Food prices may have to rise “exponentially” due to mounting cost pressures driven in part by carbon tax on farm diesel, ICMSA President Denis Drennan has warned.
In a press release issued this week, the Irish Creamery Milk Suppliers Association described a 5 cent per litre reduction in green diesel as “wholly inadequate”, with its president warning that farmers were facing a “perfect storm” of rising input costs and falling returns.
The association said the measure did not reflect the scale of the pressures on primary producers.
“This is the equivalent of throwing a bun at a bear,” Drennan said in the statement.
“Farmers need decisive action and meaningful reductions in their costs and instead we are getting these minor and marginal penny-pinching measures.”
The statement also highlighted fuel costs as a central issue, pointing in particular to the role of carbon tax in increasing the price of green diesel.
“…quite clearly, the issue of carbon tax equivalent to 17 cents per litre on green diesel can no longer be ignored and is going to have to be addressed,” the statement said.
“The relief available to farmers for the increase in carbon tax on farm diesel needs to be extended to agricultural contractors and the process badly needs to be simplified”.
The ICMSA further called for an investigation into why green diesel prices had risen more rapidly than ordinary diesel.
It said farmers were dealing with increasing costs at the same time as output prices were either below the cost of production or falling sharply.
“Farmers [are] entering a ‘perfect storm’ where the Government seemed unable or unwilling to address inflationary factors that were within its purview… while simultaneously the prices paid to farmers [are] falling or stagnant,” the statement said.
In a phone interview with Gript this week, Drennan said these pressures could have direct consequences for consumers.
He warned that food prices may have to rise significantly if the situation continues, and that if farmers weren’t supported, food prices may rise “exponentially.”
Drennan also rejected recent claims by Minister of State Sean Canney that carbon tax should be viewed as a “fund” rather than a “tax”.
He said that, in practice, farmers had no viable alternatives to diesel-powered machinery.
“It is a tax because there’s no alternative,” he said.
“There are no electric tractors or hydrogen tractors. Some companies are looking into that, but it’s not an option yet.”
The issue of carbon tax has become increasingly prominent in recent days, with Government policy set to introduce further increases from May 1st under existing legislation.
As reported by Gript earlier this week, several rural TDs and Independent politicians have criticised the measure, arguing that it is adding to already rising fuel and energy costs.
The Government has maintained that carbon tax revenues are being used to fund retrofitting schemes, fuel allowances, and other supports, and has ruled out cancelling the planned increase.
Energy prices have risen sharply in recent weeks amid wider international pressures, feeding into transport and agricultural costs.
These developments have added to concerns within the farming sector that sustained increases in input costs could ultimately be reflected in higher food prices.