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Dáil Éireann debate -
Wednesday, 19 Nov 1986

Vol. 369 No. 12

Adjournment Debate. - Financial Aid for Farmers.

Deputy Griffin has been given permission to raise on the Adjournment of the House his deep concern at the unhelpful attitude of the ACC and the Associated Banks in the matter of applications from deserving and necessitous farmers who are seeking Euro loan facilities.

First, I should like to thank you for giving me permission to raise this issue this evening on the Adjournment. I have agreed to divide the small amount of time left to me with Deputies Seán Byrne and Seán McCarthy, who have indicated their interest in this issue. I would also like it clearly understood that my contribution and remarks cannot and must not be interpreted as any criticism of the Government or of any of their Ministers. Here present we have the Minister of State at the Department of Agriculture, Deputy Hegarty, a farmer himself who is very conversant with the problems of the farming community. He has done his best at every available opportunity, both at departmental and Government level, to alleviate the plight of the farming community. I should like to congratulate the Government on introducing the exchange rate guarantee scheme for those who are seeking Euro loan facilities.

Since being given permission to raise this matter on the Adjournment, Members of all parties have come to me, offered their support and help and given me every encouragement in raising this important issue. I congratulate the Government on introducing what I deem to be a very bold and imaginative concept of an exchange rate guarantee scheme which includes over £200 million being lent to the farming community at a most attractive rate of interest of 5½ per cent. Unfortunately, the great expectations which greeted this scheme have not materialised for many farmers in South Tipperary for whom I speak and for farmers throughout the country. They were disappointed and disillusioned at the approach of the ACC and the Associated Banks when they inquired about the availability of the scheme. There was a certain amount of reluctance and hesitancy on the part of these lending institutions initially to give any information at all about the loan. Very grudgingly, they gave out application forms and the farmers thought, on completion of those forms, that they would be entitled to this facility. They were dismayed at being refused.

There is no need for me to go into the background of the farming community, the despair and despondency which struck them, particularly after the second consecutive bad summer. In 1985, owing to the very adverse climatic conditions there was deep and real concern among the farming community who looked forward then to 1986 and hoped for a good summer and a good harvest to enable them to clear off their debts and pay off the lending institutions. When the 1986 summer was bad the farmers were near to despair. They grasped this fine scheme for some ray of hope in continuing in agriculture.

I ask the Minister to call in the ACC and the top executives of the four Associated Banks and request them to have a more sympathetic, more sensitive and more humane approach to the plight of the farming community, particularly the small farmers in my area and the dairy farmers with a milk output of less than 25,000 gallons. The behaviour of these institutions to date is totally against the spirit of this magnificent scheme. From my own experience from the number of farmers who have approached me and who, I am sure, have approached all other Deputies from rural constituencies, I know that the farmers wish the Minister to have another look at the scheme and to ask the institutions not to be so rigid in their declaring of applicants as ineligible.

I know that there is a question of creditworthiness, which the institutions must have regard to, but I would ask them to be flexible. A farmer may not have been creditworthy at a 17½ per cent or at up to a 22 per cent interest rate, but at 5½ per cent interest rate surely virtually every farmer would be creditworthy for the amount of loan required. I have a file of names of big and small farmers, dairy farmers, cereal growers and pig producers, who have asked that the Minister be requested to make representation on their behalf to the ACC. I know he cannot enter into every case individually — though some Ministers have done so and successfully — but the bulk of the applicants who were refused under the present system of interpretation of the scheme find no hope in it. I hope that as a result of all our representations those farmers who were refused will have their cases re-examined with a view to granting them the money they so badly need.

Deputy Griffin has kindly allowed me to share the time with him, since I had made a similar request to the Chair. The Euro-loan scheme is a fraud and a cod. The Minister stated in reply to a parliamentary question that the terms and conditions of the scheme had been drawn up so as to ensure that the funds would be allocated on low interest to those most in need, in order to maintain their contribution to general agricultural output. That is blarney.

There are at least 50,000 small and medium farmers in serious financial trouble. This scheme has so many restrictions it is an insult to suggest it will help farmers. Not too long ago we in this House gave permission to the Government to help out a certain banking group when they could not run their own business. About £200 million of taxpayers' money was poured out to them to sort out their financial problems. They and their colleagues in the ACC are now putting families out of their homes and forcing them to sell their houses, their land and their livestock. Letters are being sent out to people in my constituency which would not be sent to criminals. If this Government have not the courage to deal with the lending institutions — the AIB, Bank of Ireland or the ACC — the incoming Government will act on behalf of the nation. These institutions are worse than the landlords who put people out of their homes. Letters have been written by these faceless people with no thought or knowledge of the hardship these families are experiencing through EC prices dropping, input costs increasing and the worst weather conditions since records began. Yet we read in the newspapers that they are being kind to the farming community. They are acting in the same way towards small shopkeepers. It is about time all this bunkum stopped. These are the people who set this country mad some years ago and set the price of land on fire, but now they are looking for their pound of flesh.

This scheme is doing nothing for the average farmer. There are farmers in my constituency who are frightened out of their minds by letters from bank managers. These are people who always meant to pay their way and fought for the freedom of this country. They have almost been driven into mental homes. They sold some of their livestock and some of their land but when they applied for the Euro-loan they were refused and told that if they had come in last year they would have qualified. Yet the Minister tells us it is a good scheme and that so many people are applying every week. What type of people are applying? What type of people are qualifying? The Minister should take a hard look at the job the banks are doing and the people they are setting up to suit themselves. They are closing a lot of doors and the average man who is without muscle is not getting anywhere.

It is a national scandal that family farms are being sold out by the lending institutions while the Government are sitting idly by and doing nothing. How long can this continue in view of the way prices are going? Will it be like 100 years ago when families were thrown out and emigrated? Will we need more boats to get the people out of the country? The situation is terrible, yet the Government say this is a lovely scheme. It is useless to the average farmer. I am not talking about the man who lived highly and bought land at a wild price but about the small and medium farmer. He has not a chance in hell while he is paying interest rates of 18 per cent and 20 per cent. His colleagues in Belgium and Holland growing tulips have money freely available at 5 per cent. Here we have had to listen to blarney about the great help that would be given to farmers after Hurricane Charlie and two years of bad weather. What did the farmers get? A miserable £200 million. We gave over £200 million to the AIB for the irresponsible conduct of their business and they have the cheek to put a man and his family out on the road. They are threatening to do so every day of the week. If such people had not sold off their livestock last year to pay their debts they would qualify under the new scheme.

The Minister says they may look into the matter in the light of the experience of the operation of the scheme. How long more must we wait? These people cannot live on a breadline with the bank manager breathing down their neck. I appeal to the Minister for God's sake to do something now. I could go on for an hour but I want to allow my colleague to say a few words. The sum of £200 million which has been granted represents only 13 per cent of the indebtedness of farmers to the ACC and the banks. It is only a sick joke. People owe all this money not through their own fault but because of world prices, EC prices, quotas and many other factors such as bad weather. Maybe if they came from Japan and got an IDA grant they would have an easier time.

These are our people and they have a right to raise their families here. Some of their fathers fought for our freedom; but for them I would not be here this evening. When the Fianna Fáil Government come into power the lending institutions will have to wake up and cop on. This is our country. It does not belong to the vultures who are trying to destroy the fabric of rural Ireland.

I thank Deputy Griffin for allowing me the opportunity to speak. The terms of this Euro-loan should be renegotiated. There is no doubt the amount of money allocated is quite insufficient. It is almost impossible to find someone who qualifies under this scheme. I have known only one person who has received sanction for a loan. The scheme is a charade and a sham and something should be done to give proper compensation to farmers. They have endured two terribly difficult years of bad weather. Their income has dropped by about 24 per cent and I do not know of any other section of the community which would tolerate that type of loss. If any other section were subjected to such a loss there would be a public outcry and the country would be brought to its knees. Farmers are basically tolerant people and they have accepted what has happened but they need help. There is an obligation on the Minister and the Government to provide that help.

We are reaching the stage when the family farm is becoming non-existent. More and more farmers are having to sell their land to pay the vultures who are running our banking institutes. I would like to be able to say that the banks and the ACC are treating farmers properly but this is not the case. When farmers had good times the banks did very well out of them, but when farmers are doing badly there is an obligation on the banks to help them out. Instead, those banking institutes are treating the farmers like criminals. They send them letters no decent, honest person would send to another. Bank managers are questioning and investigating farmers as if they had committed major crimes. That is scandalous. I know from experience as a medical doctor that more farmers are getting more depressed and a greater number of them will have to be committed in some cases and go voluntarily in others to psychiatric institutions. I hope the Minister will bear these comments in mind and give the ACC and the bank management a good lecture. Tell them they are dealing with decent people who should be treated decently.

I thank Deputies for their contribution. The exchange rate guarantee scheme for farmers and private peat producers has been introduced by the Government to give meaningful aid to those producers who are in severe financial difficulty as a result of the very difficult weather conditions both last year and in the current year. These loans are funded in EMS currencies borrowed by the four Associated Banks and the ACC for on-lending to farmers. I want to stress straightaway that the money involved is not derived from the EC and the Government's participation is that of guaranteeing the exchange loss that might arise in the event of any re-alignment of EMS currencies.

It is only costing the Government £16 million. Cut out the red tape and all this waffle——

The Minister must be allowed to speak without interruption. You will have to restrain yourself.

The loans are being made available through the Associated Banks and the ACC at an exceptionally low interest rate of around 5½ per cent for working capital purposes and for restructuring of existing debt. I must make it quite clear that the involvement of the national Exchequer relates only to any potential exchange risk loss. It does not relate to any losses incurred by the lending institutions arising out of any repayment problems they might have with any individual farmer under the scheme. It is a specific requirement that responsibility for assessing the general creditworthiness of applicants and for any credit risk involved is entirely a matter for the lending institutions.

What are the Government there for?

The total fund provided under the scheme is £200 million. While this is a very considerable sum, the numbers of farmers who can benefit is necessarily limited. The scheme is not intended to provide low interest loans to every farmer who would like to get access to cheap money. The specific priority of the scheme is to help those farmers who have experienced severe financial difficulties as a result of the recent weather problems. The provision of low interest loans at these very favourable rates of interest does, inevitably, generate a demand far in excess of available funds. In the circumstances, it is a matter for the lending——

What about the Government? It is Deputy Hegarty's responsibility as Minister——

——institutions to decide on the eligibility and qualifying amount of individual applicants.

(Interruptions.)

Order, please.

In a year's time will the Minister take back what he is saying now——

It is unreasonable to ask the Minister to come here at this hour of the night and not let him speak. That does not make sense.

They took back the rescue package as well.

Deputy Byrne should leave the House if he does not want to listen.

In deciding on this issue, the lending institutions are the people in the best position to assess the detailed financial circumstances——

(Interruptions.)

——of applicants and are, therefore, in the best position to decide on the relative hardships experienced in individual cases, I can well understand the feeling of disappointment of producers who would like to have enjoyed the very substantial benefits that are available under the scheme but are not included. The fact of the matter is, however, that the available funds must be concentrated on those who have experienced the most severe financial hardships. Furthermore, the lending institutions have been instructed to endeavour to ensure that the requirements of smaller farmers are adequately catered for so far as the available funds allow.

I would like to draw the attention of Deputies to the terms and conditions of the scheme which cover working capital approvals and existing borrowings of the working capital requirements to fund borrowings in 1986-87. Borrowings specifically for land purchase or nonagricultural borrowings of farmers are excluded from the scheme.

In his announcement of the scheme, the Taoiseach has pointed out that of the total available for new loans to the farming community, a minimum of £65 million is to be reserved for new working capital requirements of the categories of farmers covered by the scheme initiated on 1 June, that is, dairy farmers with quotas of less than 25,000 gallons, pig producers, winter beef producers and cereal growers, but also of other categories of farmers who are in severe financial difficulties.

The consequences of the conditions on eligibility under the scheme is that loans both for working capital and restructuring purposes must be allocated by the lending institutions on a priority basis to those farmers who are in severe financial difficulties because of weather conditions. Farmers not in serious financial difficulty due to recent weather conditions may also be eligible for working capital loans under the scheme provide they are in the category of farmers covered in the scheme initiated on 1 June, that is, dairy farmers, pig producers, winter beef producers and cereal growers. However, benefits to this category of farmers can only arise in the event of the allocation of working capital to an individual lending institution not being fully utilised by farmers who are in severe financial difficulties due to the recent weather conditions.

We have endeavoured to provide as much flexibility as possible in the operation of the scheme. There is a monitoring committee involving the farming organisations monitoring this scheme. In the past, these schemes have been criticised on the grounds that they involve too much red tape. However, if we are to have flexibility we cannot, at the same time, expect the scheme to cover everyone who would like access to substantial loans at interest rates of around 5 per cent-6 per cent. We have also designed a scheme to get the benefits into farmers' bank accounts as quickly as possible. As I said earlier, the scheme is not designed to meet the wishes of everybody who wants low interest money and it would be foolish to pretend otherwise. We have endeavoured to ensure that the most needy cases are covered——

——in the apportionment of funds and that those who are well able to finance their own operations do so in the ordinary way.

(Interruptions.)

Bluff.

The Dáil adjourned at 11 p.m. until 10.30 a.m. on Thursday, 20 November 1986.

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