Tipperary farmers advised to know their financial options if they experience TB breakdown
IFAC has published a list of financial options for farmers affected by Bovine TB on their farms.
When a farm experiences a bovine TB breakdown, the resulting restrictions can create significant financial pressure. IFAC, Ireland’s farming, food, and agribusiness specialist professional services firm, is advising Tipperary farmers to understand their financial options during a TB breakdown.
Philip O’Connor, Head of Farm Support at IFAC said: “In this scenario, there are several compensation schemes available through the Department of Agriculture, Food and the Marine (DAFM), to help manage the economic impact.
"Understanding and actively engaging with these support mechanisms can help manage the financial impact of a TB breakdown on your farm business. Early engagement with DAFM and proper planning is essential for maximising available supports while maintaining business continuity.”
Planning ahead is crucial, and farmers should take the following steps to protect their financial position during a TB breakdown:
- Maintain detailed records of all affected animals
- Contact your RVO promptly regarding any planned animal movements
- Consider the impact on cash flow and discuss options with your financial advisor
- Review your eligibility for all available compensation schemes
- Keep track of testing dates and requirements to minimise the restriction period
- Engage your bank early, especially if you have repayment obligations that may be affected by the breakdown.
Below are the key financial supports available and details on how to access them:
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On-Farm Market Valuation
The primary compensation mechanism is the On-Farm Market Valuation scheme, which applies to all reactor animals identified through TB testing. This scheme operates with specific valuation ceilings:
- Standard reactor animals: Maximum €3,000
- Stock bulls: Maximum €4,000 per breakdown
- Pedigree stock bulls: Maximum €5,000 per breakdown
Importantly, farmers can claim tax relief for compulsory stock disposal if they replace the animals within four years and defer the tax even if the stock is not replaced. For in-calf animals, the compensation rate is determined by post-mortem examination at the slaughter facility.
Tax Implications of TB Compensation
Understanding the tax implications of any compensation received for the compulsory disposal of cattle is crucial for financial planning:
Stock Relief and Reinvestment is where a farmer receives any income under the compulsory disposal of cattle, that farmer may elect to have the ‘profit’ they make on the disposal of those animals deferred over a 4-year period.
The profit is the excess of the proceeds on the disposal of the animals over the value that they were held in the accounts.
The 4-year period can commence in the year the compulsory disposal of the cattle occurred, or it can commence the following year.
For the 4-year period, the farmer is deemed to have taxable income of 1/4th of the profit deferred, and tax is payable. However, if the farmer intends to reinvest the ‘profit’ on the disposal, then they will also be deemed to have stock relief equal to the deferred income. Essentially, they will not pay tax on this deferred income if they fully reinvest within the 4 years.
If they don’t fully reinvest all of the profits on buying replacement stock, then any shortfall will come off the deemed stock relief in the later years.
An exit from farming considerations, depopulation compensation and the hardship grant scheme are all options for farmers affected by this issue, as well as an income supplement scheme.
The Income Supplement scheme provides monthly payments for farmers who lose a significant portion of their herd. You become eligible when:
- More than 10% of your entire herd is removed as reactors, or
- At least 10% of your dairy cows are removed as reactors
The monthly rates are:
- Dairy cows: €55 per reactor animal
- Suckler cows: €38.09 per reactor animal
- Other cattle: €25.39 per reactor animal
This supplement is paid automatically by DAFM without application, calculated monthly in arrears from the date your herd meets the eligibility threshold. The supplement is taxed as normal income and not compensation for the disposal of stock.