Thursday, 6 December 2018

Ceisteanna (11)

Eugene Murphy


11. Deputy Eugene Murphy asked the Minister for Agriculture, Food and the Marine if the plans announced in budget 2018 to introduce a low-cost cashflow loan scheme for farmers have been abandoned in view of the fact that there seems to be no movement on a hardship fund to help bridge cashflow difficulties for farmers; and if he will make a statement on the matter. [50998/18]

Amharc ar fhreagra

Oral answers (6 contributions) (Ceist ar Agriculture)

Will the Minister clarify whether the plans announced in budget 2018 to introduce a low-cost cashflow loan scheme for farmers have been abandoned, given that there seems to be no movement on the hardship fund to help bridge the cashflow difficulties for farmers?

One of my priorities is to improve access to finance for the agrifood sector. Food Wise 2025 identifies competitiveness as a key theme and includes a recommendation that stakeholders work to “improve access to finance for agriculture, forestry and seafood producers and Agri-food companies”.

The future growth loan scheme is being developed by my Department and the Department of Business, Enterprise and Innovation in partnership with the Department of Finance, the Strategic Banking Corporation of Ireland and the European Investment Fund. It will be delivered through participating finance providers and will make up to €300 million of long-term investment loans available to eligible businesses, including the primary agriculture, agrifood and seafood sectors. The loans will be competitively priced and will be for terms of eight to ten years. 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 currently unavailable. The delivery of this product and its effects will be felt all along the food production chain. The fund is leveraged by Exchequer funding of €62 million, of which 40%, or some €25 million, will be provided by my Department. My Department’s contribution was announced as part of budget 2018 and will be paid to the scheme by the end of this year. Arrangements are being finalised to have the scheme in place and ready to be launched in early 2019. It will run for three years from its launch date, and further announcements in this regard will be made shortly.

In regard to general cashflow issues, I liaise with the main banks on issues relating to the agrifood sector and I welcome that they have followed through on their commitment to support the sector through a challenging period.

The delivery of last year's agriculture cash flow loan scheme has acted as a catalyst to encourage financial institutions to improve and develop new loan products for the sector. A recently announced initiative by one of the main banks mirrors the scheme in offering a discounted interest rate with extended and flexible repayment terms. The milk flex loan product developed by the Irish Strategic Investment Fund with dairy co-operative and private banking participation is another good example of innovation in this regard. In addition, many farmers rely heavily on co-operative and merchant credit and I have welcomed initiatives by some of the co-operatives in relation to credit facilities for their suppliers.

While I have to welcome what the Minister says will come on board in 2019, it should be remembered that this was announced in budget 2018. If I am not mistaken, the Minister made a further announcement at the IFA AGM in January and indicated that it would be established in the autumn. I push this point on the basis that these are the most challenging times for farmers I have ever seen. They face the uncertainty of Brexit, the uncertainty of CAP reform and, most importantly, climate change. As the Minister has seen himself, weather patterns have changed dramatically and that is costing farmers dearly. Any business, but farming in particular, requires financial planning. As such, I urge the Minister to put this in place within a matter of weeks. Farmers need it desperately and there should be no further delay. If another payment announced on budget day did not occur when it was supposed to, there would be uproar in the country. I appeal to the Minister to do everything required to bring this in as quickly as possible.

I confess to having been rather frustrated myself at the difficulty in progressing the matter. As the Deputy knows, the European Investment Fund Agreement Bill 2018 has concluded its passage through the Seanad and will come before the House today. It provides for the legislative framework under which the new loan fund will be delivered. A legislative basis is required because of the involvement of the European Investment Fund. It has been a more cumbersome and difficult process than we anticipated and it has taken longer than I would have liked. However, I am satisfied that it addresses a gap in the market for capital investment through unsecured lending over eight to ten years at an interest rate which is not currently available. I acknowledge that it is later than we would have liked, but it will be in the marketplace in early 2019.

While I welcome that, one must consider what has happened already in 2018. There was a terrible fodder crisis last spring and the weather was appalling. In fact, we did not have a spring as it seemed winter went into summer. Farmers were initially unable to get fodder. In the Minister's own part of the country, the dairy sector was severely affected. There is now a beef price crisis. Farmers are under attack financially on all fronts and while I welcome the clarification the Minister has provided this morning, I urge him to put the fund in place as quickly as possible. Farmers will not be able to continue farming without having that financial planning in place. Such planning must be assisted by Government given the threats facing farmers. There is uncertainty from Brexit and there is no doubt that there will be challenges from CAP. A financial crisis on top of all that makes it next to impossible for farmers to continue to work at their trade.

I accept the Deputy's point. If we were in any doubt, the 2018 Teagasc farm income survey published this week confirms it. I acknowledge that it has been a very difficult year. However, in the context of climate-related challenges, the stakeholder group we established has worked extremely well. It includes statutory, non-statutory, voluntary and farm organisation participants. We have seen the gap close substantially and there is now an acceptance that there is sufficient fodder in the country. There may be individuals who remain vulnerable and we must remain vigilant in that space. However, I accept the thrust of the Deputy's observations overall and hope this financial product aimed at capital investment rather than working capital will be of some benefit to the sector in 2019.