Farm Ireland

Friday 14 December 2018

Opinion: Is the end is sight for the family farm as we know it?

Many people in rural Ireland hold the fear of the family farm being lost
Many people in rural Ireland hold the fear of the family farm being lost
Jim O'Brien

Jim O'Brien

It’s a New Year. I’m equally excited and despairing of resolutions — excited by the prospect of making them and despairing of my capacity to implement them with any conviction. I suppose I like the notion of change rather than its reality.

Thankfully, it takes more than myself to transform my life, it takes a confluence of happenings — both planned and accidental — to bring about change. As former British Prime Minister Harold McMillan famously said, “Events, dear boy, events”.

I don’t often wear my farming property hat when writing this column, but I have just completed the end of year review of happenings in the auction rooms of the country. It is obvious that there are major changes afoot in farming, changes that centre round the ownership and the use of land.

Since the Land War, the Land Acts and the foundation of the Land Commission, the family farm has been the bedrock of Irish agriculture. In the 148 years since the first of these Land Acts was passed ownership of the family farm has become embedded as a core value in rural Ireland, it is a value that has fermented over the decades in a cocktail of tradition, hard work, passion and sometimes blood.

But all is changing as events and developments conspire to alter some of the fundamentals of Irish farming. The increase in size of what is regarded as a viable farming unit has meant that any holding less than 100ac is under pressure when it comes to providing an adequate living for a modern family. It is not too long ago when holdings of half this size were capable of rearing and educating relatively large families.

I remember working with a company in the west of Ireland in the mid-1990s. The organisation was expanding and hiring local graduates; quite a few of these graduates came from farms of between 30ac and 35ac where farming was the only source of income. Such holdings would now be incapable of providing a single person with an adequate livelihood. 

Today, many of these farms are idle or are leased on an ad-hoc basis to neighbours and relatives. Most will eventually be sold in executor sales.

During my days in rural development I worked with a man who was deeply concerned about the absence of a land policy on the part of the State. He worried that the country would become a patchwork of wild and abandoned farmsteads as family ownership rather than land use continued to be the core value.

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The pressure of scale has brought the issues of use and ownership to the fore as events rather than policy force the pace of change. That was until a highly significant government intervention in Budget 2015 (see panel below) transformed the landscape. The budgetary changes announced in October 2014 introduced a schedule of generous tax breaks for landowners who engage in long-term leasing arrangements with active farmers.

This intervention could yet find a place in the history books alongside the Land Acts of the late 19th and early 20th century. It created conditions that are breaking the link between land use and land ownership while sidelining the restrictive and ad-hoc nature of the conacre tradition. The impact of these tax incentives is now being felt in an era when young farmers have no difficulty farming without owning.

Speaking to the Farming Independent last week, auctioneer Joseph Coogan described the up-coming generation of young farmers as undaunted by change and prepared to farm on time-limited, leased land anywhere in the country. In contrast, previous generations were tied to the notion that land, in order to be farmed properly, had to be owned and maintained in the family for generations. 

The new dispensation has many benefits. Leasing is seen by young farmers as their route to viable farming, while landowners see it as a way to get the most out of land assets. It also means that these farmers have no need to borrow money to buy land but are free to invest in stock and production. They are no longer tied to any geographical area and can move to where the land is. Above all it gives farmers who are skilled and progressive, but landless, an opportunity to shine.

Am I too bold to think we are witnessing the beginning of the end of the family farm as a family-owned asset? We may be looking at the emergence of the mobile-farm family, happy to rent large tracts of land and farm them for 20 years before moving on and perhaps doing something completely different.

There are downsides in that this new reality may have a destabilising effect on rural communities. It could also result in land ownership falling into fewer hands and we could inadvertently find ourselves going full circle and back to the days of the absentee landlord.

This is an exciting time for Irish farming; some of the excitement could be done without, such as the fodder shortage, the tillage crisis and the prospect of Brexit. However, the break between land ownership and land use could be the Copernican bit that provides the industry with suppleness and a flexibility not only to face change but to embrace it and drive it.

The tax exemptions for leased land

The tax reforms in Budget 2015 introduced annual tax exemptions of between €18,000 and €40,000 for land leased for periods of five years and upwards. The income from land leased for five to seven years is tax-free up to a maximum of €18,000; the income from a lease of seven to 10 years is tax-free to a maximum of €22,500; while a lease of 10 to 15 years is tax-free to a maximum of €30,000. A lease of 15 years or more can bring in €40,000 before it is taxed. Conacre income continues to be subject to the normal tax regime.

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