Contractors can no longer act as 'unpaid bankers' for farming

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The ICSA president Patrick Kent
Derek Casey

Derek Casey

The fodder crisis has shown the extent of over dependence of farmers on contractor credit, it has been claimed.

A contractor lobby group has called on Agriculture Minister Michael Creed to create a properly functioning farming banking structure that provides expanding commercial farmers with the necessary working capital requirements.

The Association of Farm and Forestry Contractors (FCI) said there is a stranglehold on funding to meet realistic working capital requirements on modern Irish farms.

"We know that farmers are struggling to meet daily cash flow needs and this has been made acutely obvious with the recent fodder crisis," said FCI national chairman Richard White. "FCI members have been anticipating this fodder crisis as our members have seen first-hand evidence of the shortages of fodder, as we contractors are the ones who harvest the silage crops.

"Working across thousands of Irish farms, our members have seen dairy cow and cattle numbers rise, while silage pit sizes remain static, in an unrealistic attempt to emulate New Zealand systems that have been developed for a milder climate and different soil types.

"We know that farmers cannot expect to meet the targets of increased animal numbers, without adequate silage crops, and all this demands proper working capital funding on farms."

It comes as Mr Creed came under pressure to provide a low-interest loan scheme for farmers. IFA president Joe Healy said it was now also a "financial crisis".

ICSA president Patrick Kent said small and medium-sized farming enterprises have an immediate need for working capital.

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"Cashflow difficulties are crucifying cattle and sheep farmers who have used up all their credit facilities at this point," he said.

Mr Creed said there was work underway on another low-interest loan scheme and acknowledged there was a need for "working capital support". "It would be misleading to say it will happen in response to this issue," he said. However, he said co-ops have stressed there is no issue with farmers purchasing fodder regardless of credit issues.

The minister said he was also meeting with the banks to discuss the current credit issues arising for farmers.

In addition, contractors report large volumes of unfinished slurry spreading work as they struggle to prevent build-up in sheds.

"In these circumstances our members cannot invoice their customers, further adding to cash flow problems for farm contractors," said Mr White. "Irish contractors can no longer act as unpaid bankers to an agricultural industry that is struggling to meet its ambitions to expand, due to a lack of working capital.

"The current challenge facing our FCI members is to manage their debt levels as their farmer customers now struggle to cope with the additional costs of a national feed crisis," he added.

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