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.