Saturday, November 20, 2010

Tax yield from Irish agriculture collapses, as EU keep the sector on life support

EU Logo

EU subsidies are the life support mechanism of Irish agriculture.

The tax yield from Irish agriculture collapsed by 90% between 2007 and 2009 – from €817 million to €78 million. This compares to an overall contraction in tax revenue of 26%.

Last year Ireland contributed €1.5 billion to the EU Budget and received €1.8 million from the EU. The Irish contribution is determined by a formula and rules based on certain customs duties, a proportion of VAT and a proportion of Gross National Income.

Ireland’s receipts from and payments to the EU Budget from 2005 to 2009 are as follows:


Annual Receipts - €BN

Annual Payments - €BN

Surplus to IE - €BN





















The lion’s share (€1.64 billion) of the money received goes to agriculture and rural development, the largest component being the €1.3 billion for the Single Farm Payment while the balance (€161.8 million) is paid from Structural Funds.

Total public expenditure on Irish agriculture in 2009 was €3.38 billion – for an economic sector whose output is €4.76 billion. The gross added value of Irish agriculture at basic prices was €983 million.

Employment in agriculture has dropped from 114,800 in June 2008 to 84,900 last September. The number of farms in the country has dropped from 128,200 in 2007 to under 115,000 units. The demographic profile of agriculture is similar to the demographic profile of Irish politics – 51% of the farmers are over 55 years of age and only 7% are under 35 years of age.

The land area of Ireland is 6.9 million hectares of which 4.2 million hectares is used for agriculture and a further 737,000 hectares is used for forestry. Over 80% of farm land is deployed for pasture, hay and silage production; 11% is dedicated to rough grazing and the balance, 10% to crop production.

The 2010 budget of the Department of Agriculture, Fisheries and Food to keep this show on the farm amounts to €1.37 billion and it takes 5,232 employees to sustain it a 4% drop in employee numbers since 2009. Their travel and subsistence allowances alone are €9.7 million. The associated postal and telephone charges exceed €9.7 million but they spend €126,000 on value-for-money reviews. That, by the way, is a 59% reduction on the €310,000 spent on value-for-money reviews in 2009. Research and training for the 84,900 remaining employees is €35.7 million.

How will the social partners (i.e. the IMF and ECB) react to this?

1 comment:

  1. Could the drop in tax receipts have anything to do with a decrease in land prices and transactions. If so does this show that the only source of money in Irish farming outside of the EU is in selling land?