ROBUST MARKER AS PART OF ‘TRACK AND TRACE’ SYSTEM NEEDED TO COMBAT ILLEGAL FUEL LAUNDERING

peaking before the Joint Oireachtas Committee on Transport this morning (Wed), IFA President John Bryan said in order to tackle the problem of illegal fuel, the Government should introduce a robust, non-removable, marker for agricultural diesel.

He said this should be coupled with a verifiable ‘track and trace’ system of marked gas oil from port to end user.  In addition, substantial penalties, including loss of licence, should be imposed on retailers of illegally laundered diesel.

“These measures will reduce the volume of illegally-traded fuel, while at the same time underpinning the competitiveness of our growing agriculture and agri-food sector.”

The IFA President rejected calls from some groups for the equalisation of excise rates as too simplistic. “In the UK and Northern Ireland, a system similar to ours operates, with a reduced excise system for Marked Gas Oil. Changing the regime in the Republic won’t have any major impact if the UK authorities retain theirs.”

John Bryan said IFA has serious concerns about any attempt to raise the price of agricultural diesel for farmers and agricultural contractors.  “It would have a negative impact on cash flow, putting pressure on the viability of small businesses, particularly given the restricted access to working capital from the banks.”

He said, “The move would also impose significant additional paperwork and compliance costs on farmers, and the proposal does not take into account the costs of policing and administering a rebate system.”

Farmers themselves spend approximately €160m on agricultural diesel annually. In addition, farmers spend €280m per year on contracting costs. It has been estimated that up to 25% of this is due to fuel costs.

IFA estimate therefore that if the excise rates were equalised, the additional upfront costs for farmers, plus the costs of financing these additional costs, would be in the region of €80m.

Working examples of the individual costs include:

• For an individual grain farmer burning over 900 litres of agricultural diesel a day during peak season, this would represent an increase in upfront costs of over €400/day.
• For an agricultural contractor, burning up to 3,000 litres per day, this is an upfront cost increase of €1,300/day.

For the farming and contracting sector, these costs are unsustainable and would undermine competitiveness.