Credit deal a step closer af­ter ICMSA bank talks

Irish Independent - Farming - - Front Page -

An ini­tia­tive to al­low dairy farm­ers to by­pass po­ten­tially crip­pling Ir­ish bank­ing terms and in­ter­est rates is mov­ing into its next phase.

ICMSArep­re­sen­ta­tives have al­ready held talks with Dutch bank Rabobank to al­low farm­ers to ac­cess cheaper and more plen­ti­ful credit. For­mal ne­go­ti­a­tions are due to start in com­ing weeks.

“We are con­cerned that Ir­ish banks will be lim­ited both in the amount of credit and on the in­ter­est rates they will be able to of­fer,” said ICMSA pres­i­dent Jackie Cahill.

Up to € 2.8bn could be re­quired by Ir­ish dairy farm­ers be­tween now and 2020 to ramp up milk out­put by the 50pc tar­get set in the Food Har­vest 2020 re­port, ac­cord­ing to an ICMSA study com­pleted in con­junc­tion with Mer­rion Cap­i­tal and UCC dairy econ­o­mist Michael Keane.

How­ever, the or­gan­i­sa­tion claims that at cur­rent milk prices Ir­ish farm­ers are well po­si­tioned to han­dle ex­tra debt due to their low lev­els of in­debt­ed­ness. The ICMSA say that coops are pre­pared to fa­cil­i­tate credit ar­range­ments on be­half of for­eign banks for farm­ers. They also claim that trans­ac­tion charges can be fur­ther re­duced by stream­lin­ing credit se­cu­rity if stan­dard con­di­tions for the reg­is­tra­tion of a charge against land are es­tab­lished.

In ad­di­tion, the re­port states that mort­gages known as chat­tel mort­gages should be made avail­able to farm­ers on the strength of long-term leases on land to fa­cil­i­tate ex­pan­sion of units over the com­ing years.

The ini­tia­tive comes at a time when a se­ries of in­ter­est rate rises have been flagged by the Euro­pean Cen­tral Bank. A spokesman for the ICMSA said that con­ti­nen­tal banks would be able to of­fer in­ter­est rates up to 2.5pc lower than what would be on of­fer from Ir­ish banks. “ There is no way that Ir­ish banks should be al­lowed lever­age over blue-chip dairy farm busi­nesses to sort out their own bal­ance sheets,” he said.

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