Despite recent economic indicators pointing to the beginning of a strong recovery, many rural towns and villages have seen no tangible signs of an upturn. Budget 2015 decisions are vital to ensure that the benefits of economic recovery are evenly spread. Strong budget support for farm families will provide a very necessary rural stimulus. Farm incomes in many sectors are under real pressure and the Government’s commitment to a strong Rural Development Programme (RDP) up to 2020 must be delivered upon.

The IFA identifies funding for farm schemes and supportive taxation measures for agriculture to continue to contribute to economic recovery, underpinning 300,000 jobs. We put these key messages to Oireachtas members at Wednesday’s national lobbying event in Dublin.

So, what do farmers and the agriculture sector most need from Budget 2015?

Poor market returns across many sectors have resulted in a very difficult income year for farm families, although thankfully good weather and growing conditions are having a positive impact on input usage. Farming remains a low-income sector with an urgent need for strong funding of farm schemes in this year’s budget.

In January, the Government gave a commitment to co-finance the EU RDP for the next six years at a rate of 46%, providing an overall funding envelope of €4bn for farm schemes and the LEADER programme up to 2020. This commitment must translate into real action.

The IFA estimates that funding of €500m for the RDP schemes (ANCs, AEOS/GLAS, Discussion Groups, TAMS, Beef Genomics) is required to ensure their proper implementation in 2015. It is not good enough to kick proposed Government spending out to the future – farmers need properly funded schemes now. Schemes take time to set up, time for farmers to engage and apply, to plan and undertake their investments.

The €500m is an increase on last year’s funding allocation for these schemes. Does this mean we are looking for an increase in the overall agriculture budget? It certainly does. Can we make such a request when the recovery is only in its infancy?

The answer to this is simple – because of the new RDP, there is more funding available to Ireland from the EU than was provided last year. While we are looking for increased funding for RDP schemes this year, because more can be sourced from the EU, the overall cost to the Exchequer is reduced.

In terms of the public finance calculations, this is the only figure that truly matters when it comes to reaching the 3% deficit target.

Taxation

From a taxation perspective, the outcome of this year’s Agri-Taxation Review will feed into the budget. It’s hoped that the review report, due to be published on budget day, will provide a framework for a supportive agri-taxation system that addresses the challenges being faced by agriculture today and supports its further growth and development.

IFA, in its comprehensive submission to the review team, identified increased volatility, low levels of land mobility, barriers to early lifetime transfers and the ongoing requirement for capital investment as key areas which require appropriate and targeted tax measures.

Key among our proposals is the need to retain 90% Agricultural Relief and CGT Retirement Relief to facilitate lifetime transfer. The introduction of a targeted measure, individual to farmers, to better manage income volatility is being sought, as is an incentive model to support intra-family farm partnerships and farm transfer and the extension of the land leasing tax exemption scheme.

The introduction of measures that will deliver more viable farm enterprises, with improved efficiency and output, will result in increased returns through the tax system, offsetting any direct tax revenue foregone.

Throughout the recession, agriculture has demonstrated its resilience. This is evidenced by a 30% growth in food exports, with strong employment growth in the sector. This growth is continuing in the recovery, with agri-food exports in the first half of 2014 up almost 11%.

Recent county level analysis undertaken by IFA highlights the importance of a strong agriculture sector to the economy, not just for those directly involved in farming but also for thousands of regionally based jobs dependent on and linked to agriculture.

In next month’s budget, it is critical that the Government demonstrates, through targeted agri-taxation measures and proper funding of vital farm schemes, its real commitment to supporting a viable and growing rural economy.