Carbon Tax on Agri Fuel Must be Suspended Immediately

IFA Farm Business Chair Bill O’Keeffe is calling on Government to review their decision of yesterday and properly address fuel costs for farmers and agri contractors. 

The excise duty reductions announced yesterday did very little to lower the cost, with a temporary 3% price reduction* for the sector.

“This is simply not anywhere near enough to address the issue for the farming sector,” he said.

Agri-diesel has increased by 50% in recent weeks, and yesterday’s announcement did very little to offset this increase. Agri diesel has seen the greatest percentage increase in recent weeks and this must be addressed by Government.  

Without immediate Government action, the increased cost of agri diesel will drive up costs on farmers and agri contractors significantly. There is no room with current margins to absorb these additional costs.

“The inevitable result of this current fuel shock will be economic inflation, and food is massively exposed to the cost of fuel and energy.  Consumers need to be aware that carbon tax on agri fuel is resulting in higher food costs and is driving food inflation on our retail shelves. Increases in food prices are already in the pipeline and when consumers question this in the coming weeks and months, they can look at the Government’s failure to significantly reduce taxation on the full food chain. Action today by removing the carbon tax element of agri fuels will head off food inflation in the coming weeks,” he said.

IFA is calling on Minister Harris to go back to the drawing board and reduce the tax burden on agri fuels by suspending carbon tax.

“The only way to reduce the cost of agri fuel is to immediately suspend the carbon tax element on agricultural diesel and gas. Carbon tax adds 17cpl to agri diesel. As agri machinery has no alternative to using diesel, it is a revenue generating tax on farmers and contractors.”

Following an extremely wet beginning to 2026 with higher-than-average rainfall, farmers and contractors are only starting to tackle the huge backlog of fieldwork.

Tillage farmers are now at peak fuel demand with cultivation work and sowing of crops getting underway. Livestock farmers are tackling slurry and fertiliser application, and they are only weeks away from the beginning of the silage season when there will be a huge requirement for agri diesel.

Poultry farmers also need LPG gas to provide the optimum environment for producing chicken to the highest standards, and carbon tax on this gas used in the broiler sector must also be suspended.