asked the Minister for Finance if, in view of the need to bring more farms up to a viable size, he will make a statement on the 31 per cent drop in loans for land purchase as disclosed in the 1975 annual report of the Agricultural Credit Corporation.
Ceisteanna—Questions. Oral Answers. - Land Purchase Loans.
47.
The primary objective of the Agricultural Credit Corporation's lending policy in relation to land purchase is to ensure that adequate funds are available to enable genuine farmers expand the size of their holdings. Priority is given to those who have small and medium sized holdings and who need extra land to improve their economic viability. At the same time the corporation are always conscious of the fact that land prices can be inflated if too much money is provided for land purchase, and so they try to ensure that loans for land purchase do not form an unduly high proportion of total lendings.
The demand for land purchase loans was very high in 1973-74 and such loans accounted for over 15 per cent of the value of total loans issued that year. As a result, the corporation had to impose restrictions on land purchase loans and this, together with the drop in the number of farms offered for sale in 1974-75 led to a reduction in land purchase loans to a normal level.
Can I take it that it is the restriction on lending which caused it, the availability of money, rather than the number of applications? Were there fewer applications or was less money made available?
First of all, a drop in the number of farms offered for sale, so there were less cases in respect of which the issue could arise, and secondly, the proportion of loans was exceptionally high in 1973-74 and this is something which it is always sought to avoid in order to prevent an excessive volume of money chasing too few properties and thereby pushing up the price of land inordinately. With a view to bringing that into balance, the proportion of money used for this purpose was reduced in 1974-75. This together with the fact that there were less farms available for sale accounts for the drop in the proportion.
Am I to take it that the Department are afraid of an inflation in land prices?
The Department are always conscious of the danger that such an inflation in land prices could occur as a result of an excessive amount of credit being available for this particular purpose, in view of the small number of properties becoming available at any one time for sale and also the very strong demand for land in Ireland because of the importance people attach to the ownership and working of land.