Dáil Éireann Debate, Tuesday - 12 February 2013
598. Deputy Bernard J. Durkan asked the Minister for Agriculture, Food and the Marine the steps he proposes to take in conjunction with his EU colleagues to protect the concept of the viability of the family farm enterprise throughout Europe; and if he will make a statement on the matter. [7374/13]
View answerNext year, 2014, will be celebrated by the FAO as the International Year of Family Farming. The EU will prepare for this by facilitating discussion and organising a conference under the auspices of DG-Agri in Autumn 2013.
Family farming has always been the main form of farming in Ireland. The key difficulties that I have seen are the lack of succession planning and the lack of availability of farm land for new entrants. To meet these challenges new taxation measures were introduced in the last two budgets aimed at improving land mobility and farm consolidation, and encouraging transfers to younger, more progressive farmers. Stamp duty on agricultural land was reduced from 6% to 2%. In addition, half the rate (1%) is now applicable on transfers to close relatives until the end of 2014. This change substantially reduced the stamp duty payable on transfers of farm land by gift or by sale. The measure promotes inter-generational transfer, as the cost of lifetime transfer to transferees who do not qualify for the young trained farmer stamp duty relief has been reduced considerably.
Budget 2012 also restructured the retirement relief available on Capital Gains Tax in order to incentivise the earlier transfer of farm assets to the next generation, and to encourage the sale of land by those farmers with no successors.
Retirement relief was restructured in order to encourage farmers around the normal retirement age, who have successors, to transfer their land and holdings to young, innovative, ambitious, prospective farmers. This measure encourages an improvement in the age profile of farmers, and should ensure that farmland is put to more productive use.
It should be noted that there has been no change to the very important 90% agricultural relief on Capital Acquisitions Tax (CAT). This means that farms worth up to €2.5 million will continue to be fully exempt from CAT with regard to transfers to a child.
I am also happy that the new restructuring relief has been announced in the 2013 budget. This is the result of detailed work which analysed the reasons why the old consolidation relief was not working. I am confident that the new relief in relation to Capital Gains Taxes, once State Aid approval has been received, will be more effective, especially given that Stamp Duty rates have been reduced. Re-structuring is essential for us to meet the Food Harvest 2020 targets. We need to use land more productively and encourage more young farmers to make the best use of the land. A recent EU Commission study found that
‘younger[farm] managers tend to perform better than the EU average, with 46% more area and 57% more economic potential for 21% more labour force’ [[1] Commission Staff Working Paper, Impact Assessment, CAP towards 2020, Annex 1: Situation and prospects for EU agriculture and rural areas, p. 25. Brussels, 12/10/2011.1].
Ireland has a very low level of land sales, with most land staying within the same family for generations. Only 0.4% of land changes hand in any given year. Young farmers that want to expand need to be able to access land. According to the latest census of agriculture the average farm has 3.8 land parcels. This means that our farmers are wasting time and diesel driving between plots of land, increasing the stress and the risk of accidents. Young farmers will now have an opportunity to consolidate their holdings and increase efficiency.
I also believe that family farms are the places where young people can learn the required skills in partnership with parents and other family members. Indeed Irish farming greatly benefits from the pooling of skills and knowledge of all family members and in this regard I would strongly encourage greater participation by women in farm decision making and management. I am confident that providing an additional incentive to farm partnership formation will encourage farmers to consider more closely the benefits of farm partnerships to their farming business and in providing a better work-life balance.
Encouraging farm partnerships will also support the dairy herd expansion required over the coming years, enabling Irish farmers to avail of the opportunity presented by the abolition of EU milk quotas in March 2015.
