Budget 2023: everything farmers need to know

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You can watch a live webinar at 8pm on www.farmersjournal.ie where the Agricultural Science Association (ASA), ifac and the Irish Farmers Journal will bring your expert analysis and advice on the impact of the tax and policy changes coming in 2023.

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Pick up this week’s Irish Farmers Journal for a breakdown of Budget 2023, an exclusive interview with Minister for Agriculture Charlie McConalogue on the budget and expert insights and analysis on what the changes will mean for your farm.

The Irish Natura and Hill Farmers Association (INHFA) has welcomed the retention of the five tax reliefs which are “essential” for encouraging young farmers into the industry and the commitment to increase spending in agriculture by €283m in 2023, but outlined the need for further clarity on this.

National president Vincent Roddy also welcomed the additional support for the suckler sector through a BEEP-type scheme with a budget of €28m. However, the proposed spend of €28m is “disappointing”.

“While we sought a budget of €85m, we had hoped that the €52m/year committed under the Suckler Carbon Efficiency Programme could at least be matched here,” he said.

Roddy also expressed disappointment at the lack of support and recognition for farmers operating on designated lands.

Farmers with lands designated as special areas of conservation and special protected areas have, he said, seen their income potential restricted and endured additional costs through the 38 activities requiring consent applying to these lands.

The INHFA sought a direct payment of €240/ha for those affected by the burden imposed through these designations in its budget proposal.

Just transition

“It is vital that the just transition our Government promises is applied to these lands and those impacted by these designations.

“Unfortunately, this budget is a missed opportunity to send a message to farmers on these lands, and all farmers concerned, around expectations relating to climate change and biodiversity loss. A message that clearly states how the Government has your back and will support you through a just transition,” he said.

In relation to the new Agri Climate Rural Environment Scheme (ACRES) and budget proposals to provide funding for 30,000 farmers to join the scheme in 2023, Roddy said the capacity wasn't there for the numbers mentioned.

“Unless the closing date is extended out to March, there won’t be 30,000 farmers joining, as the advisory capacity isn’t there to complete the applications within the current timescales,” he said.

He also stressed the need to “re-evaluate the scheme and the budgets around it” to ensure access for all farmers who are willing to make a commitment to enhancing biodiversity and the environment.

With regard to the sheep sector, Roddy stressed the need for additional direct supports beyond the €12/ewe promised under the new CAP and the need for additional funding to support the progress made in developing an Irish woollen industry.

“While these have not been indicated in the budget proposals, we look forward to getting clarity on them,” he added.

Concluding, Roddy expressed dismay at the 10% concrete levy, which he maintained “will only increase building cost at a time when we should be everything to avoid these increases”.

As part of Budget 2023, the Department of Agriculture has allocated an €8m grant aid scheme to support farmers with the spreading of lime.

While the payment rates and details of the scheme are not yet known, Minister for Agriculture Charlie McConalogue said the lime scheme will help offset the “high fertiliser prices” affecting farmers.

The €8m lime scheme has been included along with an “enhanced” resource package to support farmers plant multi-species swards and red clover. However, the funding allocations for both of these are not yet known.

The Department of Agriculture’s research fund has increased to €20m to “maintain a steady pipeline of climate solutions for the sector in the coming years”, said Minister for Agriculture Charlie McConalogue.

The funding will be directed at agri-food research and innovation projects, with a new national call for proposals to be issued by the Department in 2023.

The Minister said the funding will build and enhance on previous research to deliver an evidence base for the challenges faced by the farm sector.

Minister for Agriculture Charlie McConalogue confirmed that €18m has been secured in Budget 2023 to fund a “large-scale water scheme on farms” and to fund a call for new European Innovation Partnerships (EIP) for farmers in the first quarter of 2023.

Successful EIPs will include localised farmer projects on biodiversity, climate, rural environment and farm safety, said the Minister.

Tánaiste and Minister for Enterprise, Trade and Employment Leo Varadkar has announced the development of a long-term €500m Growth and Sustainability Loan Scheme (GSLS) for small and medium enterprises, including farmers.

This will enable farmers to access finance for strategic investment purposes, says Minister for Agriculture Charlie McConalogue. He said that the agri-food sector has a demonstrated capacity to plan for the long term even while grappling with more immediate challenges.

The scheme will ensure farmers continued viability and sustainability into the future, says the Minister.

Budget 2023 will see some €112m allocated to fund the new national forestry programme, a 12% increase on previous years’ expenditure.

However, the programme is currently being finalised and is expected to be published in the new year.

Commenting on the funding increase, Minister of State Pippa Hackett said it will “build on the ongoing work to reform our forestry system since this Government took office”.

“This work is by no means finished and we are currently finalising a new forest strategy and a new forestry programme for Ireland, which will see supports for a closer-to-nature model of forestry.”

Minister for the Environment Eamon Ryan did not commit to providing a specified lump of fresh capital to the anaerobic digestion (AD) sector in Budget 2023.

However, he did indicate that his Department would come forward with market response-focused plans to incentivise biomethane production.

“It’s a regulatory market mechanism as I see the main delivery mechanism,” Minister Ryan told the Irish Farmers Journal.

Allocations

The minister said that a follow-up on “specific spending allocations” will come in the weeks after budget day that would outline how such mechanisms will work.

However, Department officials have also indicated to the Irish Farmers Journal that €24m in supports already announced in the National Development Plan (NDP) for 2023 and 2024 would provide capital expenditure.

Some €8m is to be allocated to next year’s work on the sector, with twice this allocation earmarked for 2024 and it is the Department of Agriculture that is to head up the plans to utilise this capital expenditure.

It is understood that the supports alluded to by Minister Ryan would primarily come in under a renewable heat obligation scheme aiming to cut greenhouse gas emissions in the heating sector.

Plans for this market-led biomethane incentivisation scheme should be opened to consultation in January and finalised by summer 2023, with the Department hopeful that contracts will be signed “by the end of next year”.

Minister of State at the Department of the Environment Ossian Smith announced that he expects the National Broadband Plan to leave an additional 18,000 farms ready to connect to high-speed fibre broadband in 2023.

No funding increase has been made to the plan, as all details on it have been finalised already.

Some 8,000 farms have been given access to connect to fibre broadband so far this year.

Minister for Agriculture Charlie McConalogue has confirmed that some €37m will be provided for organic farming in 2023.

The “record level of funding” will be provided to farmers through the Organic Farming Scheme (OFS) in the form of direct payments.

The €37m is understood to be part of the €256m allocated for organic production as part of the CAP Strategic Plan 2023-2027.

With the funding spread evenly across the five-year period of the CAP plan, 2023 would have seen over €50m provided for organics.

However, as next year’s payment is below the €40m mark, it is understood funding will be back-ended towards the latter years of the strategic plan, when more farmers have converted to organics and are receiving related payments.

An increase in funding for TAMS to €90m has been secured to fund the proposed large-scale investment in on-farm renewables.

A 60% increase in grant rate for solar panels on farms is proposed.

A standalone investment ceiling of €90,000 for solar panels applies next year.

As an immediate step, farm dwellings are now eligible for inclusion for solar panel investments.

Irish Farmers' Association (IFA) president Tim Cullinan said the renewal of the Beef Environment and Efficiency Scheme - Sucklers (BEEP-S) was important, but that the allocation was too low and it would leave support for suckler farmers well below what was needed.

“The fodder, tillage and suckler schemes won’t be enough to mitigate the 40% increase in farm inputs, particularly for the low-income beef and sheep sectors,” he said.

He acknowledged the introduction of an energy scheme to support farmers who will be facing very significant bills over the winter months.

“[The] IFA raised this issue when it became apparent that farmers were to be excluded. It would have been a serious omission if farmers could not avail of supports to deal with rising energy costs. We are waiting to see the full detail on how the scheme will be operated.”

The IFA president said Brexit Adjustment Reserve (BAR) funding of €238m for the farming sector could be significant, but he needed to see the proposed breakdown of the funds.

Climate measures

On climate measures, Cullinan recognised the liming and multi-species swards schemes and the accelerated capital allowances for slurry storage.

“While these schemes are worthwhile, they fall a long way short of what will be needed to help farmers meet their climate targets.

“The 10% concrete levy will undermine these initiatives and means that TAMS costings will have to be revised,” he said.

For the new agri-environment scheme, IFA rural development chair Michael Biggins said he would be concerned that the funding will not allow all potential applicants into the scheme.

“The Government have been trumpeting this new ‘flagship’ ACRES environment scheme, but the reality is that not every farmer who is currently in an environment scheme can be included in the new scheme based on the allocation made today,” he said.

IFA farm business chair Rose Mary McDonagh welcomed the extension of the various agricultural reliefs, but expressed concern about the Minister’s comments about the zoned residential land tax.

“There is increasing concern about how this tax will impact on farmers. Farm land should be excluded from the scope of the tax,” she said.

McDonagh said the reduction in the flat rate VAT refund to 5% was a significant adjustment that would impact farmers by €46m.

The Irish Cattle and Sheep Farmers Association (ICSA) says it is “stunned” by the news that there will be a 10% levy on ready mix concrete and blocks as part of Budget 2023.

“This will have huge implications for farmers. It will impact many farms who need a load of ready mix for upgrades. It may also impact various concrete products and [the] ICSA will be engaging with the detail of this,” ICSA president Dermot Kelleher said.

“For example, many water troughs are now concrete products. Obviously, it will have huge implications for any farmer building a slatted tank, slurry or silage storage or grain storage facilities.

"We are calling on the Government to look at this again. This will overshadow the announcement of accelerated capital allowances for slurry storage,” he said.

However, elsewhere, the ICSA was positive about some elements of the budget measures for farmers announced on Tuesday.

Additional suckler scheme

Kelleher welcomed the allocation of €28m for an additional suckler scheme, as well as another year of the fodder support scheme.

However, he said that beef finishers and sheep farmers will be “very disappointed” that there is no “targeted support” for them.

“[The] ICSA has lobbied for support for all three sectors and all are under pressure from the huge increase in input costs,” he said.

The farm organisation also welcomed the energy support scheme, which it said “will provide some support for farm businesses” and the “extension of important stock reliefs and stamp duty extensions for young farmers”.

On fuel taxes, Kelleher said that not enough is being done to help the farming sector with the “inordinate increase in diesel costs”.

Overall, the ICSA president said Budget 2023 “has some positive measures”, but warned that it “comes nowhere near dealing with the impact of huge cost escalation” for farmers.

The Government has made a “reasonable effort” to support farmers in Budget 2023, says the Irish Creamery Milk Suppliers Association (ICMSA).

However, the association’s president Pat McCormack was critical of some elements of the budget announced on Tuesday, including a claim that proposed slurry storage measures will be hindered by a Mica concrete levy of 10%.

McCormack described the accelerated capital allowances budget provision for slurry storage as a “notable step forward” which “made sense on financial and environmental grounds”, but warned that the 10% levy on concrete and concrete products due to come into effect from 3 April 2023 “would certainly dilute the effectiveness of the measure”.

He questioned whether “Government fully grasped the size of the contribution that agriculture was making to the national economy”.

He also asked if the “scale of the challenge that had to be met in managing the transition to lower emissions” was also being recognised for the farm sector.

“It’s notable, for instance, that the Department of Agriculture, Food and the Marine is budgeted to receive the smallest increase in expenditure apart from the Department of Taoiseach.

"We’d have to hope that that’s not indicative of the sense of priorities. This is a concern and the reality is that little has been given to support the climate change transition,” he said.

Extension of relief measures

The Tipperary dairy farmer welcomed the extension and rollovers of tax reliefs, such as the young farmer and farm consolidation, stock relief for young farmers and the excise relief on green diesel. However, he said the latter needs to be extended “well past” the 28 February 2023 date currently prescribed.

“The general widening of bands and increase in tax credit would also help farmers in dealing with the overall consumer inflation that was affecting them like every other sector of society,” McCormack said.

The Department of Agriculture has deferred its allocation of Government’s carbon tax revenue for 2022 to next year.

Allocated some €20m of carbon tax revenue for pilot environmental programmes in last year’s budget, the Department will receive no such funding for its expenditure in 2022.

The €20m that would have been available for the continuation of agricultural pilot schemes in 2022 has instead been allocated for additional measures to address energy poverty in the Department of Social Protection, a Government briefing note on the matter reads.

The redirecting of funds came about after the Department advised that the results of the pilot environmental programmes funded last year will be used to inform the Government’s implementation programme for the new Common Agricultural Policy 2023-2027, not in 2022.

Deferred allocation

As such, the Department of Agriculture deferred any carbon tax allocation for 2022, except the continuation of the 2020 funding of €3m for green agricultural pilots.

This funding is being used to increase the knowledge base and baseline data for climate and environment, identifying Ireland’s carbon-rich soils through a peat mapping project, a soil moisture monitoring network and the monitoring of greenhouse gas emissions on farmed lands.

Despite the deferral of carbon tax funding, the Department’s Results Based Agri Environment Pilot (REAP) will continue through 2022, but the co-funding requirements will now be met directly by the exchequer.

Macra said the Government’s commitment to the extension of various young farmer tax reliefs to assist in addressing generational renewal and the challenges of food production and climate change is welcome.

Macra president John Keane said that the consistency and continuity of young farmer tax reliefs is essential to support generational renewal.

“Macra had lobbied for the extension of these reliefs and drew attention to the EU’s review of state aid supports under the agricultural block exemption regulation, which is due to expire on 31 December 2022.

“It is now critical that the Government engages proactively with the EU on the regulation with a view to getting an increase in the lifetime threshold for young farmers from €70,000 under state aid rules to €140,000.

“The timing of the review of the regulation remains concerning, as it coincides with the expiry date of the current Irish young farmer tax reliefs and, therefore, must not impact on the orderly extension of both young farmer stamp, stock and consolidation reliefs," Keane added.

A €1.25bn Temporary Business Energy Support Scheme (TBESS) will provide qualifying businesses, including qualifying farm businesses, with up to 40% of the increase in their electricity or gas bills, up to a payment of €10,000 per month.

The scheme will be administered to businesses by the Revenue Commissioners, backdated to September, and will run until at least February 2023.

It is understood the scheme will be of particular benefit to high-energy use pig, poultry and dairy farmers.

An additional 1,000 gardaí will be trained next year in Templemore.

Some 430 new civilian staff for core policing duties will be recruited.

The Government has made a commitment of 200 new recruits every three months over the course of the next few years.

This is part of the €150m in funding for the justice sector.

The Department of Agriculture will have a total budget of €2.1bn in 2023, an increase of over €283m on 2022, Minister for Public Expenditure Michael McGrath has said.

He said 2023 will be an important year for the sector, with the commencement of the new CAP.

He also announced funding of €238m in Brexit Adjustment Reserve funding for measures to alleviate impact of Brexit on the sector.

The Budget will provide for free school books for some 500,000 primary school children from September 2023.

Minister McGrath said the measure reflects the Government’s priority on education.

A funding allocation of €2.5m was announced by Minister of State at the Department of Agriculture Martin Heydon.

Minister Heydon stated that it was his priority to getting more physical safety investment on to farms.

The Budget will see some €81m of carbon tax revenue allocated to the Department of Agriculture to fund the Agri Climate Rural Environment Scheme (ACRES).

Minister Michael McGrath says it will support 50,000 farmers to undertake climate and biodiversity measures.

Minister McGrath also announced a number of measures for improving the provision of health care.

Michael McGrath has announced an investment of €217.5m for rural broadband roll-out in 2023, with the intention of ensuring 185,000 households will gain access to a high-speed fibre-optic broadband connection.

He has also confirmed that €750m will be provided for decarbonisation schemes. Half of this (€337m) will be for grants for energy efficiency retrofits.

The €50,000 rural house efficiency scheme, announced last week, was confirmed.

Carbon tax revenue will increase by €211m to a total of €623m.

Minister McGrath has announced a social protection package for 2023 worth €1bn. It will see social welfare payment for individuals increase by €12 per week.

A welfare Christmas bonus payment will be paid in early December, with a separate double payment of weekly rates in November.

€14m has been allocated for emergency placements for mental health.

Once-off doubling of the child welfare benefit of €140/child will be made in addition to normal monthly amount.

€500 once-off payment for carers in November.

€200 once-off payment for those in receipt of living alone allowance to be paid in November.

Recipients of the fuel allowance will receive a €400 lump sum before Christmas along with their weekly allowance envelope.

The upper income limit for a 50% payment of student fees under SUSI has risen to €62,000, up from €55,000.

All SUSI maintenance grants are to increase between 10% and 14% in September of next year.

The student contribution fee has been decreased by €500 on a permanent basis for eligible families earning between €62,000 and €100,000 per year.

Minister for Public Expenditure and Reform Michael McGrath has announced that all households will receive an electricity credit of €600.

The credit will be paid in three instalments of €200, one to be issued before Christmas and two in the new year.

Minister McGrath has announced that student fees will be cut by €1,000 for the current academic year that has just began.

He also announced a childcare package of €121m that will see a reduction of up to 25%, up to €175/month back in the pockets of parents, he said.

As part of Budget 2023, farmers will be able to avail of an accelerated capital allowance scheme to construct modern slurry storage facilities, confirmed Minister Donohoe.

The scheme for farmers will be time limited and is designed to “assist the sector in adopting environmentally positive farming practices”.

The budget provision is part of the Government’s support to farmers to “reduce emissions and support newer and cleaner technologies,” said the minister.

A 20 pack of cigarettes will increase by 50c in a bid to increase overall health of the population.

There will be a pro-rata increase on all other tobacco products.

Minister Donohoe has announced that he will be reducing the VAT on newspapers from 9% to 0%.

This will come into effect from 1 January 2023 and is “in line with the Government commitment to support an independent press,” he said.

“We know the challenges farming communities face as they deal with rising costs,” the minister said. He said that a number of “important agricultural reliefs”, which are due to expire at the end of the year, are being extended.

Three are extended to 31 December 2024:

Two reliefs are being extended until 31 December 2025:

A 10% tax on concrete blocks will come into place from 3 April 2023. The Government aims to raise €80m for the redress scheme for defective concrete blocks.

Minister Paschal Donohoe has announced a series of measures to support renters and increase the supply of housing on the market.

As part of Budget 2023, a tax credit of €500 will be provided to all renters. It will also apply to subsequent years and for rent paid in 2022, Minister Donohoe confirmed. Some 400,000 renters are expected to benefit from the tax credit.

“Too many people can’t afford to buy their own home or are paying too much of their income in rent,” Minister Donohoe said.

The minister also confirmed the rent to buy scheme will continue at current rates.

A vacant homes tax will also be applied to properties that are occupied for less than 30 days in a 12-month period. This tax will be charged at a rate equal to three times the local property tax rate.

However, Minister Donohoe noted that concessions will be made when the property is “vacant for a genuine reason”.

Minister @Paschald has announced a new tax credit for tenants who are paying rent in respect of their principle private residence. #Budget2023 pic.twitter.com/XbCfy4Gkgz

— Department of Finance (@IRLDeptFinance) September 27, 2022

Businesses experiencing a “significant” increase in electricity costs will be able to access an energy cost compensation scheme, which will operate on a self-assessment basis.

Businesses which experienced a rise in their average electricity unit costs of more than 50% this year can claim 40% of the increase in their prices back through the scheme.

A €10,000 per month grant cap will apply, as will an overall amount. This will form a “large part” of the once off measures, Minister Donohoe said.

Tax credits for PAYE and self-employed people are increasing by €75 to €1,775.

Self-employed sole traders finally achieved parity in terms of personal tax credits with PAYE workers in last year’s budget and this equity has been maintained by pro-rata increases.

An additional €75 allowance has been made for home help.

The Universal Social Charge (USC) lower 2% band has been raised from €21,900 to €22,920.

A carbon tax increase of 2c/l on petrol and diesel is to be offset by a 2c/l cut to a different fuel levy - the national oil reserves agency levy.

This will offset the tax rise, leaving pump prices effectively neutralising the carbon tax rise for drivers.

Minister Donohoe has announced a total tax package of €1.1bn. The standard rate cut-off will now be at €40,000, which up until now was €36,800. Tax credits will increase by €75 and home carer tax credits will rise by €100.

The total budget package amounts of €11bn. This is made up of €4.1bn in once-off measures and €6.9bn in permanent measures.

Minister Donohoe has also said that the current public debt stands at €44,000 per capita in Ireland.

Ministers @Paschald & @mmcgrathtd have today announced a Cost of Living Budget Package of €11 billion. #Budget2023 pic.twitter.com/WKK9HfDEg5

— Department of Finance (@IRLDeptFinance) September 27, 2022

The minister has extended the excise reductions on fuel. This is 21c/l in respect of petrol, 16c/l for diesel and 5.4c/l for green diesel. They will be extended until 28 February 2023.

Minister for Finance Paschal Donohoe has begun his Budget 2023 speech.

Budget 2023 will be a cost of living budget, he said.

“The wholesale price of natural gas is around eight times its average level in the years preceding the war in Ukraine,” he added, noting that inflation in Ireland is now running at highs not seen in many decades.

He said Government understands the worries of small businesses and farmers.

What will the changes announced in Budget 2023 mean for your farm income and farm family?

At 8pm, the Agricultural Science Association (ASA), ifac and the Irish Farmers Journal will bring your expert analysis and advice on the impact of the tax and policy changes coming in 2023.

You can register for the webinar here and watch it live on farmersjournal.ie.

You can also pick up this week’s Irish Farmers Journal for key insights and analysis on Budget 2023.

Good afternoon and welcome to the Irish Farmers Journal’s live blog of Budget 2023.

At 1pm, Minister for Finance Paschal Donohoe will deliver next year’s Budget.

A new beef scheme, energy supports and a lime scheme are among the measures confirmed for farming in this year's budget.