Farmers face return of crippling debt charges
Farmers are facing crippling interest rates as co-ops reintroduce charges of 1pc per month to accounts over the coming weeks.
Bank sources have confirmed that nearly all of the major dairy processors are hatching plans to start imposing interest on the huge mountain of debt accumulated by farmers after one of the worst winters in memory for feed supplies.
Bank of Ireland's head of agri lending, Seán Farrell, said that dairy processors' credit to producers is 30-50pc higher than 2012.
Co-ops are now working on the basis that many farmers will not be able to clear their accounts this year, and are encouraging some suppliers to convert their debts into seasonal or short-term loans with the banks.
Bank of Ireland said that it would provide unsecured facilities of up to €60,000 at 6.74pc, or secured loans at 5.74pc for farmers with capacity for repayment. These rates are approximately half of the equivalent annual rate with a merchant or co-op charging 1pc per month.
While individual co-ops and feed suppliers are reluctant to specify the precise level of farmer indebtedness, they confirmed that it has been a record year for feed sales.
A spokesperson for Dairygold described the situation of individual suppliers as "very serious".
Kerry were providing credit-free supplies to farmers up to the end of June, but are now "reviewing" what will happen after this. Credit facilities are currently 30pc higher with the southwest processor, despite the provision of a €20/t rebate on feed.