The new ICMSA Farm Business Committee Chairperson has called for a clear timeline on the roll-out of the Farmer Low-Cost Loans announced by Minister for Finance and Public Expenditure in Budget 2018.
Shane O’Loughlin said that farmers are currently making their projections and financial plans for the coming year and 2019/20 and a key part of this planning is the availability of credit at a reasonable rate.
He pointed out that just as important as when the loans were delivered was the question of who they would be made available to.
Last year’s fund, which was administered and lent out by SBCI through the Pillar banks, was drawn down totally in an extremely short period that demonstrated the extent of the demand and the what Mr. O’Loughlin called the “consistent underestimating” of the financial challenges faced by farmers.
“The first issue for ICMSA is that this tranche of loans must go to those who most deserving of this specifically low-cost option – and not just those who got in quickest on the ‘first-past-the-post’ system that was applied last year despite our criticism.
"Very many of those who most needed that credit last year either failed to get it or were too late as it took time to put the necessary documentation together”, said Mr. O’Loughlin.
“The second issue arises around the constant and long-term problem of funding being made available at competitive, realistic, interest rates within Irish credit institutions.
Farmers are asking – certainly ICMSA is asking – why “Low Cost Loans” in Ireland are made available at interest rates that are still well above those being charged by mainland European banks on their farm loans.
"Farmers are being overcharged and there is a responsibility on Government to ensure that we have funds available to borrow at the kinds of rates that are routinely charged by comparable mainland EU banks who borrow their money from the same sources as our banks and at the same rates.
"It is time for these so-called ‘Low Cost Loans’ to be the norm for all farm businesses across the country and keep credit and investment in rural Ireland where the economic multiplier effect of farm purchases is a huge commercial plus for the wider local economy”, he said.
“Let’s get the loans ready and deliberately focus them on the farmers who need them – not who can get the paperwork in fastest – and then start looking at medium and long-term farm financing at the kind of rates that the mainland EU banks charge and on which they seem to be able to make a margin”, O’Loughlin said.