Oireachtas committee to seek bank flexibility on loan repayments

Flexibility in bank loan repayments and EU intervention were the main measures discussed yesterday by the IFA and the joint Oireachtas committee on agriculture to ease the income crisis in dairy farming.
Oireachtas committee to seek bank flexibility on loan repayments

While the representatives for the main political parties and the farmer groups welcomed the €500m EU aid package to combat challenges facing European farmers, all delegates agreed other measures are urgently needed to ease pressure on the sector.

Willie Penrose, Labour TD for Longford-Westmeath, said: “We in the Government won’t be found wanting, but we have to focus on the banks to ensure that further pressure is not put on farmers in the difficulties they will face in the coming years.

"It is important now that the marketing bodies go out there in the market and continue to sell in the way they did before.”

Pat Deering, Fine Gael TD for Carlow-Kilkenny, said the joint committee had produced a report on dairy post-quota opportunities and challenges long before the end of EU quotas.

He said the dairy farmer’s cost of production has increased by 50% in the past 20-year period. He said the sector must analyse where the extra costs have come in.

“The key point is that it is important that we now review where we are with our report, to bring back in the stakeholders, especially the banks,” said Mr Deering.

“Some new producers coming into this area have invested heavily, they will need some help, perhaps a holiday in terms of repaying loans.”

Mr Deering said at the outset of the end of dairy quotas, some farmers had told him they would be able to manage income volatility, but he said the reality has proven otherwise.

IFA dairy chairman Sean O’Leary said: “We farmers will have to learn to manage the impacts of volatility.

"Farmers will have to look at how to manage their cashflows with greater volatility and lower milk cheques in the coming months. The distribution of Ireland’s targeted aid will be of some help.

“However, the type of cash-flow difficulties we are facing now will continue to be part of the income challenges facing farmers in the coming years. Despite what people are saying, I don’t think farmers jumped headlong into what they saw as a post-quota opportunity.

“But with the right supports from the Government, the banks and the industry, there is a bright future in dairy. We need to put a bit of focus back on efficiency, and work with the industry on that.”

IFA president Eddie Downey also said that diary farmers still have a bright future, despite the difficult situation farmers are experiencing right now.

“We have been operating with our hands behind our backs for the past 30 years,” said Mr Downey.

“While New Zealand production has expanded by four times the volume, we stood still. The changes in the financial world, oil prices falling and the Russian ban have conspired against us.

“It is how we manage that to get a sustainable situation for our family farm here, that is the challenge. That is why we put forward our proposals.

“Every time we met the banks, we highlighted that we wanted all loans stress-tested because we want a sensible approach to lending. And farmers have been sensible. But, within that sensible borrowing, there is also now a need for flexibility from the banks in repayments.

“Nobody built a milking parlour for one year. They built it for 20-30 years. We have always given the message back to farmers that they be sensible with the measures they introduce on their farms.”

Mr Downey said flexibility and banking measures are important.

He also suggested the Government might look at a measure to allows a farmer to put money aside in a tax-friendly account in a good year to allow him to better manage challenges during a bad year.

He also said EU intervention is now required as many of the economic problems facing farmers have been caused by the European and Russian standoff over Ukraine.

“Russia has taken a political decision to stop European produce going into Russia,” said Mr Downey. “When a political decision like that is made, then a political intervention is needed to ease the plight faced by food producers.”

Joint Oireachtas committee chairman Fine Gael’s Andrew Doyle said it would be interesting for Ireland to examine how France got around the rules on state aid.

He said he would invite in other farm industry leaders to discuss solutions to farm income challenges.

“We will bring in the banks, and Ornua and Bord Bia as well,” said Mr Doyle. “The dairy sector will continue to be an important player in the expansion of Ireland agriculture industry, along with beef.”

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