Cautious thumbs-up for excise relief plan

Biofuels: There was a muted welcome for the announcement of continued excise relief on biofuels in the Budget, with claims that it would not lead to a massive increase in fuel crops being grown.

The best estimates from both farmers and the Government last night were that 163 million litres of fuel, which could be exempted, would require planting between 50,000 and 100,000 hectares.

Biofuels are made from oilseed rape: bio-ethanol is made from sugar, wheat or dairy byproducts and is blended with petrol and pure fuel oil for use in modified diesel engines.

President of the Irish Farmers' Association John Dillon said the Government was merely meeting an EU requirement that 2 per cent of energy should come from such fuels.

"However, while I welcome the support for the fledgling biofuel sector with reduced excise, at the end of the day what the farmer receives for his crop will ultimately determine what will happen here," he said.

Minster for Agriculture and Food Mary Coughlan said the relief for biofuels would be extended to €20 million next year, €35 million in 2007 and €50 million in 2008, 2009 and 2010.

"This relief, when fully operational, is expected to support the use and production in Ireland of some 163 million litres of biofuel per year," she said. "This is some 20 times the current level of biofuels that is excise relieved and will provide an opportunity to explore alternative land use possibilities following recent Cap reform and the changes to the sugar beet regime."

Denis Naughton, Fine Gael's agriculture spokesman, said while the announcement was a positive step it was a very small one. "In reality, the incentive relates to 100 per cent biofuel products, which will be difficult for the public to use, as it will require the conversion of their existing vehicle," he said.

"A more positive step would have been to incentivise the use of biofuels in the blending of all fuels," he said.

The Irish Cattle and Sheepfarmers' Association also welcomed the announcement but said more ambitious targets would have to be set if biofuels were to become a new and viable enterprise.

Minister for Communications, Marine and Natural Resources Noel Dempsey said the programme would also provide much-needed support to the rural-based agriculture, forestry and renewable technology sectors. "By lowering the cost to consumers, renewable energy technologies and cleaner fuels will be able to compete with more traditional fossil fuels," he said.

The IFA criticised the Budget for failing to address farm competitiveness and failing to put in place effective measures to allow farmers to build the productivity capacity they need to compete.

It was also critical of the continued taxing of Compulsory Purchase Order compensation and the failure to address farm consolidation.

The IFA and Irish Creamery Milk Suppliers' Association were critical of the increases in employee tax credits, saying they further discriminated against farmers. Both organisations and Macra na Feirme welcomed the renewal of stamp duty relief for young trained farmers, worth €20 million per annum.