IFA slam ‘desktop’ fertiliser analysis

ELIMINATING the zerorate VAT on fertiliser could reduce usage while delivering €35m for Government coffers, according to a study from the ESRI.

The paper, which examined the environmental effects of 142 existing and potential fiscal measures, concluded that both environmental and economic benefits could be accrued by ending the zero rate for farmers.

Across three types of fertiliser — phosphorous, urea and CAN — it projected a reduction of around 33,000t a year.

The analysis suggests that there will be a tax revenue gain of €35.14m each year.

An IFA spokesman said it was a classic ‘desktop’ exercise that would be counter-productive and will impose extra costs on what is a low-income sector.

“Farms that are deficient in soil nutrients need extra fertiliser. Twothirds of our farms are nutrient hungry,” he said. “Improving soil fertility and increasing grass growth is the way we drive efficiency on farms by achieving more output from the same resources.”

The ICMSA’s Denis Drennan said soil indexes were low. “Fertiliser is a significant cost and farmers would be exact about how it is used,” he said.

The ESRI said this change could disproportionally affect small, struggling farmers, who are likely to be lowintensity users of fertiliser.

It said an appropriate solution in Ireland would be to charge a normal rate of VAT on fertiliser, thus removing the effective subsidy, but to refund this on the basis of farm size and type.