'Dismay' as broiler poultry farmers cut from VAT flat-rate scheme
The Irish Farmers' Association (IFA) Poultry Committee chair Nigel Sweetnam has hit out at a government decision to exclude broiler poultry farmers from the VAT Flat-Rate Addition (FRA) scheme.
The scheme compensates farmers who are not VAT registered for the VAT incurred by them on input costs used in the course of their farming activities.
Minister for Finance Paschal Donohoe confirmed the move today (Wednesday, June 18) based on advice provided by the Revenue Commissioners.
The minister's decision means that from September 1 next, broiler poultry farmers can no longer apply the 5.1% VAT addition to their broiler chicken sales.
“This is a massive blow to the broiler poultry sector which is already under massive pressure due to very significant increases in production costs some of which has been imposed on us by government policy,” Nigel Sweetnam said.
“The likely outcome of this is that some broiler poultry farmers may well exit the sector.
"It is also inevitable that the cost of chicken in supermarkets will also have to increase meaning consumers will also carry the cost of the minister’s decision,” he added.
Sweetnam said that the decision to exclude a single sector from the VAT Flat-Rate Addition scheme is unprecedented from an Irish perspective.
“IFA have worked tirelessly to find solutions and have had numerous engagements with the government on this, including current and former minister’s for agriculture and the minister for finance.
"We have, always, stressed the lack of fairness at precluding broiler poultry farmers from this scheme.
“We also put forward constructive alternative proposals for consideration which may have deterred the minister from taking this decision, but these were not acted on,” the IFA Poultry chair said.
Sweetnam noted that this decision has come at a time when farmers are already under immense financial pressure.
“Even before this announcement, farmers were actively seeking price increases. We’ve been engaging with our processors and retailers over the past few weeks and continue to do so to recover rising input costs.
"Poultry farmers cannot be expected to absorb a substantial cut in income imposed on them by the government.
“This is one of a multitude of costs imposed on the sector by the government in recent times. The fact is that 24% of the price we pay for our gas is carbon tax,” he added.
The IFA Poultry chair also noted the majority of broiler poultry farmers also have additional suckler, beef, dairy, or sheep enterprises.
He said this complexity will make compliance with the new VAT rules even more difficult as these farmers will now be asked to separate their farm enterprises from a VAT perspective.
“This decision adds another layer of red tape for already overburdened farmers. The government are asking producers to overhaul their farm structures and tax arrangements in the middle of the year without providing any clear guidance on how to do so," Sweetnam said.
The IFA said that it will continue to engage with the government on this issue
"This decision will have potentially serious implications for the supply of Irish chicken to supermarkets, particularly as it makes us uncompetitive compared with imported product.
“This unwise and shortsighted decision by the government cannot be at the expense of poultry broiler farmers’ incomes. The reality is this will have to be passed through the price of chicken on the supermarket shelf,” Sweetnam added.
