Farm Ireland

Saturday 24 March 2018

Farmers face return of crippling debt charges

Martin Ryan and Darragh McCullough

Farmers are facing crippling interest rates as co-ops reintroduce charges of 1pc per month to accounts over the coming weeks.

Bank sources have confirmed that nearly all of the major dairy processors are hatching plans to start imposing interest on the huge mountain of debt accumulated by farmers after one of the worst winters in memory for feed supplies.

Bank of Ireland's head of agri lending, Seán Farrell, said that dairy processors' credit to producers is 30-50pc higher than 2012.

Co-ops are now working on the basis that many farmers will not be able to clear their accounts this year, and are encouraging some suppliers to convert their debts into seasonal or short-term loans with the banks.

Bank of Ireland said that it would provide unsecured facilities of up to €60,000 at 6.74pc, or secured loans at 5.74pc for farmers with capacity for repayment. These rates are approximately half of the equivalent annual rate with a merchant or co-op charging 1pc per month.

While individual co-ops and feed suppliers are reluctant to specify the precise level of farmer indebtedness, they confirmed that it has been a record year for feed sales.

A spokesperson for Dairygold described the situation of individual suppliers as "very serious".

Kerry were providing credit-free supplies to farmers up to the end of June, but are now "reviewing" what will happen after this. Credit facilities are currently 30pc higher with the southwest processor, despite the provision of a €20/t rebate on feed.

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Glanbia provided their members with a €25/t rebate in April and have extended the credit-free period on fertiliser purchases to the end of July.

Credit facilities at Aurivo (Connacht Gold) are more than 20pc higher than last year.

Although Town of Monaghan Co-op is not engaged in milling, credit on farm inputs is €1m higher than last year and a service charge is being applied to accounts.

The ICMSA criticised the Minister for Agriculture, Simon Coveney, this week, labelling his comments on shifting the focus to next winter's needs as premature.

ICMSA president John Comer appealed for more attention to the "staggering levels of debt that have accumulated on farms in the aftermath of the fodder crisis".

His comments come at the same time that a report by Britain's largest farm advisory group, Andersons, described 2013 as "the most difficult year in a farming lifetime".

"The background of uncertainty is probably greater than at any time in the farming lifetime of many people," said Andersons director Jay Wooton.

Mr Wooton said that poor soil structure and seed vigour – both a direct result of last year's appalling weather – combined with poor conditions again in 2013, would reduce yields by at least 10pc.

He added that he expected most British dairy farmers to lose money this year, even after the receipt of the Single Farm Payment.

Irish Independent