Banks urged to support farmers during volatility
AGRICULTURE Minister Michael Creed hit out at the lack of a "functioning competitive banking market" as he launched a €55m interest free cashflow support scheme for Glanbia's dairy and tillage farmers.
Mr Creed said he would be meeting the heads of the pillar banks in the coming weeks to urge them to "display forbearance as they deal with individual farmers".
"Cash flow and the cost of credit to the farming community is not what it should be," the Minister said.
"We do not have an effective functioning competitive banking market," said Mr Creed.
He added that he hoped the move by Glanbia Co-op to offer farmers the ability to drawdown cash flow support when milk or grain prices dip below 'triggers' would help increase competition.
Mr Creed said he hoped the pillar banks would act as the cost of credit was too high compared with other European countries.
The Minister said there was "no silver bullet that we can fire to resolve" the price volatility with farming produce but they were looking at a whole series of initiatives.
Glanbia's group managing director, Siobhan Talbot ,said the Glanbia Advance Payment (GAP) Scheme running until December 2020 was about sustaining suppliers "through the low part of cycles" as the dairy and grain markets were cyclical.
The Glanbia Co-op has raised €100m by issuing a five year exchangeable bond linked to a pledge of 4.3 million Glanbia plc shares.
This scheme will allow dairy farmers a voluntary advance of a maximum of 2 cent per litre (c/l) in a month where the base milk price paid by Glanbia Ingredients Ireland (GII) falls below 24c/l.
The price repayment will be triggered when the base price moves above 30c/l or alternatively in 2020.
Advance payment on grain is set at €20/tonne when prices reach certain levels.
Henry Corbally, Glanbia Co-op chairman, said the volatility dairy farmers were experiencing has brought "great problems and hardships" for cashflow on family farms.
Mr Corbally said 1,000 farmers have already attended workshops on applying to their €100m MilkFlex loan scheme launched earlier this year.
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