Farmers paying more for loans than other businesses
Published 05/08/2015 | 02:30
Farmers are being urged to shop around for loans, as it emerged the sector is being hit with higher borrowing costs than other industries.
The ICMSA estimates the higher interest costs are costing Irish farmers up to €80m a year.
Farm businesses accounted for the majority of new loans drawn down in recent months, according to figures from the Central Bank.
However, the SMEs in the primary industries sector - mainly agriculture - have attracted higher than average interest rates of 5.5pc in the first three months of the year. The Euro area interest rate average stands at 3.3pc.
John Comer, president of the ICMSA, said the cost was more than the Irish superlevy bill and farmers were facing a competitive disadvantage.
IFA president Eddie Downey said it undermined competitiveness as figures show that conditions for SMEs, including farm businesses, are tougher in Ireland than almost anywhere else in the Euro area when it comes to cost and accessing finance.
IFA farm business chair Tom Doyle said that agriculture has the highest percentage of performing loans in the SME business sector.
The figures show that loans to the agriculture sector are generally lower than average but account for the highest volume of loans. The Central Bank pointed out this may show a high volume of unsecured or short-term lending with banks pricing in credit risk arising from the volatility in prices.