Mixed reactions to low-cost loans

Agriculture Minister Michael Creed has welcomed the EU’s new €1bn fund of low-interest loans targetting young farmers.

Mixed reactions to low-cost loans

Agriculture Minister Michael Creed has welcomed the EU’s new €1bn fund of low-interest loans targetting young farmers.

The loan initiative was announced by EU commissioner for agriculture and rural development Phil Hogan and EIB vice-president Andrew McDowell. The aim is to increase access to funding for EU farmers, especially young farmers.

Mr Creed said: “Supporting young farmers and generational renewal continues to be a priority and will form an important part of the CAP post-2020.”

Participating banks are invited to match the EU with another €1bn in low-interest farm loans. Farmers are to be given up to five years before starting to repay the loans, repayable at lower rates over up to 15 years. Young farmers are likely to be offered an interest rate of around 3%.

Two pilot loans of €275m are to be implemented in France through this scheme.

These loans are specifically targeted at young farmers and climate change mitigation.

ICMSA president Pat McCormack welcomed the fund, which he said was a recognition of the special impediments to getting more young farmers up and running in the sector.

However, he said that €1bn probably wasn’t that much spread over the likely number of applicants in 27 member states, even with the extra €1bn added by commercial lenders, relative to the cost of land and equipment.

Mr McCormack said: “In Ireland, where we are down to 5% of farmers being under the age of 35 and an average age of 57, we have to ask why we’re not getting younger men and women going into farming or having any interest in taking over the family farm.

“The reason why is perfectly obvious: It’s hard work that involves long hours for which you’ll get a proportionately low income that in no way reflects the work you’ve done and the skills you’ve developed and used. If we could change that, then the youth will consider farming as a livelihood; if we can’t change that then we’ll have to look on while they continue picking other futures and occupations.

“One other thing worth noting is that the 3% interest rate that these ‘soft’ loans will be made at in Ireland is actually less than the standard rate at which money is loaned out to farmers in several EU member states like Germany and France.

“Not the least reason why we can’t get young people farming in Ireland is the higher interest rates that Irish banks charge as standard seemingly without any comment from our Central Bank or any effort to introduce real competition,” said Mr McCormack.

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