Farm Business & Inputs Council Report March 2022

Commission on Taxation and Welfare:

The Commission of Taxation and Welfare (CoTW) is established by Government to independently consider how best the taxation and welfare systems can support economic activity and promote increased employment and prosperity, while ensuring that there are sufficient resources available to meet the costs of public services and supports in the medium and longer term. The Commission is due to submit its report to the Minister for Finance by 1st July 2022. 

Online IFA submission made to the CoTW on Jan 17^th. Full submission available on request. Designed within parameters of CoTW survey, focus of 10-page submission was on promoting the importance of equity/fairness in design/re-design of taxation & welfare system, and building on existing taxation/welfare measures/supports in place for the Agri sector given the significant wider economic advantage gained from same. 

Submission called for Productive farm land used for food production purposes to be exempt from any Site Value Tax / Re-Zoned land Tax / Zoned Residential Land tax or any other form of land/asset type tax introduced to address the existing housing crisis. In addition, it highlighted that opportunity exists, via VAT exemptions and accelerated capital allowances, to further support increased investment and adoption of more environmentally friendly practices, therein supporting climate change ambitions of carbon neutrality by 2050.

FB representatives registered to attend follow-on Stakeholder engagement session March 3^rd & 4^th. 

Property Registration Authority/Prescriptive Easements:

• The 30^th Nov deadline for registrations under the 1858 Act was removed – wider review early 2022
• IFA had written to the Minister responsible Darragh O’Brien on the issue and will keep under review.

Letter sent to Pillar Banks (cc M. Martin; L. Vradkar; E.Ryan; C. McConalugue] & Press Release following Ciaran Cuffe, Green Party MEP actions re lending to Agri Sector:

• Positive affirmation from Banks received re continued commitment to supporting Agri Sector 

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Inputs:

Feed/Fertiliser Webinar held 20^th January; c. 300 in attendance. Good engagement. Chaired by Brian Rushe, IFA Vice-President, speakers on the night included: Liam Woulfe, CEO Grassland Agro; Rory Deverell, Risk Consultant StoneX; Shane Whelan, IFA Policy Executive; David Wall, Teagasc; Liam MacHale, IFA Director in Europe; Rose Mary McDonagh, Chair IFA Farm Business Committee. Concluding remarks/call to action:

• Escalating input costs will erode into any marginal gains from relatively strong output prices. Need collective action: 
  • Farmers: Examine your own personal situation, engage early with Agri Advisor / Finance Provider, & put a plan in place (i.e. feed / fertiliser / finance etc.)
    • Keep under review and act accordingly – better to be proactive than reactive.

Agricultural Input Price Index (excluding VAT) Base Year 2015 = 100

Category	Dec-20	Jan-21	Feb-21	Mar-21	Apr-21	May-21	Jun-21	Jul-21	Aug-21	Sep-21	Oct-21	Nov-21	Dec-21	Dec-21 / Nov-21	Dec-21 / Dec-20
Agricultural Input Price Index	102.4	103.4	104.8	106.4	107.7	109.1	110.2	111.2	112.0	113.6¹	117.7	119.4	123.8	3.7%	20.9%
Seeds	100.9	100.9	100.9	110.5	110.5	110.5	110.5	110.5	110.5	110.5	112.6	112.6	112.6	0.0%	11.6%
Energy	95.3	97.7	100.5	105.4	106.7	108.7	109.9	113.2	115.1	116.5	125.0	128.8	127.4	-1.1%	33.7%
Electricity	110.1	110.1	110.1	110.1	113.3	113.3	113.3	115.1	122.9	124.6	127.0	133.1	134.7	1.3%	22.4%
Motor Fuels	90.2	93.5	97.4	103.9	104.5	107.3	108.9	112.7	112.7	114.1	124.9	128.3	125.8	-1.9%	39.5%
Lubricants	103.5	104.2	103.4	106.3	107.6	108.3	108.7	110.2	111.0	112.6	112.6	112.6	112.3	-0.3%	8.5%
Fertilisers	79.0	79.2	82.5	86.8	90.3	94.2	95.1	96.9	100.2	104.3¹	120.8¹	123.2¹	147.7	19.9%	86.9%
Straight Fertilisers	74.2	74.2	78.2	84.6	89.5	94.0	95.1	97.0	100.0	102.7	122.7	127.0	159.8	25.8%	115.3%
Compound Fertilisers	80.2	80.4	83.5	86.9	89.8	93.5	94.5	96.2	100.0	104.7	120.1	121.5	142.7	17.5%	78.0%
PK Fertilisers	88.8	88.8	90.0	92.4	94.0	95.1	96.9	97.5	104.1	108.1¹	120.5	124.8	137.2	9.9%	54.5%
NPK Fertilisers	79.9	80.2	83.4	86.7	89.6	93.5	94.5	96.2	99.9	104.6	120.1	121.4	142.8	17.7%	78.6%
Other Fertilisers	105.7	105.7	105.7	105.7	105.7	105.7	105.7	105.7	105.7	114.3¹	114.3¹	114.3¹	114.3	0.0%	8.1%
Plant Protection Products	104.1	104.1	104.1	104.4	104.8	105.1	105.1	105.3	105.3	105.3	105.3	105.3	105.3	0.0%	1.1%
Veterinary Expenses	109.0	110.3	110.3	110.3	110.3	110.3	110.3	110.3	110.3	110.3	110.3	110.3	110.3	0.0%	1.2%
Feeding Stuffs	110.8	112.3	113.7	114.1	115.7	117.3	119.3	120.2	120.3	122.4	124.1	126.1	128.4	1.8%	15.9%
Straight Feeding Stuffs	117.7	120.6	123.3	122.1	123.0	124.6	126.5	127.0	127.4	129.9	133.3	138.2	141.9	2.7%	20.6%
Compound Feeding Stuffs	110.4	111.8	113.2	113.7	115.3	116.9	118.9	119.8	119.9	122.0	123.6	125.5	127.8	1.8%	15.7%
Feeding Stuffs for Calves	112.5	113.7	114.4	115.5	116.3	117.7	117.5	120.7	120.8	122.7	124.4	126.1	127.2	0.9%	13.1%
Feeding Stuffs for Cattle excl. Calves	110.1	111.9	113.1	114.5	116.2	117.9	118.9	119.9	120.0	122.8	124.8	126.7	130.0	2.6%	18.1%
Feeding Stuffs for Pigs	115.7	116.9	119.8	116.4	118.7	120.1	125.6	126.6	126.6	129.2	130.5	134.6	136.0	1.1%	17.6%
Feeding Stuffs for Poultry	105.8	106.2	106.5	107.9	108.9	110.9	113.0	113.0	113.1	112.5	112.9	112.9	113.2	0.3%	7.0%
Other Compound Feeding Stuffs	108.7	110.3	112.0	113.3	114.7	116.1	116.9	117.8	117.8	121.0	123.3	124.3	127.1	2.3%	17.0%
Maintenance of Materials and Buildings	105.8	105.7	106.5	106.6	106.6	106.7	107.1	107.1	107.6	107.9	107.9	108.7	108.8	0.1%	2.8%
Other Goods and Services	105.1	105.5	105.5	105.7	106.2	106.0	106.5	106.4	106.2	106.2	106.8	107.4	107.6	0.2%	2.4%

                                                                                                                           

• Range of supports / options available – the earlier you engage the more options are available
  • Farm Input Suppliers: Understand existing stocks secured at high prices but essential any reductions are quickly passed on to farmers 
  • Finance Providers: Need to take flexible & understanding approach, and ensure swift turnaround in provision of low-cost working capital
  • Commission: do all within their remit to support, including the removal anti-dumping duties
  • Government: Be proactive in the provision of innovative support packages and quickly introduce the required Regulation to establish Office of Food Ombudsman to better ensure Retailer Governance that gives farmers get their fair share.  

Meeting held with R&H Hall 16th Feb 2022:

• Liquidity/Working capital concerns from all perspectives
• Persistence of high prices remarkable (8wks vs 2 wks in 2012). Maize tended to be anchor crop with all others prices around it. Decimated last year; limited stocks; and strong demand. New crop dry wheat for autumn 22 currently €260/t and good value compared to maize as it stands 
• Freight costs +€25/t (c.€50/t overall) and really at mercy of shippers whether they land at all (empty cargo Ireland vs. refill from France to destination)
• Lot of factors of influence – energy crisis (fund investment; diversion of crop use); geopolitical (Ukraine/Russia); weather (SA drought etc). Inflationary effects itself is a concern – future recession and reduced demand
• Unlikely any shift in prices until Q3 and return of US harvest (unless significant event changes course of direction/sentiment). Given soya at €500/t levels, could even be some further uplift from compounders before trending downward

Recent CSO figures demonstrate huge financial challenge being faced by farmers in 2022 as input costs soar and are wiping out any marginal increases in output prices being received.    

• Fertiliser prices rose almost 25% in December alone compared to November, and were up 86.9% on December 2020 levels. Electricity prices were up over 22%; fuel was up almost 40%; and feed up 15.9%

Submission & letter to Minister Pascal Donoghue re Finance Bill and proposed Zoned Residential Land Tax (3% market value)

• Meeting held with Dept of Finance and Revenue. Declan McEvoy (IFAC) on call also
• Housing for All – Dept of Housing driven. Contrary to Sunday Independent article
• Local Authority pressure – follow-up meeting to co-ordinate
• IFJ Land Market Report article drafted re ZRLT 

Meeting with SBCI – 19/01/22

• Good uptake of Credit Guarantee Scheme among farmers generally (extended to end H1 2022) and also re newly launched Brexit Impact Loan scheme.  
• Discussion/feedback re propositions focused on term offered being restrictive for larger type assets; difficulties re eligibility code being deemed as credit approval – member feedback why needed at all given Gov Guarantee 
• Review completed end 2021– two new propositions likely through 2022. Emphasised need for FGLS replacement.  
• Updated ongoing financial challenges currently experienced (particularly pig & poultry sector). Asked for whatever leniency/priority could be afforded to ensure swift provision of low-cost working capital to ease on-farm pressures

Meeting with AIB – 20/01/22

• AIB committed to Agri sector; have range of supports available to supports farmers; understand cyclicity of Agri sector and have positive track record supporting farmers in the past. 
• Re cashflow supports for pig farmers / all farmers – no one solution; case-by-case. Range available and beneficial if farmer came with some homework done on amount of additional working capital required rather than having to come in again in 5/6mths it would be better to have it all sorted in one application now. Early engagement is key. Options include Farmer Credit Line product (attractive 3.5% variable loan that works alongside current account); retrospectively financing cap ex / increased breeding stock from cashflow, terming it out over 7-10/15yrs depending on nature of investment.  
• Have started seeing some uplift in the last 3 or 4 weeks but it hadn’t been as high as expected. Agri Team proactive engagement with AIB Pig farming customers. 

Cultivate Credit Union Loans

• Available from 31^st Jan 2022 across 120 outlets  
• Unsecured loans of up to €50,000
• 6.5% variable interest rate

Ulster Bank:

• Little by way of specifics – active with Competition Authority. Outcome will dictate timelines / transition.
• Completion is expected to occur in phases between Q4 2022 and Q1 2023, although the majority of loans are expected to transfer in Q4 2022.    
• Continue to support existing customers as normal
• If customers do nothing, they will transfer seamlessly to AIB / PTSB (depending on profile) and retain all existing UB rates, arrangements etc.
• If customer decides to move to other finance provider themselves, they will incur costs of moving (releasing security; legal charges etc) and also have to negotiate / re-negotiate existing rates etc themselves. 
• Advised very limited leakage of Ulster Bank farming customers to other financial providers to date. 
• Relatively small number of Ulster Bank farming customers will move to AIB. Given more commercial type farm operations all will have Relationship Managers who will engage and manage the transition. 
• Bulk of Ulster Bank farming customers will be moving to PTSB. Events here somewhat further back. Likely transfers end 2022/early 2023.    

IFA Debt Support Service

• The DDS continues to work for family farms that have financial difficulties. Unfortunately, many contacts made through the IFA DSS line are at the final stages of receivership and in many cases are gone beyond the possibility of restructuring or refinancing. Please urge IFA members to act early with their lenders if they experiencing financial difficulties and to contact the IFA debt support service as soon as they foresee issues arising. Progress on individual cases is extremely difficult once legal proceedings have started or a receiver has been appointed. 

Irish Banking Culture Board (IBCB) 

• Established April 2019, IBCB is an independent industry initiative, working with a wide range of stakeholders, to influence culture and behavioural change within Banks to try build trustworthiness and regain public trust. IFA have representation on IBCB Board and together with FB/IFA IT representatives are supporting design and implementation of forthcoming research specifically involving farmers to greater ensure their views/perspectives are incorporated into the initiative.