“We need to make the best possible use of our land resource for the benefit of our rural population and do that in a way that is truly sustainable” – this was a core message Michael Hoey of Country Crest delivered at last week’s Irish Tillage and Land Use Society (ITLUS) conference.
This conference focused on making the best use of land and discussed alternatives to conacre which allow for land and productivity improvement. Rented land is a big proportion of the total area sown to crops and, with margins perennially tight, the productivity of this land is essential to profitability.
A quick show of hands indicated that about one-third of the audience currently has land leased-in as distinct from rented on conacre and about one-third of these started some of these leases in 2015. Growers believe that there is an increased interest in leasing among landowners, but a number of obstacles remain.
It was pointed out on many occasions that the whole area around land mobility and transfer is very complex and that discussions on same should take place in the presence of a competent solicitor and accountant.
Land mobility discussion
There was a long and lively panel discussion on topics relating to land mobility and the need to have systems that promote productivity, regardless of enterprise. The panellists were Declan McEvoy of IFAC; Aisling Meehan, solicitor and Irish Farmers Journal contributor; Bernie Brennan from the entitlements section of the Department of Agriculture; and Ivan Whitten, Teagasc adviser and ITLUS council member.
The three main alternatives to conacre were leasing, hub farming based on share-farming, and partnerships. The latter was seen as least attractive given that its main benefit depends on generating profit and this does not always happen.
There was considerable discussion on issues relating to share-farming as it is a sensible means for a landowner to protect entitlements while providing the grower with the benefit of scale with reduced risk plus cashflow benefits. The introduction of greening and crop diversification complicated many such arrangements and the shared greening obligation is now being referred to as hub farming. This allows for block cropping, with greening obligations met within the single hub.
Share-farming brings many advantages to the grower where it is being done properly. However, there were many references to arrangements where the landowner was incurring very little real risk. While this is against the spirit of such arrangements, it was pointed out that it is growers who drive such arrangements. It was suggested that there be an official clampdown on arrangements that do not fully comply with the share-farming principle but it was also stated that the most effective way to end these arrangements is for growers to walk away.
Leasing is also very appealing, especially for the grower. New tax-free income allowances have increased the attractiveness of leasing, as distinct from conacre, for landowners. However, landowners remain worried about the security of their entitlements when leased with the land. The concern relates to what may be required at the end of a lease which may occur in a new CAP regime. This stems from uncertainty as to the exact definition of an active farmer at EU level.
This uncertainty is preventing some landowners from leasing out their land to active growers as they are fearful of losing their entitlements if a new CAP regime is introduced during the term of the lease. However, it was suggested that these complications are not universal in the EU and it is hoped that the private contract clause used this time can provide a solution again next time around.
A criticism of the lease arrangements is that they are too attractive to the landowner. A suggestion was made that the tax allowance only apply to the land rental portion and that the entitlement value be handled separately. This would enable more acres to be leased within the threshold values set.
One interesting point which emerged in discussion was the issue of de-registering for VAT where a registered landowner, who was farming up to now, wanted to cease farming and lease out the land.
Declan McEvoy stated that the de-registration process is not just a matter of zero transactions. He said that de-registering for VAT involves the repayment of the VAT refund received in the preceding three years.
So it is important that any VAT-registered farmer intending to de-register begins to plan for this at least three years ahead. It is essential to begin to reduce the net claim for VAT returns in the preceding years to avoid a nasty surprise during the de-registration process.
So it is dangerous to wait until the point of de-registering to begin this process. While it can be done quite quickly, de-registering will involve repayment of the refunds received by the individual in the preceding years.
Country Crest: Supporting primary producers
Opening the conference, Michael Hoey explained the history and philosophy of Country Crest. He and his brother Gabriel share the view that every person should do what he/she can on the journey through life to leave our resources in at least as good a condition as they got them. This necessitates having a profit from farming and everything Country Crest does is targeted at getting as much from the market as possible for primary producers.
“Food is far too cheap and yet the multiples use it to make food products loss-leaders in the retail sector. This has the ongoing effect of further depressing prices to add to the survival challenge for primary producers,” Michael said.
When the quality and presentation of Irish produce left a lot to be desired back in the late 1980s, Country Crest targeted the delivery of a consistent supply of quality Irish produce to the retailing multiples. “If we supply what the customer wants and it tastes good we will win repeat sales and that is the name of this business,” Michael said. “Appearance and taste are at the core of repeat business.”
Country Crest grows and pre-packs potatoes and onions for the retail sector. This is done with a passion for authenticity, innovation and the best possible produce. It requires strong relationships between the best Irish growers and national retailers.
Country Crest is now a supplier of many different products to the retail multiples. But it is also a farming business working on about 3,200 acres in Dublin and Meath which includes about 400 acres of potatoes and 150 acres of onions. The remainder of the farmed area is given over to cereals, oilseed rape and spring beans.
About 25% of the land farmed is owned and the remainder is accessed through varying combinations of conacre, partnership arrangements and long-term leases. Michael talked about the great challenge of making money from any of these arrangements and in particular about the way the supports are being channelled to the landowners rather than the land users.
Country Crest evolved into the prepared meals market to help supply this need from Irish produce. “The horsemeat crisis presented a massive challenge to food businesses and, despite assurances from meat processors, we really had no idea what was in the meat we were purchasing for our prepared meal market,” Michael stated.
“For this reason we had to look very seriously at the credibility of our business and decided to dust off some old plans to get back into beef production. This enabled us to have total traceability for the meat we are putting into our meals.
“We now have a 20-month heifer business, with 20 animals per week finished for slaughter. This meant the construction of a new 450-animal house which encompasses animal comfort, sustainability and safety designs.”
Virtually all feed for the beef is home produced for security of provenance and this adds traceability to the supply chain. “But it is well worth it,” Michael stated, “as it allows us to have total confidence in the products we produce and sell to our customers.
“Ballymaguire Foods is our company that produces the prepared meals for our Irish retailers and consumers. All food components are now made from scratch and no additives or artificial ingredients are used. There are plans in place for expansion next year.”
Sustainability is key for a modern food business. Country Crest was one of the pilot companies in Bord Bia’s Origin Green programme and this has affected the evolution of its businesses. They produce much of their own electricity, have planning permission for an anaerobic digester if and when the tariff system makes it economical, and they recycle as many materials as possible and compost green waste. But sustainability also refers to jobs, workers, community and animal welfare.
People are important for Country Crest. The company employs 240 people and contributes to the livelihoods of very many more. It is actively involved with schools and colleges to promote healthy food and healthy eating. It has involvement with very many charities and community projects, both at home and abroad, because people matter to sustainability.
Michael was an active participant in the Food Wise 2025 project and he relayed how difficult it was to get a reasonable hearing for crop producers. He has also been a significant driver in the move to restore sugar beet production and processing in this country. His passion for the authenticity of Irish produce and the need to support the livelihood of growers is very much behind this objective.
Michael spoke briefly about the increasing trend for people to eat outside the home. We are currently at 19.1% stomach share (a term used to indicate the proportion of total food consumption which is prepared and consumed outside the home or purchased and prepared at home), but we are heading to the US level of 37%. “There is a big interest in cooking programs on TV but people do not want to cook,” Michael commented.