Farm Ireland

Wednesday 21 March 2018

ICOS calls time on 'unfair credit'

Declan O’Brien

The level of credit being offered by some marts was described as an "ongoing challenge" to the sector over the past year by the head of ICOS.

Speaking at an Oireachtas Agriculture Committee hearing into the collapse of TLT International, ICOS chief executive Séamus O'Donoghue said the credit levels provided to live shippers by some marts had been a cause of concern.

The committee heard that the final amount owed to the marts was still not known, but Mr O'Donoghue told the hearing that the figure was estimated to be between €3m and €4m.

While the ICOS leader accepted the failure of TLT International had come as "unwelcome shock", he said all of the affected marts had adequate financial reserves to deal with the problem and that all customers would be paid for their stock.

Mr O'Donoghue claimed that the tighter bank borrowing arrangements had resulted in marts coming under greater pressure from live shippers to offer attractive credit lines.

He said this had particularly been the case where marts were competing with one another for live shipper business.

He told the hearing there was scope in the sector for mart "consolidation and rationalisation" and this process would reduce some of the competitive pressure between the marts, while also giving them greater economies of scale.

Michael Spellman, chairman of the ICOS marts committee, described the credit arrangements that were put in place for live exporters as "totally unfair" since they put other buyers at a competitive disadvantage when purchasing stock.

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He said a "no credit policy" was being operated in many marts and he suggested that "was the way it should be".

While there was some unease at the manner in which TLT International was put into receivership rather than examinership, Mr Spellman said he was not surprised that the company's banks, HSBC, moved to wind up operations.

"It would have been better if they moved sooner," he said.

The action of the marts in providing unsecured credit to exporters was slammed by Fine Gael TD Tom Barry.

He said the marts in question were acting as banks and were not "competing on their core business but on their banking service".

While there was talk of "goodwill" being a common ingredient of the mart trade, Mr Barry said there was a "difference between goodwill and reckless trading".

The hearing heard calls for the Government to put in place some farm of export credit insurance to protect the live export trade. However, Deputy Barry said such a call could not be entertained. He said there could be no suggestion of export credit insurance being used to provide cover for what he termed "bad practices".

However, speaking at the ICMSA annual general meeting in Limerick, the Minister for Agriculture Simon Coveney did not rule out the possibility of such a move.

"It's an interesting idea and one that we should look into. I don't want to give a definite answer on that. Would I put state money into it? It's not something I am prepared to say yes or no on right now. We would have to get value for money," Minister Coveney said.

IFA leader John Bryan pointed out that individual farmers were also facing massive losses as a result of TLT's collapse. He said one Co Monaghan farmer was owed €45,000, while another from Limerick was owed €25,000.

Irish Independent

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