Coveney urges farmers to avail of loan facilities
Ruling out suggestions that every farmer should get an advance of €1,000 on autumn direct payments, he said: “The reason we have a banking system is to assist farmers get over that problem. I have had discussions with senior bank officials. The banks are willing to put in place short-term loans with low interest rates in respect of which there is no re-payment requirement until single farm payments are received.”
“Cash flow issues can be resolved by way of the credit facilities available in co-operatives and through banking facilities in place for farmers with the capacity to repay, which includes most of them.”
“It should not be forgotten that commodity prices this year are strong. Milk prices may reach an all-time high this year and beef prices are also strong and increasing. Store cattle are an issue currently because of the availability of grass, as indeed are store lambs.
“With some normalisation of weather patterns, that should resolve itself quickly. This has been a disastrous start to the year for farming, but it does not have to be a disastrous year in terms of returns because, in my view, the price of commodities will remain strong up to the end of the year.”
Mr Coveney said Ulster Bank has set aside €25m for a weather or fodder fund, and it has not been drawn down. Only about 65% of the available overdraft Bank of Ireland facilities were being drawn down by many farmers.
“There was a 15% increase in the number of requests for increased overdraft facilities among farmers and in the rest of the economy the figure from Bank of Ireland is 37%. Farmers, for whatever reason, do not feel comfortable going to banks, which is a problem in itself.
“About 40% of Ulster Bank’s loan book last year was to the farming community, which accounts for 7% of the population. Other banks, such as AIB, Bank of Ireland, and Rabo, are all actively seeking to be part of the growth story of the agrifood sector by investing in farming.
“About half the farms in Ireland do not have any debt at all. The banking system wants to engage with this sector and if that engagement is not forthcoming from banks at a time when credit is badly needed, I want to hear about it. I will publicly take a very aggressive line with banks if that is the case, because they have given me strong commitments that they want to work with farmers and make it as easy as possible for them to get bridging finance to deal with this fodder crisis and, for some, credit crisis. Whether that is done by short-term loans or overdraft facilities, I want farmers to test the system so I can be sure I am being told the truth by banks which, to be fair, I suspect I am. I have seen a lot of evidence there is money available for farmers but a proper pitch needs to made to access that funding by showing a capacity to repay.”
He said Glanbia made an extra €15m of credit available, Dairygold has enabled an extra €10m to €12m, and the same is happening with Kerry Group, Connacht Gold. and Lakeland. “The smaller co-ops are also involved. There is a vested interest for co-ops in ensuring that animals are fed, milk is produced, and fertiliser goes out on grass so that brakes are not put on the system due to this fodder crisis.”
Mr Coveney has said it is unlikely Ireland will be able to draw on the EU solidarity fund for emergency funding to address the fodder crisis.
