The ICMSA has slammed as "nonsensical" rules that exclude farmers who used co-op loans to buy bulk tanks from receiving TAMS II grant aid.
Patrick Rohan of the ICMSA's farm and rural affairs committee confirmed that some farmers who applied for grant aid for the purchase of a bulk tank under the TAMS II Dairy Equipment Scheme were being refused payment because the equipment was purchased with co-op loans.
Mr Rohan said a number of farmers had contacted the ICMSA regarding the issue. He asked how borrowing from a co-op differed significantly from getting a loan from a bank or credit union.
"We recently met with Minister Creed and very clearly outlined our extreme disappointment at this attitude," Mr Ronan said.
"It is surely irrelevant whether a loan for an item of equipment is received from a financial institution or a co-op - the money has to be repaid anyway," he added.
"ICMSA is calling on Minister Creed to ensure that these farmers are paid as a matter of priority," said Mr Rohan.
He added that the rules of the scheme should also be amended so that the purchase of essential farm equipment can be financed by the farmer's co-op or milk processor.
Under the Dairy Equipment Scheme grant aid of 40pc is available for the purchase of equipment. The maximum allowed for an individual farmer is €32,000.
However, young trained farmers qualify for a 60pc grant and can receive up to €48,000 per applicant.