The Government is currently preparing its budget for 2017. ICOS has prepared a pre-budget submission for the Minister of Finance, Michael Noonan and the Minister of Agriculture, Michael Creed. ICOS has extensively engaged with Government Departments and Stakeholders over the previous 12 months on the issue of price volatility.

As a result, ICOS is calling on the Government to support the development and introduction of an income stability tool. The proposed measure would allow farmers, through their co-op, to voluntarily defer up to 5% of their milk receipts in any given year. The money would be retained in their names in a recognised, interest bearing fund, which would be managed by their co-op, as a loan-stock-type instrument. The money can be drawn down at any time, and subject to income tax at the time of draw down, but in any case, the funds must be drawn down within 5 years.

ICOS is of the view that the proposed Income Stability Tool can be implemented as a co-op structured volatility measure. The proposed measure provides a template for the development of a voluntary “cap and collar” milk pricing arrangements, between a farmer and his co-op/milk purchaser. The deferral of a modest amount of 5% is to ensure compliance with EU State Aid Rules, and in theory the scheme can be made available to all farming sectors.

The fundamental advantage that the ICOS proposal offers is income stability, and our proposal can operate alongside the current or an improved tax averaging system.

The ICOS Pre-Budget Submission can be viewed at the following link: ICOS Pre-Budget Submission 2017

By Eamonn Farrell

Agri-Food Policy Executive