High cost loans are crippling go-ahead farmers

CHEAPER loans for the agri sector need to be fast-forwarded in order to ease increasing cash problems for Irish farmers, according to Galway IFA Chairman, Pat Murphy.

He said that while there had been suggestions from the EU Commission of cheap loans coming on stream by early summer, they still had not materialised.

“Many farmers are paying penal interest rates of between 8% to 10% at a time when banks can get money for around the 1% mark and even lower,” said Pat Murphy.

He said that this was a completely unreasonable scenario for farmers to find themselves in, at a time when it should never be as cheap to borrow money.

“This is really one of the great unanswered questions . . . as to why the banks and financial institutions are not reflecting the reality of the current wholesale interest rates.

“It’s an issue that the IFA will be pursuing vigorously over the coming weeks. We’re hearing the figures of European Investment Bank loan rates of 1% and yet farmers and other small businesses are being crippled with interest rates, eight to times greater than this,” said Pat Murphy.

He added that this was an issue that was also being approached on a number of levels by National IFA President, Joe Healy – the priority now was to get results on this over the coming weeks, said Pat Murphy.

During the Spring, there were indications from EU Commissioner, Phil Hogan, that farmers would be able to access ‘cheap’ loans in an arrangement to be worked out with the European Investment Bank (EIB).

In the scheme, banks in the EU member states were to roll out cheap EIB loans with an interest rate as low as 1.5% being mooted.

Farmers – and especially the dairy sector – have always been regarded as ‘big borrowers’ in terms of the small business sector. Total borrowings on Irish farms have been estimated to be in excess of €3 billion.