Farm Ireland

Saturday 24 February 2018

Brussels briefing: Eurocrats on hols as farmers face credit crunch

IFA President Joe Healy Photo: Frank Mc Grath
IFA President Joe Healy Photo: Frank Mc Grath

Sarah Collins

It's that time of year again as Brussels has cleared out for the summer.

But for farmers, the traditional end-of-season liquidity crunch has set in, with cashflow issues at their most acute.

Add to that the ongoing dairy price crash, inclement weather and Brexit uncertainty, and you have the makings of what the IFA says is a 'farm income crisis'.

"Farm families are under huge pressure as cashflow tightens and the viability of their family farm is put at risk," said IFA President Joe Healy when the group published its pre-budget submission last week.

The EU recently awarded Ireland €11m from a new €500m emergency dairy fund, which the Government is hoping can help fund short-term loans to cash-strapped farmers.

But what farmers need more, particularly young farmers, is easier access to bank loans.

EU negotiator Michel Barnier Picture: AFP/Getty Images
EU negotiator Michel Barnier Picture: AFP/Getty Images

The legacy of the financial crisis is still hampering lending, with Irish interest rates among the highest in Europe.

While they may not be as high as fellow bailout countries Greece, Cyprus or Portugal, farmers' groups including the IFA have been lobbying the European Investment Bank (EIB), the EU's long-term lending arm, to see if it can help to offset the problem.

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The EIB has a specific loan guarantee scheme for agriculture and rural development, and is working with banks like Credit Agricole to finance farming succession in France.

But the EIB is still a bank, one whose portfolio is guaranteed by EU member states, and so it is less inclined to invest in countries where there has been a major banking crisis.

Alan Jagoe, President of the European young farmers' association (CEJA), says there needs to be more flexibility, particularly for younger farmers who don't have the credit history to tap loans.

"Banks need to look at the bigger picture," Jagoe says. "There needs to be a will there, both politically and within the financial institutions, to do it."

One solution could be for the EIB to help fund and promote national schemes, such as the Glanbia MilkFlex fund.

The fund blends company money with contributions from the Ireland Strategic Investment Fund to provide cheaper loans to Glanbia suppliers, with repayments linked to variations in milk prices.

Guarantees are another option. Lithuania's Agricultural Credit Guarantee Fund underwrites a portion of loans to farmers wanting to purchase new livestock or equipment.

Commission ups the ante on Brexit fallout

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EU negotiator Michel Barnier Picture: AFP/Getty Images

The European Commission’s appointment of Frenchman Michel Barnier as its ‘chief negotiator’ on Brexit has caused quite a stir in Brussels.

The UK’s Daily Mail slammed the move as “an act of petty aggression” against the UK, given that it was Mr Barnier, as internal market commissioner from 2010 to 2014, who oversaw the EU’s post-crisis reining in of the financial sector, succeeding Ireland’s Charlie McCreevy’s in the job.

But Mr Barnier is respected in Brussels circles as a skilled politician, having served various terms in office in France as Europe minister, foreign minster and agriculture minister.

He is seen by many as a tough negotiator prepared to work in Europe’s interest, but also has good connections in the City of London, who came to know him as firm but fair.

Commission president Jean-Claude Juncker highlighted Mr Barnier’s “rich experience in major policy areas relevant to the negotiations”, including agriculture.

“I wanted an experienced politician for this difficult job,” Mr Juncker said in a statement. “I am sure that he will live up to this new challenge and help us to develop a new partnership with the United Kingdom after it will have left the European Union.”

Mr Barnier, who can speak decent English (but usually doesn’t), won’t be responsible for the post-Brexit trading relationship between the UK and the EU.

His job will be limited to negotiating an exit treaty with the British government once it triggers its divorce proceedings under article 50 of the EU treaty — including the date it finally withdraws,

and what happens to British staff who work for the institutions.

And EU leaders will seek to retain control over the negotiations in the person of Donal Tusk, the European Council president, who chairs regular EU summits.

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