ICMSA warn against changing land-leasing tax breaks

Small-scale dairy farms risk being “fatally undermined” by moves to target land-leasing tax breaks towards tillage farmers, the Irish Creamery Milk Supplier Association (ICMSA) has claimed.

ICMSA president Pat McCormack said his phone had been inundated with calls from concerned farmers following reports of possible restrictions to land-leasing tax exemptions.

It is understood that the Department of Agriculture is considering amending the current tax breaks in place for landowners who lease their lands on a long-term basis in favour of rentals to tillage farmers.

Any proposals are likely to be brought forward as part of the Food Vision 2030 tillage group, which met for the first time last week.

“The reality is that - for many family dairy farmers - their business model is based on a requirement for rented/leased land, while debt repayments are based on certain cow numbers,” McCormack explained.

“Any changes to the land leasing exemption could fatally undermine these farmers, and we sincerely hope that Minister McConalogue recognises this fact and ensures that all farm sectors can continue to avail of the land-leasing tax exemption,” he said.

Cow banding under nitrates

“There’s no mystery around the lease cost increases in 2023; it is down to cow banding under nitrates.

"If we are serious about addressing land lease costs, then it is the banding proposal that needs to be amended - not the land-leasing tax exemption.

“It’s the banding that is driving the rise in leasing costs," he maintained, "it’s nothing to do with the [tax] exemptions."

Price increases for leased ground

Greater competition for land this year has resulted in the price of leased ground hitting €500/ac to €600/ac in some parts of the country.

Last week, it was revealed that the area of land under cereal crops will fall by around 18,000ha this year, due to ground being lost to dairy farmers and increased protein crop plantings.

Annual tax reliefs of €18,000 are available on five-year land leases. This figure increases to €22,500 for leases of up to seven years, and goes to €30,000 for 10-year leases.

A tax relief of €40,000 is available where land is leased for 15 years or more.