Next low-cost farmer loans will be for capital investment

The next low-cost farmer loan scheme will be focused on long-term capital investment and finance, unlike the previous cash flow scheme.

Next low-cost farmer loans will be for capital investment

Stephen Cadogan

The next low-cost farmer loan scheme will be focused on long-term capital investment and finance, unlike the previous cash flow scheme.

However, ICMSA president Pat McCormack expressed concerns that the Department of Agriculture seems intent on restricting the scheme to investment-only, and said it is the obvious mechanism to instead address the cash flow crisis on farms.

Mr McCormack said the loan scheme needs to be opened for applications as soon as possible.

However, announcements by Agriculture Minister Michael Creed and Strategic Banking Corporation of Ireland (SBCI) chief executive Nick Ashmore last week indicated that the scheme is not imminent.

Mr Creed said:

I announced in Budget 2018 that my Department is considering the development of potential further Brexit response loan schemes for farmers, fishermen and food businesses, following on from the success of previous schemes. I hope to announce progress on the agrifood elements of this loan product soon

He was speaking during a joint Oireachtas committee on agriculture, food and the marine debate where SBCI chief executive Nick Ashmore said “settling in” of the Brexit support loan scheme has now freed up the capacity for the SBCI to start talking to institutions and start delivering a farmer-focused loan support scheme.

He confirmed the scheme is being worked on by a cross- departmental group which includes the Departments of Agriculture, Food and the Marine, Business, Enterprise and Innovation and Finance, and which works very closely with the European Investment Bank and European Investment Fund.

“There have also been early discussions with the banks,” said Mr Ashmore.

“We are limited in our ability to bring schemes to market by the market’s inability to absorb more than one scheme at a time.

“We delivered the agricultural cashflow support loan scheme, then the Brexit support loan scheme, and now we are in the early stages of working up and delivering the next scheme which, as the Minister said, is focused on long-term capital investment and finance.

“As with the Brexit scheme, the Strategic Banking Corporation of Ireland, SBCI, will move to a system whereby it takes pre-clearance or pre-eligibility applications.

- Mr Creed told the Oireachtas committee debate that new loan products launched in the market recently are comparable in terms of repayment costs to the State’s €150m cheap loan initiative in 2017 which was over-subscribed by farmers.

“I did a quick calculation on a three-year repayment of a €30,000 loan for working capital under the latest initiative by one of the pillar banks in comparison to the State’s €150m loan initiative, and the difference in repayments is €12 per month,” said the Minister.

“Our objective with the initial €150m scheme was to address the problem that existed, while also acting as a stimulus to encourage greater competition in the industry and, to be fair, there is evidence that the industry is responding.”

“The credit union movement is also responding.”

He also noted that co-ops have provided low-interest or zero-interest credit facilities.

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