‘Factory levy’ generates up to half of IFA income

Perhaps the most controversial aspect of the Irish Farmers’ Association’s funding model is what’s known as the “factory levy”.

The tariff is collected on all farm sales to co-ops, processors, marts and merchants. It equates to 0.15 per cent, or 15 cent per €100 in sales.

While the IFA does not give detailed breakdowns of its income, sources suggests the levy generates between a third and a half of its €12.9 million income.

The European Involvement Fund (EIF) levy – its more formal title – was introduced by the association in the 1970s to help fund its presence in Brussels. The association's office in the Belgian capital has three full-time staff, including its European head of policy.

While it should, in theory, be distributed on a pro-rata basis across all farming groups, the IFA commends about 95 per cent of the funding it generates.

The Irish Creamery Milk Suppliers’ Association (ICMSA), the State’s second-largest farming body, only receives about €100,000 from the levy.

Opt-out available

While the charge is automatically deducted from pay cheques to farmers, they can opt out by simply indicating an intention not to pay.

Surveys, however, suggest many farmers are either unaware they are paying it and/or unsure what it goes towards.

Critics also claim the association’s reliance on processors to collect such a substantial portion of its income compromises its independence.

At the height of the beef price slump last year, the issue was continually raised by disgruntled farmers, who claimed the IFA was taking too soft a line with meat processors.

At the time, the association's president, Eddie Downey, insisted the levy had no influence on IFA policy, but acknowledged there was a perception to the contrary in some farming circles.

In a recent brochure, the organisation said the EIF money helped fund its European campaigns, and “the professional back-up required to support elected voluntary officers in defending the €1.5 billion paid to Irish farmers in direct supports”.

‘Practically insignificant’

A spokesman for the ICMSA told The Irish Times revenue from the EIF was "practically insignificant", noting the group derived its revenues from its 15,000 largely dairy farmer membership base through voluntary subscription.

The ICMSA also indicated it had commercial interests in insurance and telecommunications businesses to help fund its operation, like the IFA.

The IFA’s latest annual report says it generated €12.9 million in income in 2014, derived from member subscriptions, EIF levies and its business interests, which include FBD insurance and IFA Telecom.