asked the Minister for Agriculture the action he has taken in the period since 1 July 1985 to date to improve the conditions under which loan funds are available to Irish farmers.
Ceisteanna — Questions. Oral Answers. - Loans to Farmers.
11.
At the beginning of this year I introduced the working capital scheme which provided a subsidy of 5 per cent per annum to tillage farmers. In addition I recently announced the introduction of two exchange rate guarantee schemes under which farmers may borrow at favourable interest rates to finance their working capital requirements. Thirdly, at various meetings between my Department and the major lending institutions during the past year, the lending agencies have been strongly urged to take full account of the effects of the poor weather conditions when considering farmers' credit needs. Finally, it is Government policy to reduce interest rates and rates have fallen significantly over the past 12 months; there are encouraging signs that rates will fall further in the coming months.
(Limerick West): Does the Minister consider that the actions he has already taken and described now are enough considering the bad year through which farming has gone up to now? Does he plan to take any further action in the future? Has the Minister had any recent talks with the banks and other financial institutions, including the ACC, on this very important issue? How sure is the Minister that interest rates will fall in the near future?
I am optimistic that they will. The meetings between the lending institutions and ourselves are ongoing. One can never be totally satisfied that one is doing enough since farmers are going through a tough time. From my discussions with farmers and farming organisations I can say that they are reasonably satisfied that what we are doing is welcome.
(Limerick West): The Minister must not be talking to the farmers.
Is the Minister aware that farmers' total indebtedness at this stage is £1.7 billion to banks and the ACC and £0.3 billion to co-operatives? Would he agree that the schemes he is introducing are not nearly sufficient to meet this very serious situation?
Finally, is the Minister aware of the condition in the low interest loan that we secured from the EC recently that if the difference between the interest rates on the domestic scene and the proposed rate, which is 9¼ per cent, is less than 2 per cent the scheme will be suspended? Since money is now available at 12 per cent and by his own words the interest rate is falling, is the Minister now saying that scheme will be suspended in the very near future, before any money is issued?
First, let me tell the Deputy that this is not an EC loan. This is a loan which was raised by the lending institutions — the banks and the ACC — on the London money market and it was raised in European currencies, usually Deutsche Marks. There is provision for the suspension of the scheme in the event of a gap of less than 2 per cent between the interest rates to farmers and those charges under the scheme. At the moment the scheme is operating at 9 per cent from the ACC and 9.25 per cent from the banks and is a very good scheme.
Could I ask the Minister——
May I ask if the Government will reduce their interest rate? They are charging 2 per cent for the risk. In order to ensure that the scheme goes ahead, will the Minister advise the Government to drop their own risk charge?
I have no doubt that the scheme is already going ahead and going ahead very well, indeed.
The Government are charging twice as much as the rate at which it came to us.
At the next meeting between the Department, the banks and the ACC, would the Minister ensure that the following items are discussed: first, that farmers who are unable to meet their repayments at the end of May to the ACC and the banks would have the possibility of a moratorium of six months on those repayments without accummulated interest? Secondly, would it be possible also for the Minister to discuss the possibility of the continuation of the rescue package which has been in existence over the past three and a half years since this Government came into office? The Government had not introduced it.
I will look into these matters for the Deputy.