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Food inflation is ‘going to be a fact of life’ – farmers call time on era of cheap food

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ICMSA president Pat McCormack

ICMSA president Pat McCormack

ICMSA president Pat McCormack

The era of cheap food is over, and people waiting or expecting food prices to revert to their previous levels are “waiting in vain”, according to President of ICMSA, Pat McCormack.

Speaking at the National Economic Dialogue, McCormack said food inflation is "just going to be a fact of life" and consumers "are going to have to get used to paying the real costs – both economically and environmentally – of the food, they want to consume."

He said that much of the concerns being expressed around the surge in food prices were because consumers and corporate retailers had become used to simply passing their own financial preferences backwards onto the farmers and primary producers.

“The ‘cheap food’ era was ending anyway, but the invasion of Ukraine has massively accelerated that process. The corporate retailers have lost the ability to dictate backwards on volumes and margins and the move to sustainability in going to mean that consumers are going to have to get used to paying the real costs – both economically and environmentally – of the food they want to consume," he said.

It comes as the IFA President Tim Cullinan called for new financial supports to help preserve food supply, employment and economic activity in rural Ireland.

He said Government policy would have to reflect the changed circumstances over the last six months.

“Farmers are currently engulfed in an inputs price crisis, and they will need innovative financial supports to help preserve food supply, employment and economic activity in rural Ireland in the weeks and months ahead. While we acknowledge the pigs, tillage and fodder schemes, more will need to be done,”

He said Budget 2023 provides a real opportunity for this Government to demonstrate that they understand the real situation for Irish farmers on the ground and called on the Government to remove all unnecessary uncertainty and, at a minimum, extend all existing positive taxation measures/interventions to promote agricultural activity; asset transfer and balanced rural development for at least the next three years.

“Maximum co-financing under the CAP and securing maximum BAR funding for Irish farmers would help to combat the current input crisis, but also the significant cuts in the Basic payments that many will encounter in 2023 as the new CAP Programme begins,” he said.

He also proposed a temporary reduction in the VAT rate for select agri commodities; suspension of excise duty on agri-diesel & LPG for farm use to help reduce production costs at farm level.

VAT exemptions and accelerated capital allowances would further support increased investment and adoption of more environmentally friendly practices, he said, which would support climate change ambitions of carbon neutrality by 2050.

He also said that the Zoned Residential Land Tax, introduced in the Finance Bill 2022 and to be implemented from January 2024 must ensure that all productive farmland currently and previously used for food production purposes is exempted.

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