IFBA conference: The future for on-farm investment

By Hugh Scanlan

Between 1994 and the end of this year, it is estimated that Irish farmers will have received almost £300 million in grant aid for on-farm construction investment, valued at around £1.175 billion.

Dan Gahan, Department of Agriculture, told the recent Spring Conference of the Irish Farm Buildings Association (IFBA) that £125 million in grant aid has been paid out to around 15,000 farmers, under the Control of Farmyard Pollution Scheme (CFP), £76 million has been paid to over 17,000 farmers, under the Farm Improvement Programme (FIP), and £28 million has been paid to over 7,500 farmers under the Dairy Hygiene Scheme.

Clearly, an enormous amount of work has been carried out under these schemes over the past six years, so it is interesting to see how much more essential work remains to be done.

The 1997 Teagasc Farm Management Survey indicates that a total of 24,500 farmers still have inadequate pollution control facilities.

The Department of Agriculture estimates that around 16,800 of these may carry out work under future schemes, on the basis that most of those in the under 25 acre and over 250 acre categories will be ineligible and around half of those in the 25 - 50 acre and 125 - 250 acre categories will also be ineligible.

In relation to dairy hygiene, the Department estimates that around 10,000 farmers need to up-grade their facilities but it is expected that many of these will carry out the work without grant aid rather than be tied into the conditions of the scheme.

Importance of grant schemes

Donegal-based Teagasc adviser, John Cannon, used two case studies to illustrate the importance of capital grant schemes for the survival of the farmers in his area.

Ninety per cent of the farms in Donegal are drystock based, with the average suckler herd being only 6.5 cows and the average sheep flock only 77 ewes, both significantly below the national average.

A quarter of the 10,000 farmers in the county are already in REPS and John reckons that a further 500 - 1,000 will probably join over the next few years, with the cost of compliance being the key determining factor after that.

Case Study 1:- Mick is a 29 year old, Reps participant, who owns 80 acres, and leases another 71 acres. His enterprises total 78.5 income units, made up of 20 suckler cows to beef and 230 ewes.

Since 1994, when he took over the farm from his father, he has invested in a slatted sheep house, a sheep dipper and handling unit and a slatted shed for around 60 cattle, all of which were grant aided. In addition, he bought some land.

All of these investments were financed by a 10 year farm loan of £57,000, with annual repayments of £9,000.

A new dwelling house was funded under a separate home loan. He joined Reps last year and his participation costs since then consist of £2,500 to repair the silo floor and £5,500 for fencing.

No grants were received for either of these jobs. Future work, costing around £27,000 gross, will include a new silo, additional concrete yards and a slatted house for an extra 20 cows, but this is subject to grant aid being available.

Mick is getting on OK, but further development can only be contemplated if he continues to qualify for grant aid.

Another area for concern is that the proposed linkage of headage to area would reduce his headage payments from £4,000 to around £1,800.

Case Study 2:- Pat is a non-Reps participant farming 94 acres. His enterprise mix gives him 60.3 income units, based on 18 suckler cows to one and a half year old, eight weanlings and 90 ewes.

He would like to join Reps but the substantial investment in pollution control measures is a major hurdle.

This would involve a new slatted house for 38 cattle, costing £25,000, repairs and addition to the silo slab, costing £6,000, and fencing and other participation cost amounting to £5,000.

This totals £36,000 and, after deducting savings of £5,000, this leaves him a borrowing requirement of £31,000.

These figures assume that no grant aid is available to help fund the pollution control works and clearly indicate that joining Reps, under these circumstances, is a complete non-starter

The availability of a £10,000 capital grant for these works, would reduce the annual repayments by £1,920, to £4,032, leaving a resulting balance to cover family living expenses, etc, of £7,917. On this basis, the availability of the grant is still not sufficient to enable Pat to join Reps.

So what options are open to him ?

• He could avoid having to invest in the silo by switching to wrapped big bale silage but this would increase annual costs by around £1,000 and is not on.
• By cutting back on the number of cattle, he could get away with existing housing but this would have a disastrous impact on income.
• Continuing as he is, without making any changes, is not really an option because he is already causing pollution.

It is obvious that the future viability of this farm is in doubt, as there is no easy solution to his dilemma.