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Joe Healy’s first major interview following the declaration of his candidacy for IFA president was with Paul Mooney in these pages back in January. Levies had already become a major issue, and it’s revealing to see what he had to say on the subject.
“They are a serious, serious issue and not just in this campaign. As long as I’ve been involved in IFA, they have been an issue – especially the factory levy.
“I’m not foolish enough to think that we don’t need money. I’d love to get rid of levies but the organisation has to be funded. But it’s now time to look at what is the best possible way to raise an adequate amount of money to run the organisation.
“Members feel there is no transparency in the collection process. There is a perception that having levies collected by processors compromises IFA, especially in dealing with the factories. It’s the most contentious issue in the organisation for many years. I want to review it in a serious way.”
Internal review findings
The internal review was one of the first acts of the Lucey report implementation committee. They returned in June with their findings and presented four alternatives to the current European Involvement Fund (EIF) levy, but concluded that none of them would better the current model. The options examined were:
1. Member subscription only. This would require an increase of 140% in the affiliation fee to maintain income levels. It was felt that could lead to members leaving, particularly smaller farmers.
2. A levy on cattle tags. While a novel proposal, this charge would only be applied to people who breed cattle – hardly a fair system. It would also increase tag prices by 75%.
3. A levy on the Basic Payment Scheme. This would see the Department of Agriculture replace the factories, marts merchants and co-ops as levy collectors. The fundamental problem of being perceived as compromised in negotiations due to the arrangement would remain. In addition, it was estimated that the rate of the levy would have to double from 0.015% to 0.03% (from €1.50 to €3 in the €1,000).
4. Maintain the current levy system. The review committee recommended the retention of this system. The IFA executive council agreed. There was recognition of the perception that it granted the potential for influence over the IFA, but at least it is seen as a fair and equitable system.
Essentially a sales tax
But is it really equitable? The levy is essentially a sales tax. In that regard, it is a slide rule measure. That said, sales, profit and income are all very different things.
A dairy farmer with sales of €100,000 worth of milk is making a lot more money than a beef farmer who slaughters €100,000 worth of cattle. Yet they both pay the exact same EIF levy of €150 over the course of a year.
No system will ever be perfect. The simple truth is that the key to the success of the EIF has been farmer buy-in. The levy generates a lot of money when set at a tiny percentage because most farmers pay it. If farmers withdraw their support in significant numbers, the figures won’t add up so well.
The exclusion of ABP from the levy system cuts €400,000 from the IFA – almost 10% of its levy revenue. Any further slippage and there will have to be a further review of the future of the scheme.
Then again, as Joe Healy observed, the scheme has been under permanent scrutiny since its introduction. But never as much as now.
Analysis: €50m in levies taken from farmers
Industry not following Goodman's lead
Levy collectors must stand over their accounts - Bergin
Levies back under scrutiny two months after June approval of status quo
Ongoing dispute sparks big reaction from farmers
Larry and the levies: the IFA responds
Don't reply to Larry's letter - Healy
Larry Goodman and the IFA - a history
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