Farm Means - Assessment of Income from Farming


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MANUAL for Social Welfare Investigators on the assessment of means arising from beneficial occupation of land

CONTENTS

1. LAW
2. GENERAL POINTS
3. DETAILS OF FARM AS PER 1N 93.
4. THE SINGLE PAYMENT SCHEME
5. HEADAGE, AND QUOTAS
6. PIGS
7. FOWL & EGGS
8. HORSES
9. SIRES, BULLS, BOARS AND RAMS
10. CROPS
11. LAND AND GRAZING LET
12. OTHER RECEIPTS
13. COSTS AND ALLOWANCES
14. SCHEME OF EARLY RETIREMENT
15. SET ASIDE GRANTS
16. MILK CESSATION SCHEME
17. AFFORESTATION GRANTS AND FOREST PREMIUM SCHEMES
18. DISEASE ERADICATION
19. RECEIVER APPOINTED
20. RURAL ENVIRONMENT PROTECTION SCHEME (REPS)
21. SPECIAL AREAS OF CONSERVATION SCNEME (SACS)
22. RURAL DEVELOPMENT
23. NATIONAL SCHEME OF INSTALLATION AID FOR YOUNG FARMERS


1. LAW

The means of a claimant from the occupation of land are calculated in accordance with:

  • Rule (1) (3) of Part I (Unemployment Assistance and Pre-Retirement Allowance) or
  • Rule (1) (5) of Part II [Old Age (Non-Contributory), Blind, Widow's and Orphan's (Non-Contributory) Pensions, and Deserted Wife's, Prisoner's wife's, Lone Parent's and Carer's Allowances] or
  • Rule (1) (1) of Part IV of the Third Schedule of the Social Welfare (Consolidation) Act 1993, as amended, and Article 87 (2) of S.I. 417 of 1994 which stipulates in relation to Unemployment Assistance and Pre-Retirement Allowance that " the yearly value of any advantage mentioned in Rule 1 (3) of the Third Schedule shall be ascertained by deducting expenses necessarily incurred from the gross income".

Both Rules use similar wording that includes in the assessment of means "the yearly value of any advantage accruing to the person from - (a) the use or enjoyment of property (other than a domestic dwelling or a farm building owned and occupied, furniture and personal effects) which is personally used or enjoyed by the person, ... "

2. GENERAL POINTS

2.1

The method of farm assessment is the same for all the schemes, and is represented in practice by the yearly profits, i.e. the gross income from the farm, less all the expenses actually and necessarily incurred in earning that income.

Normally, details of farming transactions in the year preceding the investigation are obtained, and entered on form IN.93.

2.2

It is vitally important that the report on the form IN.93 should be accurate, clear, legible, concise and coherent, and that it contains all the necessary details on the basis of which the Deciding Officer makes her/his decision.

A client is entitled to a copy of the report of his/her case, and a copy of the completed form IN.93 issues together with the decision. Black ink or biro should therefore be used to ensure a clear photo-copy.

2.3

The legislation does not stipulate in relation to farming (as it does with the Rules for other cash income) that the assessment should be based on the income for the previous year.

This means that the assessment of the expected annual income should be based on normal output and costs appropriate to normal stock levels, capacity, and market trends. Where exceptional circumstances create a difference between this projected figure and the return for the previous year (e.g. the number of cattle sold in the last year is different from the normal number sold in the course of a year), or where the method of farming has been changed, supporting explanations should be provided.

2.4

It is important to emphasise that while details of income and expenses from the previous year are basic to the assessment, the assessment itself is not a book-keeping exercise based on one particular year. Accounts compiled for Tax or other purposes may be helpful, and should be inspected where available and the details therein recorded, but the inspector must after careful investigation make her/his fair and reasonable assessment of the net income which the holding will provide annually (i.e. an average annual income over the next number of years).

2.5

An inspector therefore needs to have a good knowledge of the agricultural economy in her/his area, especially as regards marketing conditions and trends as to yields, prices, quotas and costings.

The inspector conducting a means review has regard to the locally recognised average profit per acre derivable from the various types of farming enterprises in the area. This will vary according as the land is good, bad or indifferent. The income to be derived from cattle, sheep, horses etc., per head should also be established. The letting value per acre of grazing and tillage land would also need to be known.

A knowledge of the various national and EU schemes in the industry must also be used (including the income receivable by way of grants, headage payments, bounties, premiums). Sources for such information include publications and summaries issued by Teagasc, the Department of Agriculture, the farm supplements of the daily papers.

2.6

Where necessary and possible, details of receipts and expenditure are to be verified. In these circumstances, the onus is on the applicant to provide the required documentation. It is important to note that creamery and milk accounts are always available or obtainable.

While it should be ensured that as much verified information should be obtained as possible, it is recognised that details of all transactions will not be available. Where the Inspector is satisfied verification is not possible, figures given by the applicant or estimated by the Inspector in line with those generally acceptable in the particular area, and for that particular type of farming enterprise may be accepted. The extent to which figures have been verified and(or) estimated should be shown.

2.7

Grants and Premiums: It is not expected that the net income from a holding would be less than the annual value of the grants and premiums payable in the normal course. It may happen occasionally, particularly in cases of overstocking, and where this appears to be the case the matter should be discussed with the Area Manager.

3. DETAILS OF FARM AS PER IN 93:

3.1 SIZE:

This should be verified where possible. Land Registry office should be contacted in any case of doubt. The size should be ascertained in either statute acres or hectares, not Irish acres, adjusted acres, or arable acres.

(Note: 5 Irish acres = 8 Statute, approx. 1 Hectare = 2.4711 acres).

3.2 TYPE OF LAND:

This can be good, fair, poor, mountainy, wet, boggy, well worked, not well run, etc..

3.3 TYPE OF FARM:

This refers to the type of farming enterprise. Types of farming are as follows: Dairying, Beef Production (Dry Cattle), Sheep, Horse Production, Grain (Barley, Wheat, etc.), Sugar Beet and Root Crops, Potatoes, Vegetables, Fruit Growing, Pigs. In most farms there is usually a mixture of the above in various combinations.

3.4 STOCK NORMALLY KEPT:

This is a valuable indication of the scale of the enterprise, in so far as stock is concerned. Where the stock on hands at date of investigation differs to any significant extent from the stock normally kept, a brief notation should explain the divergence.

3.5 MACHINERY USED:

Particulars should be noted so that the assessment will include:

  • income from any contract work with the machinery
  • due allowance for depreciation, and
  • expenses for machinery hire where necessary.
3.6 STOCK:

Stock on hands at the date of investigation should be accurately noted. At present, the Department of Agriculture provide only particulars of stock as at their last inspection. The District Veterinary Office can provide particulars of stock as on the dates of their inspections, and full statement of grants and premia paid. These details should be obtained (unless there is sufficient evidence to to hand to verify stock levels and payments, i.e. documentation already received by the customer from the DVO).

It is expected that amounts of grants, premiums etc. may become available from the Department of Agriculture following computerisation. If and when the other details are available, they should be verified in all cases with written authorisation from the farmer.

3.7 CATTLE:

All cattle, apart from young cattle, are sold by weight, the unit at present is the KILO.

1 Kilo = 2.205 lbs.

100 Kilos = 220.5 lbs., (almost 2 cwt).

There are sometimes local names for the various categories of cattle, the following are in fairly general use:

Calves, Weanlings, Yearlings, Year & a Halves, Two year olds, Two & a Halves, etc., Milking cows, Dry cows.

Stores is a loose name for cattle beyond the "young" stage, and can be used for animals of different weights and ages, so is not accurate enough for farm assessment purposes.

Bullocks grow larger than heifers, are usually kept longer, and consequently they are generally dearer.

There are different breeds of cattle, nowadays broadly broken down into FRIESIANS and CONTINENTALS. The Friesians are the basic milch cows, but are not as good as Continentals for beef. They are often crossed with other breeds for better quality. It is necessary to establish the type of cattle referred to when talking about sales, because the Continentals invariably fetch much better prices per 100 kilos.

The following is a rough guide to the cattle ages and corresponding weights.

Cattle Ages and Weights guide:

TYPE

TIME

APPROX. WEIGHT

Calf

Spring

 

Weanling

Fall (Autumn)

200 Kilos.

Yearling

Following Spring

270 - 300 Kilos. (About 9 to 12 months)

Year & a Half

Following Fall

375 Kilos.

2 Year Old

Second Spring

450 to 500 Kilos.

Sometimes, cattle are kept into their third year, for finishing, and are then sold by weight. They might weigh up to 600 kilos, or over.

3.8 COWS

Cows are normally kept for milk or calf production, and are not generally sold while producing, unless they have a veterinary or fertility problem, or the yield is not satisfactory. If such cows are sold when they are not too old and are in good condition, a reasonably good price would be expected at the factory.

When cows are reaching the end of their productive lives, they are replaced in the herd, and sold as meat for canning. They would not realise a good price.

In-calf heifers and in-calf cows will invariably sell at a price above the price they would make if sold by weight, because of bringing the calf with them.

Fluctuations in the market will govern the extent of the difference in the prices.

3.9

A figure for LOSSES equal to 5% of the normal receipts from livestock sales is to be used.

4. THE SINGLE PAYMENT SCHEME:

4.1

4.1 A new scheme, known as The Single Payment Scheme, replaces the Arable Aid and Livestock Premia Schemes from 2005 onwards.

All existing Livestock Premia and Arable Aid Schemes will be abolished with effect from 1st January 2005. This includes any quotas relevant to those schemes.

Those Livestock Premia Schemes are : Special Beef Premium, 1st and 2nd age ; Special Beef Premium - Bulls ; Suckler Cow Premium Scheme ;Ewe Premium Scheme ; Supplementary Ewe Premium (Rural World) ; Slaughter Premium Scheme ; Extensification Payments ; National Envelope Top-Ups relating to the Ewe Premium, Dry Heifer, Calved Heifer and Slaughtered Heifers.

The Dairy Premium introduced in 2004 will be decoupled from the milk quota and added to the Single Payment from 31 March 2005.

In general, the Single Payment Scheme is applicable to farmers who actively farmed during all or any of the three reference years 2000, 2001, and 2002, who were paid Livestock Premia and/or Arable Aid payments in one or more of those years and who will continue to farm in 2005.

The gross Single Payment is based on the average number of animals, and/or the average number of hectares in the case of Arable Aid, on which payments were made in the three reference years 2000, 2001 and 2002. That average is multiplied by the 2002 payment rate for those schemes, (EUR 383.04 in the case of Arable Aid Schemes), and when totalled for each scheme, will give a gross Single Payment.

The Single Payment will be broken down into a number of individual payment entitlements. The number of payment entitlements will be equal to the average number of eligible hectares on the Area Aid applications during the reference years 2000, 2001 and 2002, which, when divided into the Single Payment, will give a monetary value for each entitlement.

4.2 PAYMENT.

Under EU Regulations, payment under the Single Payment Scheme is to be made between 1st December of the year of application and 30th June of the following year. There is provision in the regulation to make advance payments prior to 1st December in certain circumstances to be decided by the European Commission.

If the Commission decide not to make advance payments in 2005, the first payments under the scheme in Ireland are expected to be made in December 2005.

Farmers must re apply under the Single Payment Scheme for each subsequent year.

4.3 EXCLUSIONS.

Payments under the Rural Environment Protection Scheme (REPS), the Disadvantaged Areas Compensatory Allowance Scheme (formerly Headage Payments Schemes), farm support schemes such as Installation Aid and On-Farm Investment, are not included in the Single Payment Scheme and those schemes will continue in place as before.

Comprehensive details of The Single Payment Scheme are available on the Department of Agriculture and Food Website.

Further enquiries on The Single Payment Scheme should be addressed to:-Department of Agriculture and Food, Single Payment Unit,
Old Abbeyleix Road,
Portlaoise,
Co Laois.
LoCall : 1890 200566

5. HEADAGE, AND QUOTAS:

5.1 HEADAGE, AND QUOTAS.

These schemes are administered by the Department of Agriculture and Food. The conditions for receipt are subject to regular change, and inspectors should keep up to date with these changes.

5.2 CATTLE HEADAGE scheme.

This scheme is operated by the Department of Agriculture and Food and is payable in certain designated areas only;

5.3 HEADAGE SCHEMES.

For the purpose of headage payments, the country is divided into three areas as follows:

  • More severely handicapped areas, also known as more severely dis-advantaged areas.
  • Less severely handicapped areas, or less severely dis-advantaged areas
  • The rest of the country

Each of these areas is made up of designated counties, DED's and parts of DED's. Each inspector should ascertain the position in his/her area of operation - information can be obtained from the District Veterinary office or from the Grants section of the Department of Agriculture in Castlebar.

For Headage Schemes the following abbreviations are used

Livestock unit = LU
Animals 2 years and over = 1 LU
Animals under 2 years = 0.6 LU

A person can only get paid for 10 Dairy Cows and for 40 beef cows in a herd. Only the first 60 LUs on a holding qualify for full rate of grant, after that half rate applies.

- Less severely handicapped areas and coastal areas with specific handicaps.

In these areas you can get paid for Beef Cows (Suckler Cows) only, to a maximum of 30 LUs. No payment is made for other cattle.

- The rest of the country

No grants are payable.

5.4 MILK QUOTAS

Milk can only be supplied to Co-ops under quota. The quota, should be verified by examination of the Co-op statements, or by certificate from the Co-op.

If a surplus or unused quota is held, it is generally leased to another, either privately or through the Co-op., and the leasing price is counted as cash income. The leasing price should be verified either through the Co-op., or by inspection of the leasing agreement. Inspectors should be familiar with the average leasing price per gallon in the area.

If a farmer wishes to supply more milk than s/he has a quota for, (s)he will have to lease quota, and the leasing price, which should be verified, is allowed as an expense.

It is necessary, in order to comply with EU regulations, to incorporate in the leasing agreement, the leasing of some land along with the quota. In many cases, the land is not used or occupied by the lessee, (it may not be properly fenced, or there may be a history of animal disease on the holding, or the quota may be leased to more than one person), but remains in the beneficial occupation of the lessor, in which case, the assessment should be based on the facts of the case.

5.5 SHEEP:

Income from sheep comes mainly from the sale of lambs, sale of wool, and ewe premiums. Ewes which are replaced fetch very little.

There are two types of lambs, EWE LAMBS (female), and WEATHER LAMBS (castrated males).

A HOGGETT, (either male or female), is a sheep which has put up permanent teeth, which usually happens in the early spring time of the year following birth.

Broadly speaking, there are three different types of sheep, BLACKFACED MOUNTAIN, LOWLAND and HALF BRED.

Mountain sheep are smaller than the others, produce less meat and wool,and prices are correspondingly lower. Prices locally should be ascertained from marts or the local papers. The lamb survival rate per ewe is much lower than for lowland sheep, 70 to 75 lambs per 100 ewes would be a reasonable average, having less protection from inclement weather, predators at lambing, poorer feed, etc. The lamb survival rate for lowland sheep is up to 150 per 100 ewes.

Average wool clip per sheep as follows:

Small mountain sheep: 3 lbs. per head.
Half bred sheep: 3-5 lbs. per head.
Lowland sheep: 8 lbs. per head.

It is vital to verify the ewe numbers in all cases, to ascertain the number of lambs for sale, the amount of wool produced, and the premium payments available.

Headage, and Quotas.

As with cattle, the headage grants operate in specific areas only.

Sheep Headage.

Again for the headage payment, the country is divided up into three areas

- More Severely handicapped areas,

Grant payable in respect of mountain breeding ewes and hogget ewes.

- Less Severely handicapped areas,

Grant payable in respect of hogget ewes only.

- The rest of the country.

No sheep headage grants payable.

Under the CAP Reform Measures, individual quotas were introduced for payment of ewe premium, with provisions for transfer/leasing. The disposal of the remaining quota will require investigation where the flock numbers have dropped below the quota held - whether transferred, leased or returned to the national reserve.

Each inspector will need to familiarise her/himself with quota matters, including the numbers of ewes for which the premium is payable, the local average leasing price, etc..

6. PIGS:

Pigs are usually produced on an intensive scale in large numbers and in special units. Income is to be calculated on a sales less costs basis. Detailed records, invoices and receipts should be available or obtainable in such cases.

7. FOWL & EGGS:

Fowl and egg production is carried out in much the same way as pig production. It can be approached in a similar fashion. All poultry hatcheries for the production of day old chicks, turkey poults or, ducklings for the production of table birds or, the replacement of laying flocks must be licensed by the Department of Agriculture, Food & Forestry.

8. HORSES:

Working horses on the farm are not valued. However, they are rarely encountered now, and the likelihood is that a farmer who rears horses does so to sell the progeny. There is a trade in ponies, trekking horses, show jumpers and point to point horses. The studbook records for Irish Draught, sport horses and ponies are maintained by the Dept. of Agriculture in the Irish Horse Register, and enquiry should be made there as necessary. Brood mares are assessed on the gross prices received for foals assuming one foal every two years.

There is also a headage payable in all disadvantaged areas up to a limit of 30 mares.

9. SIRES, BULLS, BOARS AND RAMS:

Are assessed on a profit and loss account of service fees and expenses, plus any premiums payable. A service book is usually kept and should be inspected.

10. CROPS:

Income to be calculated on a sales less costs basis, which should be verified in the normal manner. Where hay or silage has been harvested, it is normal to let the aftergrass if the farmer doesn't use it for grazing her/his own cattle.

11. LAND OR GRAZING LET:

The acreage and the letting price should be verified. Where graziers are taken, the number of stock grazed and the price per head should be recorded and verified as necessary.

11. OTHER RECEIPTS:

In addition, any other receipts not mentioned above should be taken into account, i.e. from sales from sandpits, gravel pit, quarries, and from sales of fruit, vegetables, kelp, seaweed, osiers, etc.

(Note that for Unemployment Assistance purposes the first 1,269.74 1,000) of income from seaweed harvesting is not assessable.)

13. COSTS AND ALLOWANCES

13.1 MACHINERY HIRED:

The cost claimed should relate to the local rate for the job, the acreage involved, and the machinery at the farmer's own disposal.

13.2 ELECTRICITY, PHONE, CAR:

Deductions in respect of expenses incurred in running a car, or the cost of electricity and telephone are limited to the proportion of such costs necessarily incurred in the working of the farm.

13.3 INTEREST PAID:

Where interest arises out of borrowings in connection with the working of the farm, and where it is paid, it should be allowed as a deduction in assessing the means. In such cases, the following information should be obtained in full from the lending institution:

  1. Amount of loan or overdraft
  2. Date(s) obtained
  3. Period of loan in case of term loan, or similar loan from the ACC or other institution
  4. Purpose for which loan was obtained
  5. Repayment conditions
  6. Amount of interest ACTUALLY PAID in the preceding 12 months.

NOTE: A certificate of interest charged, usually issued for tax purposes, is not adequate.

Where interest due and paid is abated by way of subsidy, the amount of the subsidy should be deducted from the amount of interest paid.

The question of whether to allow as an expense the interest paid on the cost of land purchased should be considered in the light of the following:

  1. The interest must actually be paid as at (6) above from the farm sales.
  2. The use of the land purchased must be brought into the assessment.
13.4 LABOUR HIRED:

The cost of hired labour, including maintenance if given, is allowed. Verify by inspection of prescribed records, and ensure that compliance is given in respect of PRSI. Where farm relief is availed of, verify with the farm relief organisation.

13.5 FAMILY LABOUR:

Cost of family labour NECESSARILY employed, excluding the labour of applicant and spouse, may be allowed. The amount of family labour necessary will depend on the capacity of claimant and spouse. In a case where family labour is allowed, the capacity of applicant and spouse should be adverted to.

13.6 INTESTACY OR SHARED OWNERSHIP

Where only an intestacy share of the farm income is being assessed against the claimant, no allowance should be made for family labour. There may be exceptional cases where adherence to this instruction may not be possible.

A person who, because of age or infirmity, has to adopt an entirely passive role in relation to the working of the farm, and as a consequence, benefits only to a degree which is considerably less than her/his legal entitlement, should have her/his means assessed taking account of the position.

Similarly, where a member of the family, through his/her initiative, has built up and increased the farm income and is in fact the sole beneficiary of that increased income, the means assessment should reflect the actual position. Cases such as these, or any other case where a departure from the standing instructions is considered appropriate should be regarded as exceptional, and the report should indicate accordingly.

13.7 DEPRECIATION:

The principles applied for social welfare purposes when making allowances for the use of capital equipment are separate and distinct from those applied in business generally.

In the case of capital assets, such as farm machinery and equipment, the capital cost is not allowed as an expense. Instead an allowance is made for the depreciation of these assets which of their nature have a fairly definite life span and the use of which is very directly related to farm output.

Where farm machinery or equipment is purchased outright, an allowance for depreciation relative to their usage is made.

The following table shows the maximum % allowable off from gross output in respect of various types of farming :-

Maximum % Allowable:

Dairying

3.5%

Dairying & Other

3.9%

Cattle Rearing

4.1%

Cattle Other

4.9%

Mainly Sheep

3.9%

Tillage Systems

5.4%

Pigs/Poultry

1.3%

All Systems

4%

The above figures are taken from the most recent Teagasc information available from National Farm Surverys. The % depreciation shown above is the average for the years 1995, 1996 and 1997.

In applying less than the maximum % depreciation amount consideration should be given to the extent of the usage of farm machinery by way of a hire purchase or lease agreement.

Where for example 50% of the machinery used is purchased outright and the balance is by way of lease/hire purchase then only 50% of the maximum % for depreciation should be allowed off.

The amount allowed off for depreciation should be shown separately on the IN 93 form.

Where a hire purchase or leasing arrangement exists, the full amount of the payments annually under such agreement is allowed as an expense. No allowance for depreciation is allowable in these cases.

Depreciation is also not allowed in respect of other capital assets such as farm buildings, yards, land reclamation. A figure to cover the annual cost of repairs, upkeep and maintenance may be allowed and again this figure should be shown separately on the IN 93 form.

14. SCHEME OF EARLY RETIREMENT.

This scheme for farmers between the ages of 55 and 66 came into operation on 7 January 1994, and is administered by the Department of Agriculture, Food and Forestry.

The main points of the scheme are:-

  • a pension will be paid to a qualifying farmer who transfers his/her holding to a transferee. The transfer may be by way of gift, lease or sale.
  • the pension will be paid monthly and for a maximum of 10 years but in any event not beyond the retired farmers 70th birthday.
  • the minimum size of the holding to be transferred is 5 hectares of Utilisable Agricultural Area. (U.A.A. means the total agricultural area of arable land, grassland and permanent crops which is being farmed).
  • there is an upper age limit of 50 years for a farming transferee, who must be suitably qualified to farm the land for a minimum of 5 years or for as long as the pension is payable.
  • only one pension will be payable where a farm being released has been managed jointly or where two separately owned holdings are worked as one unit.
  • Milk quotas are attached to the land and must be transferred with it, even where it is being transferred to a non-farming transferee. The transferor may, of course, participate beforehand in a quota buy-out scheme where there is one in place.
  • Non Milk Quotas (Suckler cow & sheep), must be transferred with the land to farming transferees. However, if they are not required, they may be disposed of subject to the quota rules in those schemes.
  • there is also a pension scheme, under certain conditions, for workers or family helpers, between the ages of 55 and 65 who lose their employment as a result of the farmer's early retirement, subject to a maximum of two workers per holding.
  • Where the pensioner dies, payment of the balance of the pension due may be made to the spouse or dependents, subject to the total annual income not exceeding the max. of the pension and the average industrial wages as determined by the Central Statistics office.
  • The transferor must apply for OACP or OAP (non-con) on reaching 66 years of age and provide evidence to this effect. If OACP/OAP is awarded the farm retirement pension will be reduced accordingly.

The farm retirement pension is to be assessed in full for all Social Welfare payments unless the claimant has reached pensionable age. In effect this means that for the schemes payable to persons under 66 such as UA, the retirement pension is to be assessed as means, and for schemes like OAP the retirement pension is not to be assessed.

In schemes like Widow's Pension and Carer's Allowance which are payable before and after reaching pensionable age a change in the assessment should take place on reaching pensionable age (66). The legislation covering the non assessment of the Early Retirement Pension took effect from 3 April 1996.

When investigating a claim or reviewing means following such retirement the investigator should enquire re other items of means such as capital from the sale of a farm or quota, or rental income from leasing. These items continue to be assessed as heretofore.

If the disposal of the quotas is not clear in the relevant leasing or transfer documents, the Investigator should make further enquiry to establish the position.

Land leased

Lessor: If the land is leased, the income from the leasing is to be assessed as cash income (the land is not assessed on a capital value basis).

Lessee: The annual leasing price will be allowed as an expense in the case of the lessee, in assessing his/her income from the use of the land leased.

15. SET ASIDE GRANTS:

Under the Arable Area Payments Schemes, producers of (a) cereals, (b) oilseeds, (c) protein crops and (d) linseed can avail of area payments, subject in the case of larger producers to the setting aside of some land.

Arable producers can apply for area payments on land used to grow: any cereals, Oilseeds (soya beans, rapeseed, sunflowerseed), Proteins (peas harvested in a dry state, field beans, sweet lupins).

There are two schemes, one is the general scheme, where the farmer has to set aside 15% of the area claimed. The other is where he is claiming for a maximum of 15.13 hectares, in which case there is no set aside required.

It is possible to put the set-aside land to certain uses such as growing non-food crops (where the value of the non-food product is greater than the total value of any food bye-products. These include potatoes, certain types of barley, oats etc.).

In all cases where cereals, oilseeds, protein crops and linseed are grown, an authority should be obtained and enquiry made with the Dept. of Agriculture, Food and Forestry to verify acreage and payments. Enquiries should also be made regarding the use to which the set-aside land is put.

16. MILK CESSATION SCHEME:

A number of these schemes have been in operation, whereby the farmer sold the milk quota, and undertook not to supply milk again. Payment was by way of a fixed amount per gallon over a number of years, and the farmer cannot get the quota back at any stage.

The compensation is treated not as part of the income of the farm but as an asset converted into capital. The number of gallons (quota) should be multiplied by the price per gallon to obtain the total price. Although the compensation is paid by instalments, the total capital should be assessed from the date of surrender of the quota.

17. AFFORESTATION GRANT AND FOREST PREMIUM SCHEMES

Afforestation Grant Scheme

This Scheme applies throughout the State to the afforestation of agricultural land suitable for forestry. The Scheme includes associated activities such as:

Preparation of ground

  • Drainage
  • Planting and fertilization
  • Fencing
  • Maintenance work for a period of four years from the date of planting.

The Grant is payable in two moieties - an afforestation grant and a maintenance grant.

The afforestation grant is payable subject to all conditions of the Scheme being met and on satisfactory formation of the plantation.

The maintenance grant is payable four years after the date of payment of the afforestation grant provided all the necessary conditions are satisfied.

The afforestation grant payable will be the costs involved subject to the maximum levels laid down by the Department of Agriculture in respect of land type and tree category.

The Dept. of Agriculture state that the Afforestation Grant Scheme covers only the costs involved in planting, maintenance etc. Monies accruing from this grant are not therefore assessable as means.

Forest Premium Scheme

This Scheme applies to farmers and others who suffer a loss of income resulting from the afforestation of their land.

For the purposes of this scheme, a farmer is defined as a person who :

  • practices farming within the State;
  • owns, leases, or is involved in the management of at least 3 hectares;
  • derives at least 25% of his income from agriculture and
  • lives within 70 miles of the forest plantation.

The premium levels for farmers vary according to the type of tree and the type of land.

The period of qualification for the premium is 20 years for farmers and 15 years for others.

Eligibility for a forest premium is determined in the year of completion of planting and payment commences in the following year.

The level of premium determined in year one will apply throughout the period of the scheme.

Definitions of Categories of Land

Unenclosed Land:

Land which was never improved or enclosed by man-made boundaries for agricultural use other than extensive grazing.

Enclosed/Improved Land:

Land falling outside the category of Unenclosed Land.

More Severely Handicapped:

Land designated under EU Directives as such.

Non - Disadvantaged

All agricultural land excluding the above categories.

The Scheme applies to plantations on which approval to commence the afforestation work was given on or after 1 August 1992.

Premiums paid under this Scheme should be assessed as farm income. Allowance should be made in respect of any necessary expenditure incurred with regard to the scheme. Details should be included in form IN93.

The grant is designed to cover the cost of establishing the plantation and the premiums are payable for 20 years. The actual work can be done by the landowner or by a forestry contracting company or by a combination of both.

Some of these companies have been offering to prepare, establish and maintain the plantation for the first four years in return for the grant and premium. As these payments will have increased substantially, how much the company gets per acre in the future will depend on agreements with individual farmers. A written agreement is always signed, so this should be inspected or a copy obtained in all such cases. Any portion of the premium payable to the farmer is assessable as income on the IN.93.

A plantation will not be available for harvesting for a minimum of 35 to 40 years and, until then there is no capital value assessed. Thinnings might take place on a 5 year basis from 18 to 20 years onwards depending on accessibility etc. By and large, therefore, there is no annual income from a plantation, apart from the premium.

Coillte have a scheme called the Farm Forestry Partnership

Scheme in which the landowner retains ownership of the lands. Coillte will plant, maintain and sell the crop and the landowner's successor takes over ownership of the land and the partnership with Coillte.

The landowner is given an advance payment (634.87 {500} per hectare) full forest premium for 20 years, 80% of thinnings profits for next 17 years and 60% of clearfell profits at year 40.

Christmas Trees: Grown solely for sale as Christmas trees, there are no grants or premiums payable, but it is possible that, if they are harvested as thinnings leaving a required number to mature, they may attract payments. Enquiry should be made with the Department of Agriculture & Food in such cases.

Christmas trees are planted a metre apart, with up to 10,000 plants per hectare (4000 per acre approx.). The time from planting to harvesting is between 6 and 7 years.

18. DISEASE ERADICATION:

Bovine tuberculosis, BSE and brucellosis (contagious abortion) are the main diseases which affect herds of cattle. In most cases, only the animals affected are sold to the factory. It is possible that where most of the herd is affected, all the herd might have to be slaughtered, but this would be exceptional.

The owner is compensated for each animal slaughtered, and this payment plus the factory price is more or less sufficient to replace the animal. The farmer will have documentation relating to the number of reactors slaughtered, the compensation payable, and the prices obtained from the factory, and these should be inspected.

If the cattle are not immediately replaced, the disposal of the money received from the sales and compensation must be investigated, and whether the land is being used for other production in the meantime, e.g. hay etc. The land does not need to remain unproductive. In the case of brucellosis, only females are affected, and there is nothing to prevent the farmer dealing in bullocks.

In the case of BSE, all the animals in the herd are slaughtered. The herdowner is compensated by the Department of Agriculture, the price per animal being arrived at by way of appraisal by a livestock inspector. The herdowner is allowed buy in replacement stock immediately.

19. RECEIVER APPOINTED:

Occasionally, a receiver is appointed to a farm, usually through application by one of the financial institutions for recovery of debt. The receiver is given authority to take over the management of all the farm business including dealing with all income and expenditure, and documents usually reflect this. Occasionally this actually happens, and in these cases there may be a minimal payment to the farmer for work done.

However, the receiver normally allows the farmer to continue managing the farm, but arranges that some portion of the farm income be paid directly to the creditor. Payments are frequently deducted at source from the net monthly milk cheque, payment for stock, premiums or headage payments, or the leasing or selling price of a quota.

The factual position should be ascertained and assessed in each case, after enquiry with the receiver, the financial institutions, the co-op., etc. Investigators should make careful enquiry as to the running of the remainder of the enterprise, with particular regard to stock or other farm produce that may be sold privately, or the letting of land.

20. RURAL ENVIRONMENT PROTECTION SCHEME

The above scheme, which came into operation on 1 June 1994 and is being administered by the Department of Agriculture, Food and Forestry.

To be eligible for the scheme a person must be farming at least three hectares, either owned or leased for five years. Farmers who wish to join the scheme must have an agri-environment plan prepared by an approved agency.

In assessing means for UA, PRETA, FARM ASSIST and OAP purposes, 2,539.47 (2,000) of income under the REPS is to be disregarded. No disregard applies in assessing means for Disability Allowance.

In addition allowance will have to be made for expenses incurred with joining the scheme e.g. the cost of the agri-environment plan referred to above, along with the cost of any work undertaken in accordance with the scheme such as fencing, wall building and on going maintenance etc. The regulations (which are effective from 4 April 1996) provide that the expenses are allowable in the year in which they are incurred. Inspectors should satisfy themselves that the expenses claimed are related to the REPS scheme. No allowance should be made for the client's own labour.

As the bulk of the expenditure will be incurred in the first year it will therefore be necessary to review cases after one year. This revised assessment should hold good for the remainder of the five year period in normal circumstances. All relevant files should therefore be B/F for review after one year.

In addition to the basic REPS premium farmers who undertake supplementary measures will be entitled to additional payments. There are six supplementary measures which may be undertaken but if the farmer undertakes more than one of them he will only be paid for one, that is the highest one in monetary terms. The supplementary measures are -

  • Natural Heritage Area,
  • Rejuvenating Degraded Areas,
  • Rearing animals of local breeds in danger of extinction
  • Maintaining long-term set aside (for 20 years),
  • Maintaining public access for leisure facilities,
  • Organic farming.

Some of the payments for above measures include compensation for any necessary reduction in livestock numbers.

The scheme obliges participating farmers to keep records to facilitate monitoring compliance with the scheme. Among the records to be kept, and which inspectors may find useful, are a monthly livestock inventory and particulars of all chemical fertilisers bought on the farm.

21. SPECIAL AREAS OF CONSERVATION SCHEME (SACs)

An EU Habitats Directive now requires Member States to protect their most important natural areas by designating them as Special Areas of Conservation (SAC's). This means that operations or activities which could adversely affect the ecology of these areas must be prohibited or controlled. The main areas which have been designated as SAC's are located along the western seaboard in counties Donegal, Mayo, Galway and Kerry.

As a consequence, the Government has introduced compensatory payments for losses arising from the compulsory restrictions which are now being imposed in the SAC areas. This compensation takes two forms and farmers can choose either one of the following options (but not both) -

  1. they can join the existing Rural Environment Protection
    scheme, (REPS), which is administered by the Department of Agriculture and Food, under which they will be entitled to top-ups to the standard REPS payments in return for agreeing to abide by necessary conservation conditions (see Section 19 above) ; or
  2. they can quantify the loss arising from compliance with compulsory SAC conditions and can claim for the actual losses incurred from the Department of Arts, Heritage, Gaeltacht and the Islands (SAC's Compensation Scheme).

Arising from the introduction of these measures Social Welfare legislation makes provision for the following changes in the assessment of means for UA, PRETA, Farm Assist and OAP(Non-Con.) purposes.

Details of these changes, which are effective from 1 April 1998, are set out below.

ASSESSMENT OF SAC's COMPENSATION PAYMENTS - FROM 1 APRIL 1998

Section 10 of the 1998 Social Welfare Act provides for the disregard for means assessment purposes, on an annual basis, of:

  • the first 2,539.47 (2,000) of payments under the SAC's Compensation Scheme, and
  • 50% of the balance.

In addition, any expenses incurred in complying with measures necessary under the SAC's Compensation scheme are also disregarded in the assessment of means.

The balance is assessable as cash income in accordance with Rule 1(2).

Example:

Monies received under SAC's Compensation Scheme less - prescribed disregard of 2,539.47 (2,000)

  •                                      5,078.95   (4,000)
  •                                      2,539.47   (2,000)
  •                                      2,539.47   (2,000)
  • - 50% of the balance    1,269.74   (1,000)
  •                                      1,269.74   (1,000)
  • - expenses                    253.95    (200)
  • Means =                        1,015.79   (800)

1015.79 (800) pa = 19.53 (15.38) per week (rounded to 19.05 (15.00))

21. RURAL DEVELOPMENT:

Alternative Enterprises Grants Scheme: Provides for the payment of grant aid towards the cost of establishing facilities for the rearing of animals which are outside the mainstream of Irish agriculture, i.e. sport horses, deer, rabbits, goats and greyhounds. Information can be got from Agricultural Structures Division of Dept. of Agriculture.

Horticulture & Potatoes Grant Scheme: Under the Operational Programme for Rural Development, grant aid at the rate of 50% in the disadvantaged areas and 40% elsewhere is available on approved investments.

Agri-Tourism Grant Scheme: Basically this is a system of grant aid towards the cost of establishing facilities to attract and accommodate tourists. The scheme is administered on behalf of the Dept. of Agriculture by Shannon Development Company (SFADCo) in the mid-West area and by Bord Failte in the rest of the country.

23. NATIONAL SCHEME OF INSTALLATION AID FOR YOUNG FARMERS

The aim of this Scheme is to encourage the earlier transfer of farms to young well-trained farmers. The Scheme which is administered by the Department of Agriculture & Food, is funded by the National Exchequer and applies to applicants who have been set up in farming on or after 1 January 1995.

Under this scheme, a premium of 7,110.53 (5,600) is payable to farmers under 35 years of age at the time of first setting up who:

  • practice farming as their main occupation on land owned by them or held on long-term lease;
  • fulfil, at the time of first setting up on the farm, or at least within two years of that date, certain requirements regarding occupational skills and competence e.g. a degree in Agriculture/Horticultural Science, Teagasc Certificate/ Diploma etc.
  • are set up on the farm with a labour requirement of 1 Man Work Unit (MWU) and not more than 3 MWUs,
  • have obtained full title/leasehold title to the land.

The premium is a once-off payment and is designed to off-set the start-up costs associated with setting up as a farmer. It should be assessed as farm income with details included in form IN 93. Allowance should be made for expenses necessarily incurred in setting up as a farmer, e.g. legal expenses, stock purchase etc. It may be necessary to review these cases after one year.


Last modified:01/06/2010
 

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