FCI present pre budget submission for 2025

The Association of Farm Contractors in Ireland (FCI), the national association

representing Agricultural/Farm & Forestry Contractors in Ireland, has sent the

Minister for Finance its 2025 Pre-Budget Submission. Against the background of

the recent Summer Economic Statement, where Government has pledged to make

€8.3 billion in additional funding available in Budget 2025, we are requesting that

the proposed €6.9bn for increased expenditure will include the restoration of the Department of Agriculture, Food and the Marine's (DAFM) budget allocation to allow for support for the Agricultural and Forestry Contractor sector in Ireland.

The Agricultural and Forestry Contractor sector is intrinsically linked to the farming, food and timber production sectors in Ireland. Our sector, which employs up to 20,000 people in rural Ireland, between full-time and part-time skilled machine operators, is responsible for providing mechanisation services for 4.5 million hectares of agricultural land and over 800,000 hectares of forestry, producing 9% of Ireland's annual exports.

Our members provide machinery services on an average of three Irish farms per day, so the synergy between farming and agricultural contracting must be maintained and enhanced.

Our Agricultural Contractor sector now accounts for farmer spending on mechanisation services valued at over €990 million (see Table 1 Teagasc National Survey 2023). This reflects an increase in the value of the services provided by FCI members, of 76% between 2015 and 2023.

This has happened while the relative costs of the services provided by FCI members to Irish farming have remained stable at 14.61% of all farms direct costs, coinciding with a period of huge machinery inflation, labour and fuel costs increases for Irish agricultural contractors.

The latest Teagasc National Survey shows that in 2023 agricultural contracting expenditure increased by 6 percent on average to €17,391 on Irish dairy farms. On dry-stock farms, the increase was 12 percent to €4,447, while on tillage farms expenditure on agricultural contractor services at €13,958 which was up 6 percent year-on-year.

The data in Table 1 shows that contractor charges on Irish farms account for just 14.61% of total direct costs, while machinery overhead costs are now running at 37.04% of total overhead costs.

When we contrast that with what has happened on farms, driven by TAMS grant aid for which agricultural contractors are excluded, we see that machinery operating and depreciation costs have risen by 58% between 2015 and 2023 as a percentage of total overhead costs.

This clearly shows why Irish agriculture requires the cost-effective input of the Agricultural Contractor sector where the use of the latest technology can deliver economies of scale across all farms.

The Agricultural and Forestry Contractor sector must now be adequately financed. The proposals in this submission on spending and taxation reform will support Agricultural and Forestry Contractors to continue to deliver cost-effective and sustainable mechanisation services on Irish farms and in Irish forests.

These proposals require investment supports, supports for training and employment under a new Targeted Agricultural Contractor Modernisation Scheme (TACMS). They also require supports for the transfer of the Agricultural and Forestry Contracting businesses to a new generation of entrepreneurs who will continue an ethos of farming support by constant re-investment in technology and skills to ensure that Irish farmers can retain a more significant share of their hard-earned returns from food production.

FCI proposals include the following:

• Funding to the Department of Agriculture, Food and the Marine for the establishment of a National Register of Agricultural and Forestry Contractors, in association with the Association of Farm & Forestry Contractors in Ireland (FCI).

• Establishing a committee under the aegis of the Department of Agriculture, Food and the Marine to examine the supports needed to sustain the Agricultural and Forestry Contractor sector and the training needs of the sector.

• Allow for parity in financial grant support for non-farming agricultural contractors for the purchase of machinery under a nationally supported equivalent of the Targeted Agricultural Contractor Modernisation Scheme (TACMS).

• Grants of up to 65% of the investment costs in machinery and equipment to increase the carbon storage function of soils and biodiversity in agricultural landscapes and agricultural contractors to be included.

• Ensure that the availability of reduced-cost finance, such as SBCI lending, is continued. It must be made accessible to all Agricultural and Forestry Contractors to enable them to make their businesses more sustainable from both an environmental and/or a financial perspective.

• Added resources be required to support An Post/Credit Unions etc in their efforts to facilitate more locally based community banking for SME’s such as Agricultural and Forestry Contractors.

• As the accountability requirements of the financial sector increase, funding opportunities for Agricultural and Forestry Contractors must be secured.

• Temporary reduction in the VAT rate for select agricultural contractor services currently at standard rate or 13.5% rate.

• VAT is currently charged on Carbon Tax, as it is double taxation it must be removed.

• The reduced excise duty level on agri-diesel must be maintained. There is currently no viable alternative for its use on Irish farms, and its removal would see an increase in the costs of over €0.2 billion to the Agricultural and Forestry Contractor sector that cannot be passed on to farming.

• Extend section 664A of the Taxes Consolidation Act 1997 to include Agricultural and Forestry Contractors to mitigate the increased cost of production.

• Suspend LPG/carbon tax for Agricultural and Forestry Contractors and/or defer forecast increases per Finance Act 2020 to periods outside peak activity in the agriculture and forestry sector.

• Support the use of Hydrotreated Vegetable Oil (HVO) as a replacement drop-in fuel for Agricultural and Forestry Contractor machines with a Marked version of HVO.

• Exempt the marked version of Hydrotreated Vegetable Oil (HVO) from Carbon Tax payment in the Agricultural and Forestry Contractor and farming sector as a replacement drop-in fuel, as it has zero Carbon content.

• FCI supports the increase the Category A threshold (parent and child) from the current rate of €335,000 to €500,000, as announced in the Programme for Government Our Shared Future.

• The Favourite Nephew or Niece Relief should be extended to a Favourite Successor Relief, allowing the Agricultural and Forestry Contracting businesses to be gifted to someone in a better position to continue to provide the service to farming due to changing demographics and family structures. The movement from Category B/C threshold to Category A would allow for less tax liability and promote mobility of the business to a new generation.

• No age limit requirements should be imposed on Agricultural and Forestry Contractor seeking relief when transferring farm machinery assets between generations as part of a business transfer.

• Accelerated capital allowances for all machinery investments in Agricultural and Forestry Contracting to improve on-farm efficiency and/or support transition to net zero emissions.

• Accelerated Capital Allowance [ACA] Scheme farm safety equipment to extended to December 2026 and to include Agricultural and Forestry Contractors with a 50% write off over two years.

• The inclusion of agricultural tyres in the EPR scheme is postponed until 1st January 2026 and that funding is allocated in the budget to organise a series of national bring centres to deal with legacy issues in Agricultural and Forestry Contractor businesses before agricultural tyres are included in the scheme.

• Registered Agricultural Contractors, who provide grass-based or whole-crop feedstock supplies to Anaerobic Digester plants should be eligible to receive specific Contractor AD Scheme grant aid for all harvesting and transport equipment purchased in developing bio-economy supply chains, and this equipment should qualify for accelerated capital allowances.

• Registered Agricultural Contractors should be eligible to receive grant aid for all farm equipment which contributes to increased emission efficiency, such as LESS equipment or capital investment in developing bio-economy supply chains, and this equipment should qualify for accelerated capital allowances.

• Reduced excise duty on Hydrated vegetable oil fuel (HVO).

• DAFM Forestry Section be suitably funded to allow for faster issuing of licences for planting, road construction and tree felling.

• Farm forestry is treated in a similar manner in relation to the Consanguinity and Young Trained Farmers Stamp Duty Reliefs as it is with CAT Agricultural Relief, where it is defined as agricultural land.

• Where a non-farmer Forestry Contractor buys forestry, the reduced rate of stamp duty should apply to the full value of land and timber. This is required to ensure forestry remains primarily in the hands of genuine farmers and forestry contractors.

• The Department of Agriculture, Food and the Marine's (DAFM) is provided with funding to carry out an independent study into the Agricultural and Forestry Contractor sector in Ireland in association with FCI.

• The Department of Agriculture, Food and the Marine's (DAFM) is provided with funding

to work with FCI in the establishment of a National Register of Agricultural and Forestry Contractors in Ireland.

• Provide a Training Support Grant through the Department of Further and Higher Education, Research, Innovation and Science of Ireland to the Agricultural and Forestry Contractor sector to facilitate upskilling and training of new entrants to optimise machine efficiency and ensure greater safety on farms and in forests.

• Provide a Research Grant to the Association of Farm and Forestry Contractors, through the Department of Agriculture, Food, and the Marine to carry out an independent analysis of the value-added contribution of the Agricultural and Forestry Contractor sector to the Irish farming and forest economies.

• Seasonal Work Permit Scheme for all non-EU workers, to work with Agricultural and Forestry Contractors, similar to all other EU member states. This will allow skilled machine operators from New Zealand, Australia and South Africa to work seasonally in Ireland with an understanding of similar machines and farming systems. Already, many young Irish people avail of similar schemes in New Zealand.

• General Employment Permits – FCI is proposing no increase in the current €30k annual salary requirement until a full review of salary targets is complete.

• Comprehensive support programme for Agricultural and Forestry Contractors who are struggling with the rising cost of employment. Increasing the employer PRSI threshold above the minimum wage annually and the introducing of a temporary PRSI credit for lower-earning workers.

• Employers pay 8.8% Class A employer PRSI on weekly earnings up to €441- needs to increase to €500/week.

• Introduce a Cost of Business support scheme for the Agricultural and Forestry Contractors employment sectors to mitigate against the increased costs of business imposed by the Government, such as minimum wage, sick pay, and pension auto-enrolment.

• Develop a Sectoral Employment Order (SEO) covering rates of pay, sick pay, and pensions in the Agricultural and Forestry Contractor sector to be signed into legislation and to be legally binding throughout the country.

• The Total Contribution Approach (TCA) for calculating Contributory State Pension payments should be implemented in line with National Pension Framework (2008) agreement.

• Those paid Class K contributions when employed or assisting on the family Agricultural and Forestry Contracting business are not disadvantaged in calculating pension payments.

• A review of the means-tested calculation for the non-contributory old age pension is required. Attributing notional income to assets where in reality, no such income has materialised is not conducive to the primary objective of the non-contributory pension of ensuring that individuals over the age of 66 have a minimum amount of cash at their disposal every week.

• The new Workplace Pension Scheme must be extended to include Agricultural and Forestry Contractors and other self-employed people. With every €3 saved by an Agricultural and Forestry Contractor, a further €4 will be credited to their pension savings account by the Government.

• The introduction of a retirement/pension scheme to encourage Agricultural and Forestry Contractors to transfer businesses to a younger generation.

• For Agricultural and Forestry Contractors are self-employed and are not entitled to social

welfare benefits, an emergency fund should be available for Agricultural and Forestry Contractors for sudden death or serious illness in the business for the replacement of labour.