The IFA Poultry Chair Nigel Sweetnam has outlined his dismay at the Government’s decision to exclude broiler poultry farmers from the VAT Flat-Rate Addition (FRA) scheme, meaning that from September 1st next, broiler poultry farmers can no longer apply the 5.1% VAT addition to their broiler chicken sales.
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“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 said.
The VAT FRA scheme was introduced to reduce the administrative burden and cost of VAT compliance for farmers and the state.
The scheme allows farmers to remain unregistered for VAT meaning that they pay VAT on all inputs where applicable and can apply the flat rate VAT addition on their sales.
The VAT addition rate is currently 5.1%. The decision to exclude a single sector 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.â€
“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.
Nigel Sweetnam also highlighted that this decision comes 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.â€
“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 also highlighted the complex nature of mixed family farming operations in Ireland, where the majority of broiler poultry farmers also have additional suckler, beef, dairy, or sheep enterprises.
Nigel Sweetnam 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.â€
“IFA will continue to engage with the Government on this. 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,†the IFA Poultry Chair said.
“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,†Nigel Sweetnam concluded. ■