Dáil Éireann Debate, Wednesday - 13 July 2016
77. Deputy Charlie McConalogue asked the Minister for Agriculture, Food and the Marine when farmers will be able to avail of affordable loan credit from domestic and European Union funding sources in order to bridge liquidity gaps; and if he will make a statement on the matter. [21288/16]
View answerI am fully aware of the pressures on farmers right now, and I have committed to working with all the stakeholders, both at national and EU level, to address these issues and ensure that we continue to have a sustainable and resilient sector. One of my priorities is to support the provision of lower-cost, more flexible finance.
The EU Commission has announced some limited flexibility on State aid provisions as part of the response to price volatility, including the possibility of a measure on bridging liquidity gaps. I should point out that this flexibility does not include the provision of EU funding. I am working with all the financial institutions, particularly the Strategic Banking Corporation of Ireland (SBCI), to identify potential solutions to providing working capital finance for farmers with liquidity issues.
I recently met with the CEOs of the main banks and stressed the need for them to be flexible in the context of increased income volatility. The banks told me that they recognise and are responding to the challenges facing farmers in this regard. They all offer options such as moving loans to interest-only repayments and extending overdraft facilities. They all stated that they are committed to the sector for the long term and are aware its cyclical nature. I also took the opportunity to question the banks on the relatively high interest rates for SMEs in Ireland compared with those across Europe.
Partly in response to these relatively high interest rates, my Department has just published a request for tender to procure an ex-ante assessment to assess any current failures in the access to finance market in Ireland. This is a first step towards the potential introduction of Financial Instruments under the EAFRD Rural Development Programme and the EMFF Seafood Development Operational Programme.
Access to finance was discussed at the Dairy Forum in June, with an exchange of views with the main banks now a part of the agenda at each meeting. Before the meeting I formally launched the Dairy Forum’s ’Financial Management Initiative’, a programme of cash flow and financial management training and advice for dairy farmers, which is an appropriate and practical initiative at this time.
Access to finance was also discussed at last month’s meeting of the Food Wise 2025 High Level Implementation Committee, which heard from representatives of the SBCI and the Irish Strategic Investment Fund (ISIF). Both are now active in the market. In its last report in January, the SBCI stated that of the 4,619 loans amounting to €172 million drawn down by SMEs, 26% had been accessed by agriculture, which is currently its largest sector.
My Department, in cooperation with all the other relevant State bodies, will continue to explore additional funding mechanisms for farmers, the agrifood sector and for SMEs generally.
