Dáil Éireann Debate, Wednesday - 30 November 2016
11. Deputy Charlie McConalogue asked the Minister for Agriculture, Food and the Marine when the Strategic Banking Corporation of Ireland's new agrifund will be available for farmers to be drawn down; the outcome if all funds are not drawn down in the window for which the fund will remain open; and if he will make a statement on the matter. [37707/16]
View answerI would like the Minister to give the House an update on the Strategic Banking Corporation of Ireland's new agrifund. When will it be available to farmers to draw down funding? Where exactly is it at the moment? Does the Minister expect it to be taken up in full? If not, will he extend the period of time that is available for qualification purposes?
I announced earlier this month that the Strategic Banking Corporation of Ireland has invited financial institutions to take part in the agriculture cashflow support loan scheme. A number of applications were submitted by the closing date of 25 November. They will now be the subject of a formal approval process. This scheme will enable farmers to improve the management of their cashflow and reduce the cost of their short-term borrowings. The loan scheme forms part of the three-pillar strategy in response to income volatility that I announced as part of last month's budget. Along with tax measures and farm payments, it will alleviate some of the pressures being caused by the current market difficulties. The Strategic Banking Corporation of Ireland intends that the loans will be available in the market by the end of January 2017.
The scheme, with total funding of €150 million, will support highly flexible loans for up to six years for amounts up to €150,000 at an interest rate of 2.95%. This rate will represent a significant saving for farmers compared to other forms of unsecured short-term finance that are available. The loans will be flexible, with interest-only facilities of up to three years. While normal lending assessment criteria will apply, the fact that the loans will be unsecured will facilitate a more straightforward application process. The public funding of €25 million provided for the scheme includes €11.1 million from the EU’s exceptional adjustment aid for milk and other livestock farmers. The need for this scheme has been identified. It is expected it will be fully drawn down.
I thank the Minister for his reply. Can he give us an update on when exactly he expects banks to issue loans to farmers and these moneys to end up in farmers' accounts? It has been reported in the media that the timeframe for the scheme is being pushed out. It has been indicated that it will not be up and running until April or May. The idea underpinning the fund is that it will alleviate the cashflow problems that are being encountered in many sectors of agriculture. It is absolutely crucial for it to be made available as promptly as possible.
The Minister indicated that "normal lending assessment criteria will apply". Obviously, it will be unsecured. Will this mean that farmers who are under particular pressure because of cashflow difficulties will be excluded from the scheme? The Minister has refused to heed repeated calls to assist farmers in the tillage sector who are in crisis because they have lost many of their crops. I know they will be able to make applications under this scheme, but I suggest it is not the answer for them. Will he accept the rationale and need for a crisis fund to assist these farmers? Will he introduce such a scheme as quickly as possible?
On the final point made by the Deputy, this was one of measures the tillage farmers asked for when I met them. They also asked for a targeted agricultural modernisation scheme for the tillage sector and such a scheme will be announced in January 2017. They also sought to be included in the knowledge transfer and this has happened. The Deputy's assertion that this scheme is not what tillage farmers want is wide of the mark. In fact, it is what they asked for. Their access to it is funded through the €14 million that was provided by the Exchequer and thereby made available under de minimis rules, which allow for exemptions from state aid exclusion categories.
They have also asked for a crisis fund.
They have. I appreciate that. The beef industry has asked for compensation of €200 million for suckler cows. There is no shortage of people asking for help. We have to be realistic about what the State can afford. I appreciate the difficulties that are being faced in this sector. I do not believe the response to the myriad of issues being faced in the sector has been bad. While these are very challenging times for the tillage sector, I emphasise that we have implemented some measures. When the Deputy asked when the loan scheme will be up and running, he referred to media coverage suggesting that it might not happen until April or May. The chief executive of the Strategic Banking Corporation of Ireland, Nick Ashmore, gave an update on the scheme to the participants in a recent beef forum meeting. He indicated that the corporation is operating to a January 2017 deadline. The Deputy also asked whether normal terms of lending will apply. Surely he is not suggesting we should make loans available to people who do not have the repayment capacity.
What about those in crisis, including tillage farmers?
It has been agreed that Deputy O'Keeffe will ask the second supplementary question.
We appreciate the work of the Minister in arranging this invaluable loan initiative. It came about as a result of the crisis in the dairy sector, which seems to be being resolved.
I support Deputy McConalogue in respect of this issue. The concern is that no matter what bank one approaches, the person with the best accounts for the previous year will get priority, and that has to be agreed here. The Minister mentioned that the tillage sector wants everything. We know there has been a collapse in crop prices but there is part of the tillage sector which had no crops to harvest last year. Some farmers did not even sow any crops so they cannot generate income. The concern is that the Minister is not focusing on the tillage sector, where there was a major mishap. I understand the concern about the collapse in prices in the grain sector, which we all accept is bad for the economy. However, part of the sector has experienced a total reduction in its income. I cannot see how farmers can go to any of the banks to ask for loans.
The point I want to make is that, in the context of the negotiations I had at the tillage stakeholders meeting, there was a range of requests, including some relating to the matters the Deputy raised. However, there is a limit to the resources available and it was felt that it was best to do something strategic. At the meeting in question, for example, a figure quoted by one of the participants was that 80% of the spring barley crop is planted on the basis of merchant credit. Merchant credit costs are equivalent to credit card costs. If this product can, at a rate of 2.95%, substitute for merchant credit, it will be far more effective and will improve cash flow. There are other more critical structural issues for the tillage industry that need to be grappled with but this is one response. It is not a panacea and I do not have the silver bullet that will solve all of the issues for the industry. However, it is an attempt to recognise the sector's critical importance and to do something in the context of the very difficult year those who operate within it have experienced.
