FCI has been informed that green diesel (marked gas oil) will be liable for the €6/tonne carbon tax increase from May 2020.
This is expected to add a minimum of €0.02/litre to agricultural/green diesel prices from May 2020.
It has written to the Minister for Finance and Public Expenditure, Paschal Donohoe, TD, and the Minister for Agriculture, Michael Creed TD, seeking clarity following the “considerable confusion on the issue of carbon tax on green diesel, wholly created solely by the comments of the Minister for Agriculture”.
FCI is now requesting that agricultural/farm & forestry contractors, who are Revenue Commissioners registered as farm/agricultural & forestry contractors, should be allowed a similar annual carbon tax deduction/rebate as that available to farmers, to be provided at fuel oil supplier source, with immediate effect.
“Our members can no longer continue to absorb these proposed additional fuel cost, and many are now considering their future in this vital service supply sector for Ireland’s farming and food industry,” said Richard White, national chairman of the Association of Farm & Forestry Contractors in Ireland (FCI).
“The timing of the introduction of the carbon tax on green diesel is also a major concern for farm contractors,” he added.
“It shows a total lack of understanding of the basic nature of farm production in Ireland.”
He noted that the Irish national grass silage harvesting campaign begins each year in the month of May, and that will coincide with when this new carbon tax increase will be introduced.
214m litres of green diesel
FCI figures show that the grass silage harvest accounts for consumption of upwards of 214 million litres of green diesel annually; this amount accounts for close to 61% of the total annual fuel consumption by farm contractors in Ireland and begins in May each year.
“This will be the month when you propose to enforce this penal stealth carbon tax on Irish farming. Your timing could not be less appropriate,” the FCI national chairman told the Minister for Finance.
“Irish Farm Contractors do not have the option of using alternative fuels. Hybrid or LPG as alternative fuel options are not currently available to power modern high-performance agricultural machines in Farm Contractor fleets in Ireland or across the world.”
“At FCI, we are also being informed that farm contractors will continue to remain excluded from the carbon tax rebate system, which is open solely to farmers,” Richard White told the Minister for Finance.
“This is, despite the fact that our members carry out 90% of the farm mechanisation work on Irish farms consuming close to 350 million litres of green diesel annually valued at €262 million,” White said.
“Irish farm contractors are now so outraged by this further increase in fuel costs, coupled with the ongoing inequity of not being allowed to avail of a carbon tax rebate, that they will be forced to increase all contractor charges to Irish farmers for 2020 by 5%,” he added.
The FCI said that the imposition of the proposed €6/tonne carbon tax on green diesel will result in a 2.6% increased fuel cost to farm contractors plus the cost associated with the “lack of opportunity” to avail of the carbon tax rebate.
Given that the annual turnover in the Irish Farm Contractor sector is in the region of €700 million, (Source: Teagasc Farm Management Survey - Average Spend on Contractor Services per Farm €4,585 over 137,000 farms), this 5% increase in Contractor Charges for 2020 will result in an additional cost to Irish farming of €35 million at a time of tightening margins in primary agriculture, according to FCI.
“This is a further €35 million of direct taxation (a stealth carbon tax) on Irish farming.”
90% of farmers
“Irish farmers need to be aware of this new €35 million stealth tax being imposed by this Government on Irish agriculture, is directly impacting on 90% of all Irish farmers, once again using the farm contractor sector as their unpaid tax collectors,” he added.
Richard White said that farm contractors from across the country are so incensed by this new carbon tax taxation burden, that they are strongly contemplating going “Dutch” on the issue to highlight the inequities for them of the current carbon tax rebate system.
“Our role as the primary source for the provision of mechanisation services on 90% of Irish farms needs to be recognised in order to amend the huge competitive inequality in terms of true diesel fuel costs. Irish Farm Contractors have the necessary machinery at their disposal to provide that obvious and visible recognition on our roads,” he said.
FCI research has shown that agricultural/farm & forestry contractors in Ireland employ close to 10,000 people operating machines on farms.
“Farm & forestry contactors use more than 350 million litres of diesel annually (62% of total agricultural energy consumption) in carrying out this farm work and operate more than 20,000 modern and fuel-efficient tractors; which is about one-third of the national fleet.”