Farm Ireland

Wednesday 21 February 2018

ICSA warn that mounting feed bills could cause cash-flow woes

Caitriona Murphy

Caitriona Murphy

Mounting feed bills on some farms are pushing farmers to the brink of a major cash-flow crisis, the ICSA has warned.

The drystock farmers association has urged members to talk to their bank managers before the situation gets out of hand.

ICSA general secretary Eddie Punch said the worst case scenario would be to dodge the issue until cheques started bouncing.

"Farmers need to be talking to the banks, in order to secure bigger overdrafts to tide them over," he maintained. "They need loans that can be paid back over 12 months."

Feed merchants are by far the biggest creditors on the farm accounts, after a year in which feed volume usage increased by over 25pc and feed prices rose €35/t on average.

Teagasc dairy expert John Donworth said farmers had already spent at least €150 extra per cow and, in some cases, an addtional €300/cow on concentrate feeding alone.

Taken over a 100-cow herd, that amounts to an additional €15,000-€30,000 on the winter feed bill.

Demand for Glanbia's annual seasonal loan scheme through Bank of Ireland, which has an interest rate of 5.7pc, jumped considerably this year, according to the co-op.

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"With cash-flow being tighter this year we are seeing more interest than ever in the (seasonal loan) scheme, with the average loan being around €40,000," said Denis Herlihy, commercial manager, Glanbia Agribusiness.

However, big bills are not confined to dairy farmers, with beef finishers and suckler farmers under severe pressure too.

"We have big debtors on the beef side, with some farmers owing €30,000 at this stage," said one feed merchant.

He said one suckler man with 60 cows has racked up €15,000 of a feed bill on ration alone, while other finishers were in an even worse position.

"Our debtor figure is up 20-22pc on the same time last year and it's going to take 12-18 months for some of those farmers to get out of it," he maintained.

"The economics of the winter have not stacked up at all for cattle finishers," maintained Eddie Punch.

"And there are now some farmers wondering if they should go back to the traditional Angus and Hereford types beef animals that don't need as much ration and are in demand on supermarket shelves."

Roy O'Brien from the IFA in Galway said farmers had a long list of people in a queue for money, ranging from accountants to contractors and feed merchants.

"Overdrafts are tight and farmers need to get in to talk to the bank managers," he insisted.

"The bank must realise that this kind of situation puts huge pressure on farmers but it only happens once every 10 years," he said. "If the loans can be restructured now, the money will be paid back."

Irish Independent