IFA national dairy committee chairman Sean O’Leary said on Monday that, with the prospects of government formation now more certain, a new Minister for Agriculture will have to hit the ground running and engage immediately with the challenging income and cash flow situation on farms.

O’Leary called on the new Minister to prioritise the fullest use of the EU Commission’s temporary State Aid allowance to support farmers.

“2016 Superlevy repayments will begin to be deducted from next month’s milk cheque, and for many farmers, this will be an intolerable extra stress on cash flow in a year in which they are already struggling with low milk prices, bad weather and high feed bills.

“The new state aid allowance, agreed by the EU Agriculture Council in March, was part of a package of emergency measures to support dairy, pig farmers and fruit and vegetable growers, and provided that member states could aid them to the tune of €15,000 per farmer, per annum over three years,” he said.

Pressure

According to O'Leary, this concession to the main rules on state aids was specifically given in recognition of the massive income and cash flow pressure on farmers in these sectors.

"We believe it is the duty of the new Minister to ensure that Irish farmers benefit fully from this option without delay.

“As soon as the Minister takes office, he or she must immediately set up a scheme to facilitate a one-year repayment holiday on superlevy deductions, and for those who have no such liability, to gain access to interest-free cash flow loans,” he said.

Volatility

O’Leary explained that, as the extent of the state aid allowance relates only to the cost to the state of providing such supports - in this case the cost of financing the repayment holiday or loans - the allowance could go a long way and be used for a number of purposes.

“We believe the same allowance could be used by the new government to introduce the volatility-friendly tax proposals IFA has developed, which would allow farmers to hold back funds in good years, to be returned to their taxable income in poorer years or when investment is required. This would help farmers considerably in managing their incomes through future episodes of extreme volatility, and would spare them many of the stresses we are seeing this year,” he concluded.