Dáil Éireann Debate, Thursday - 22 November 2018
4. Deputy Mattie McGrath asked the Minister for Finance the status of his Department's statement of strategy 2017 to 2020, with specific reference to the continued availability of favourable terms for investment in primary agriculture, processing and marketing under the Strategic Banking Corporation of Ireland; and if he will make a statement on the matter. [48789/18]
Amharc ar fhreagraI am worried about the continuing availability of favourable terms for investment in primary agriculture, processing and marketing under the Strategic Banking Corporation of Ireland. I am asking this question in the light of the obvious concerns about the potential impact of Brexit on the agriculture sector generally, the impasse concerning whether the favourable deal on the table will be accepted and considerable fears that the United Kingdom will crash out of the European Union. There are obvious concerns about the impact on the economy as a whole but particularly agriculture, from the smallest to the biggest farmers.
The SBCI’s goal is to increase the availability of appropriately priced, flexible funding to viable Irish SMEs, including agricultural firms. By the end of March 2018, there had been €972 million of SBCI-supported lending, supporting more than 24,000 SMEs and 129,000 jobs. The SMEs that received SBCI finance are from all sectors of the economy with 26% of loans going to the agriculture sector. The SBCI has a number of schemes in place specifically designed to support lending to the agriculture sector.
By the end of March, 7,842 loans totalling €203 million had been made to farmers under the agricultural investment loan scheme. This scheme continues to be available through Fexco and Finance Ireland. Finance Ireland has also teamed up with Glanbia to provide finance for the installation of on-premises milk tanks by dairy farmers.
In January 2017, the SBCI launched a €150 million agriculture cashflow support loan scheme for farmers, on behalf of the Department of Agriculture, Food and the Marine, to provide low-cost, flexible loans to farmers to support the primary agriculture sector in dealing with income and price volatility. The scheme provided unsecured loans of up to €150,000 for up to six years at an interest rate of 2.95%. The fund was fully subscribed by April 2017. By the end of December 2017, some €145 million of loans had been drawn down by more than 4,000 SMEs supporting 5,800 jobs under the scheme.
The scheme was supported by €11 million of EU exceptional adjustment aid and further €14 million from the Department of Agriculture, Food and the Marine.
The number of applications for and uptake of grants indicates considerable angst, and banks are simply not lending. I appreciate that the SBCI offers a Brexit loan scheme in partnership with the Departments of Business, Enterprise and Innovation and Agriculture, Food and the Marine. However, the conditions do not make it readily accessible to many farmers. To apply for a loan a business must have fewer than 250 employees and a turnover of €50 million or less, which is too restrictive as can be seen from the figures set out by the Minister on applications to the end of 2017. It is too restrictive for ordinary farmers who are helping with the recovery in the economy and there are major concerns over Brexit.
Teagasc figures for 2016 indicate that the agrifood sector generated 7% of gross value added - €13.9 billion - and 9.8% of Ireland's merchandise exports, and provided 8.5% of national employment. There is considerable concern in the sector.
In recognition of the major importance of agriculture to the economy, we have put in place programmes and schemes such as this. As the Deputy will be aware, in budget 2019 I announced the future growth loan scheme to deliver loans of eight to ten years for longer-term investment. This is to cover both primary agricultural producers and food businesses. We expect the fund to be available in 2019 subject to legislation being passed by the Dáil. In the past two years in particular, we have put in place an array of programmes to provide additional support to all who are involved in Irish food and agriculture. The Deputy is correct in saying the schemes have specific criteria and terms, but that is because they are loans. They have been successful and we have made a further loan scheme available for the sector next year.
When employment in inputs, processing and marketing is included, the agrifood sector accounts for almost 10% of employment. In terms of its contribution to the national economy, Teagasc research indicates that the agrifood sector is one of Ireland's most important indigenous manufacturing sectors, accounting for employment of around 167,500 people. It includes almost 700 food and drinks firms that export food and seafood to more than 160 countries worldwide. Economic activity in the agriculture and food sector produces a far bigger return than equivalent activity in other traded sectors of the economy. This is because agrifood companies source 74% of raw materials and services from Irish suppliers, compared with 43% for all manufacturing companies. All of this demonstrates the clear necessity to maintain a firm financial commitment to the agriculture sector through all available State bodies and, in particular, because of the uncertainties associated with Brexit.
Despite the adverse move in the euro-sterling exchange rate, export sales of food and drink have increased by 6%. This reflects the quality of work by everybody involved in agriculture. Each of the budgets I have been involved in have built on the work of my predecessor, Deputy Noonan, in looking to put in place targeted support through both targeted tax measures and investment to support Irish agriculture.
I agree with the Deputy on the major challenge Brexit poses for farmers, particularly small farmers. This is why we have put in place the kinds of supports I have outlined. The Deputy will be aware of the large number of Brexit-ready seminars taking place throughout the country to inform everybody involved in the economy, including in agriculture, of the support available to help them deal with a changing world. The 6% increase in food and drink exports indicates what is being achieved collectively.
