Photo by Jed Owen on Unsplash

 

With the new carbon tax increase arriving later this year the already anxious farmers look upon the 2026 budget with concern. 

The Budget 2026 is set to be announced October 6th this year, and the announced carbon tax increase of 7.50 euro per tonne of CO2 has already worried some of the agricultural sector. 

Only five months ago in early April of this year, huge protests took place in multiple counties, focusing in on the hike in fuel pricing that has been making it harder for fuel heavy vehicle work. 

An important factor here is that Ireland, as a member of the EU,  have to follow the European Climate Law which has set a legally binding target of net zero greenhouse gas emissions by 2050, with a reduction of 55% by 2030 (climate.ec.europa.eu)

Speaking with the Irish Creamery Milk Suppliers Association (ICMSA), we can get a better understanding of how farmers are handling the situation. 

The ICMSA represents all farmers but has a focus on dairy and livestock. 

Niall Heffernan, a policy officer within the ICMSA, spoke on some issues and feelings that the association and farmers have with the carbon tax increase. 

When asked about the immediate feeling surrounding the tax announcement, Heffernan described it as a “feeling of disillusionment”. “Carbon tax is ultimately used as a stick, and the idea of a stick in policy making is that you force the population to do something they don’t necessarily want to do,” said Heffernan. 

“Carbon tax is used as a stick but there is genuinely no other alternative for farmers which is absurd.”

Looking at alternatives, the topic of alternative transport, mainly looking at electric transport, especially in the context of climate preservation, Heffernan stated that: “Farmers are committed to enhancing the environment in fact there are very few professions out there that commit as much to improving the environment as farmers” and that “carbon tax on diesel and petrol is to promote the other alternative of electric vehicles – unfortunately for the government electric tractors aren’t an option for Irish farmers”. 

When looking at the previous schemes for farmers’ tax increases, Heffernan said, “some of the money on carbon tax went towards an environmental scheme called, ACRES, but this was a scheme that did not benefit all farmers and only benefited less intensive farmers.” 

ACRES  is a €1.5bn agri-environmental payment scheme that pays up to 55,000 farmers to adopt greener practices, with the carbon tax being a section of the funding for this scheme.

Heffernan said that farming families are under enormous financial and mental pressure. “The financial proficiency of the farm is strongly linked to the mental health of farmers,” he said.

Heffernan also described the process for farmers associated with the ICMSA. 

“Financially energy costs were about 3c/litre (Costs in dairy are measured in cents per litre of milk) for Irish dairy farmers in 2024 whilst energy costs are now set to be above 5c/litre. Whilst the effect of the carbon tax will be below the 1c/litre farmers are living off the margin and in some year the margin may only be 1c litre. Every 1c litre is worth around 5,000 euro to a dairy farmer. So, the increase will have an effect of ‘a couple hundred’ in terms of estimates,” he said.

Finally, asking about a possible disconnect between urban-based policymakers and rural farmers, Heffernan said that there is a “strong sense of paper-based decision-making coming from the policy sector with little appreciation for the practical realities of farming. Policy is fantastic at devising rules and regulations without factoring in the financial and labour implications for the farmer.”  

“Farmers are asked to do more with less money.” 

The Department of Agriculture, Food and the Marine, the Department of Climate, Energy and the Environment, and the Department of Finance along with Friends of the Earth Ireland were all asked for a response on this topic, however they did not reply.