INTEREST paid on farm borrowings now represents the second biggest cost on farms after animal feed and before the cost of fertiliser, according to the Irish Creamery Milk Suppliers Association president Jackie Cahill.
He said as interest rates rise and as banks become tempted to increase their margins, this burden is going to increase.
“Putting manners on the banks should be one of the main items on the Government’s agenda,” he said.
Mr Cahill said the level of borrowing on farms is already at a point where the financing of further expansion will be difficult if not impossible.
“All the half-baked ideas of dairy expansion ignore this point. This is not mere speculation but it is the grim reality that I can see unfolding by the day.
“If we look at our Danish colleagues, possibly over a quarter of them are now bankrupt in the sense that their debts are greater than their total assets.
“We must not go down that road. We must keep the banks under control,” he said.
Mr Cahill called for a new code of practice governing all lending backed up with the full force of law and with a statutory requirement on the financial regulator to public report regularly.
He said it will cost money to get over the flood damage that has been caused up and down the country by the recent flooding.
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