‘Deferred income plan can help farmers post-Brexit’

INCOME volatility, Brexit and the fall in the value of sterling have been identified by ICOS and ICMSA as the most pressing issues which need to be addressed in the upcoming Budget.

Both organisations have called for the adoption of income stabilisation tools to dampen the impact of price volatility.

These proposals would involve a mechanism whereby farmers might defer income in a period of high prices and then draw it down in a year where prices are lower.

“ICOS is proposing that a farmer can enter into a voluntary agreement with their co-operative to defer up to 5pc of their gross annual income,” explained ICOS president Martin Keane.

“The deferred income will be held in an account for the specific purpose of the scheme and can be drawn down at any time and subject to income tax at the time of draw-down.

“The proposal by ICOS can result in a significant stabilisation impact on the income of a typical family farm enterprise.”

Such a move is supported by the ICMSA, and both organisations pointed out that the Government committed to considering the measure last year.

Speaking following a meeting with Minister for Finance Paschal Donohoe, ICMSA president John Comer said the recent fall in the value of sterling was a clear warning of the dangers facing farm incomes.

“ICMSA is proposing a Farm Management Deposit Scheme type concept whereby in a good year, a farmer can set aside some funds in a tax-efficient manner to be utilised in years of income difficulty,” Mr Comer explained.

“Such an initiative is absolutely essential. The reality of Brexit and other volatility factors is that the links further up the supply chain will pass back all the negative impacts to farmers, so it is essential that there are farm-level initiatives to counter these.”

The ICOS’ pre-Budget submission also called for a menu of measures to assist the agri-food sector to adapt to a post-Brexit scenario.

“ICOS is calling for increased funding for key State agencies such as Bord Bia and Enterprise Ireland to support the promotion of Irish agri-food exports on new markets and product diversification,” Mr Keane said.

“The Government should also investigate the requirement for a national export credit scheme to assist businesses in expanding to new global markets.

“Further, the greater utilisation of EIB financing by the agricultural sector and rural businesses must be prioritised.”