The Government has to cover the cost of interest on additional FWMS borrowing
IThe issue of who will cover the cost of interest charged on any additional borrowings, which farmers are forced to carry as a result of the staged payment of Farm Waste Management Scheme (FWMS) grants, needs to be clarified as quickly as possible.
There is genuine anger that the Department has not honoured its commitment to pay the farmers in full -- as was set down in the guidelines for the scheme.
The fact that two payment regimes have emerged as a consequence of this decision is also the source of some frustration.
While the harsh reality is that the money is not there to finance the full FWMS payments in 2009, this is of little comfort to the 17,400 farmers who undertook massive on-farm investments, in good faith, but whose grants have not been paid.
The staged payment route is not the preferred option for these farmers, many of whom will now have to carry significant additional borrowings.
While the final detail of the package being hammered out between farm organisations and the Department has yet to be agreed, farmer leaders are confident that these applicants will not be exposed to additional interest charges. This is the very least they deserve.
The Government is certainly in a strong position to demand concessions from the banks on this front, given that €7bn has been committed by the exchequer to recapitalise both Bank of Ireland and AIB.
It has also emerged that the Department will provide a letter of guarantee for every farmer waiting on FWMS grants, outlining the payment dates in 2010 and 2011 for the outstanding monies.
It is hoped that this letter will ensure that credit facilities will not be adversely affected for those farmers waiting on grants. Assurances will also be required from the banks on this issue.
With growing cash flow concerns at farm level, the Government must act on the loan interest question as quickly as possible , while also prioritising payment of the first 40pc of the grants.
- Declan O'Brien
