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The opportunity to address milk price volatility in this year’s budget cannot be missed by the Government. The Minister for Agriculture, Michael Creed has indicated to his credit, that the budget to be announced on October 11th will include measures to help farm families cope with income volatility. However, a firm commitment in next week’s budget is required.

The ICOS pre-budget submission calls for the introduction of an income stability tool, whereby a farmer would be permitted through their co-op to voluntarily defer up to 5% of his income 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 drawn down, but in any case, the funds must be drawn down within 5 years.

This measure is effectively the ICOS “555” taxation proposal launched in February this year. As an organisation, we examined closely the various income deferral proposals advocated by farming and representative organisations, including ICOS but were consistently overlooked by the Government on EU state aid grounds. The deferral of a maximum of 5% is designed to ensure compliance with state aid rules under the de-minimis provision. While, a modest amount, we believe that this measure can deliver a significant benefit in terms of income stabilisation. Following the launch of the “555” initiative, ICOS has engaged intensively with all stakeholders, and the Department of Finance and Agriculture.

We believe that we have gained broad support from all stakeholders. Furthermore our proposal can complement other initiatives put forward to improve the income averaging system, which we fully support. We acknowledge that our proposal is not a silver bullet solution to income volatility, but together with a suite of measures such as fixed price schemes, this initiative by ICOS can provide dairy farmers with an additional tool to manage volatility.

By Eamonn Farrell

Agri Food Policy Executive