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Thursday 23 November 2017

Soaring farm buildings costs sees value of grants diminished

Much of the growth in farm construction this year can be attributed to new farm building grant schemes announced by the Department of Agriculture.
Much of the growth in farm construction this year can be attributed to new farm building grant schemes announced by the Department of Agriculture.
Ciaran Moran

Ciaran Moran

Minister for Agriculture Michael Creed has been called on to increase reference costings for grant-aided work under the TAMS on-farm investment scheme.

IFA Rural Development Chairman Joe Brady raised this matter with Minister Creed last month and at the most recent Charter of Farmers’ Rights meeting.

He made the case that the adjustment in costings is necessary given the recent increases in building materials and other costs such as labour and fittings.

Brady said if costings are not regularly updated the value of grant aid due to the farmer is reduced.

The percentage of grant aid is based on the standard or reference cost payable at either the basic 40% grant rate or in the case of young farmers at 60%.

He said it is important that the grant paid broadly relates to the actual costs incurred.

The IFA Rural Development Chairman said the Department of Agriculture must take account of all the data available to them that clearly show building costs have increased over the past 12 months. 

The most recent CSO Wholesale Price Index for Building and Construction materials officially confirms that price for all materials increased by 3.4% in June 2017 compared to June of 2016. For example ready mixed mortar and concrete has increased by 2.4%; structural steel by 7.5%; sand and gravel by 6.9%; cement by 4.4%, stone/sand/gravel by 6.9%, and labour costs increased by 2.5%*.

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In the case of own labour, where a farmer carries out some of the work, it is currently costed at €12.50/hr. This needs to increase to €15/hr. This would be in line since it was last reviewed in 2010.

There is evidence that the costs being quoted by building contractors is increasing to justify costings increases.

Brady said that costings to determine grant aid apply at the time of Department approval for grant aid. The impact of a costings increase would mean that a farmer gets a more accurate rate of grant relative to investment costs incurred, excluding VAT.

‘It is not acceptable that a situation is now arising whereby farmers were promised either a grant of 60% or a grant of 40% with the Department basing their costings on outdated 2015 and earlier figures” he concluded.


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