Tuesday, 26 March 2019

Questions (63)

Aindrias Moynihan


63. Deputy Aindrias Moynihan asked the Minister for Agriculture, Food and the Marine the uptake of the Brexit loan scheme by firms in the agriculture sector; and if he will make a statement on the matter. [13990/19]

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Oral answers (6 contributions) (Question to Agriculture)

The report published by the Economic and Social Research Institute, ESRI, this morning was stark and blunt in respect of the threat of a no-deal Brexit hitting anything up to 80,000 jobs. While we have known for some time that there is a heavyweight threat, and while a large suite of measures has been taken, such as loans, conferences and grants, the take-up seems to be low and I am not sure there is a realisation of the urgency of the matter or the need to prepare. Will the Minister outline the level of take-up for those schemes?

The €300 million Brexit loan scheme was developed in co-operation with the Department of Business, Enterprise and Innovation and the Strategic Banking Corporation of Ireland, SBCI, to provide working capital support to enable eligible businesses to implement the necessary changes to address the challenges posed by Brexit. The scheme was opened for applications on 28 March 2018 and will remain open until 31 March 2020. It provides for loans of between €25,000 and €1.5 million per eligible enterprise at a maximum interest rate of 4%, ranging from one year to three years, with unsecured loans up to €500,000. The loans can be used for future working capital requirements or to fund innovation, change or adaptation of the business to mitigate the impact of Brexit. Applications for eligibility assessment must be made to the SBCI which, on approval, assigns an eligibility reference number. The reference number, along with the loan application, may be then provided to a participating lender.

On 15 March, 523 eligibility applications had been received, of which 472 were approved and 9 were ineligible. The total number of loans which had been progressed to sanction at bank level was 89, at a value of €19.34 million, 18 of which related to food businesses with a total value of €5.7 million. While the number of loans progressed to sanction level is relatively low, it reflects the current uncertainty regarding the outcome of Brexit. The number of eligibility applications approved, however, indicates a good level of interest in the scheme and is a good indicator of businesses engaging in Brexit preparedness.

In addition to the Brexit loan scheme, the future growth loan scheme has been developed by my Department and the Department of Business, Enterprise and Innovation in partnership with the Department of Finance, the SBCI and the European Investment Fund, EIF. It will be delivered through participating finance providers and will make up to €300 million of investment loans available to eligible businesses, including farmers and the agrifood and seafood sectors. The loans will be competitively priced, will be for terms of between eight and ten years and will support strategic long-term investment in a post-Brexit environment. This is a long-awaited source of finance for young and new entrant farmers, especially the cohort who do not have high levels of security. It will also serve smaller-scale farmers, who often do not have the leverage to negotiate for more favourable terms with their banking institution. Food companies have identified long-term investment finance of up to ten years as a critical need which is unavailable in Ireland. I am pleased that the Government has been able to deliver this product and its effects will be felt throughout the food production chain, from primary producer to processor.

The SBCI held an open call earlier this year inviting banks and other lenders to become lending partners. It advises that a period of due diligence, including by the EIF, is nearing completion. I have urged the SBCI to operationalise the scheme as soon as possible. It will run for three years from its launch date and I expect to make further announcements in this regard soon.

The Minister outlined the figures for the Brexit loan scheme and acknowledged that a take-up of less than €20 million is low, which is correct. He also outlined other demands but he did not provide the figure in that regard. Will he outline the number of businesses which applied for that scheme?

On the Brexit loan scheme for farmers, which was announced one year and a half ago, when will farmers be able to draw funds from it?

The Taoiseach outlined earlier a further suite of measures to be announced later in the week. Along with the figures which the Minister has provided, is that not an acknowledgement that the schemes in place are not adequate, working or delivering for people on the ground?

As outlined in my initial reply to the Deputy's question, there have been 523 applications for the loan scheme, of which 472 have been approved. That a number of businesses which have had their applications approved have not proceeded to draw down the loan is a reflection of the uncertainty that exists in the business environment. People require certainty before they make investment decisions, which is understandable. The loan scheme is expected to last until 2020 and, therefore, quite a period of time remains.

It is one of three schemes that we have run. We have run the €150 million working capital scheme, this €300 million loan scheme and there will be a third scheme, as the Taoiseach mentioned earlier, details of which will be made available later this week. There has been a comprehensive response to provide access to finance. The loan scheme is just one part of a comprehensive strategy in the context of business needs, particularly agrifood, which are firmly rooted in the context of the environment in which they operate, Brexit, exposure to the UK market and so on. It has been a substantial, coherent response and, as the Taoiseach indicated, there will be further developments on the other loan scheme soon.

There are funds which the Minister has said are not drawn down but he has not given an indication about what level of funding is involved in that. We know approximately €20 million is approved. What is the other amount that has not been drawn down yet because of the uncertainty about whether it will go ahead? What value is there on that? When will farmers be able to draw down funding from that scheme that was announced a year and a half ago?

We saw when the euro was introduced that people had money in hand, there was a long lead-in time, people had certainty, understood it and were comfortable with it. When there was foot and mouth, people rowed in behind because they had information and understood what it meant, and there was great goodwill behind it. There is a significant gap here with the Brexit schemes. Is the Minister putting out enough information for those companies to be able to access and adequately draw down from those schemes? Is the fact that the Minister has had to come with a third tranche that we understand will be announced later in the week not an acknowledgement that the schemes that are there have not delivered or been adequate? Was it misunderstood that there was a large vulnerability there?

I do not think so. The three schemes are all somewhat different. The first €150 million was a working capital scheme. It has stimulated competition in the marketplace to such an extent that the product that we introduced at 2.95% is close to what is currently available in the marketplace. That initiative has triggered greater competition for working capital. Details will be announced later for capital investments for longer than seven years, primarily in the area of agricultural investment or the fishing industry, which I would be concerned with. Most of the money available from financial institutions for capital investment is secured land and it is up to seven years, whereas the gap in the market is for unsecured money over seven years at very competitive prices. The third product we are bringing in is to drive capital investment. The one which we are talking about in this question is not targeted at primary producers but at the business community and has complemented the one which will shortly be added and the one which was done previously.