Farm businesses must be economically viable if reforms aimed at improving land transfer and generational succession are to work, a leading farm consultant has claimed.
Ciarán Dolan of Agribusiness Consultants said farms must be profitable and offer a good standard of living for young people to take them on and commit to the industry.
There is also an urgent need to rebalance tax breaks and supports in favour of the individual who is renting and/or taking over the family farm, he maintained.
In addition, Dolan called for more research into the “economic price” that could be justified for land purchases and land rental.
“Regardless of the constitutional and legal framework for succession, and regardless of what format of transfer of farm management and land access is available, the succession is doomed to failure if the farm business is not economically viable,” Dolan told the Irish Farmers Journal.
“My direct experience, particularly in the dairy sector – with high land leasing and farm input costs, and reduced milk price – young, recently-established farmers are struggling to make a viable income,” the former general secretary of the ICMSA maintained.
“Comparatively, we have high land prices and land rental prices. We have the fourth highest average land prices and rental costs in the EU in 2022,” he pointed out.
Despite the high prices, the amount of land coming on the market each year continues to contract, Dolan said.
He called for greater targeting of the tax incentives relating to succession towards young farmers taking over the home farm.
“There is a need for a significant tax advantage exclusively for individuals taking over the family farm and/or long-term renting of agricultural land. There is a strong case for rebalancing the tax breaks and supports in favour of the individual who is renting and/or taking over the family farm,” the consultant said.
“We now have an array of useful initiatives for farm succession, including registered farm partnership and succession farm partnerships. While there is an income tax credit for all members of a farm succession partnership, it is relatively small,” he explained. “The Department of Agriculture should critically examine the various schemes and supports, to determine what improvements and adjustments can and should be made to substantially align them in favour of the young, establishing farmer, particularly for more favourable access to schemes and tax exemptions and credits,” Dolan maintained.
He also called for greater levels of research into the economic price farmers could afford to pay for land purchases and land rentals.
“While we have copious data on land market prices in Ireland, we have virtually no analysis on the economic price, as distinct from the market price, for land purchase and land rental,” he claimed.
“By economic value or price of farmland, I mean what is the price or rent that the farm enterprise can bear and give a viable income to the farmer,” Dolan said.
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