also factors in Miscellaneous Savings of €28 million to bring the total of agriculture cuts to €105 million. Tomorrow will see the announcements on VAT which will greatly affect food producers and as they predict, shrink demand for their goods. It's rumoured that the new VAT rate on bagels, garlic bread etc (the bread that's not bread story) may not go ahead which is great news for small bakers. As always, I'll keep a close watch on announcements tomorrow and keep you all posted. Keep the chins up x

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