Eurocrats on hols as farmers face credit crunch

IT’S THAT time of year again as Brussels has cleared out for the summer.

But for farmers, the traditional endof-season liquidity crunch has set in, with cashflow issues at their most acute.

Add to that the ongoing dairy price crash, inclement weather and Brexit uncertainty, and you have the makings of what the IFA says is a ‘farm income crisis’.

“Farm families are under huge pressure as cashflow tightens and the viability of their family farm is put at risk,” said IFA President Joe Healy when the group published its pre-budget submission last week.

The EU recently awarded Ireland €11m from a new €500m emergency dairy fund, which the Government is hoping can help fund short-term loans to cash-strapped farmers.

But what farmers need more, particularly young farmers, is easier access to bank loans.

The legacy of the financial crisis is still hampering lending, with Irish interest rates among the highest in Europe.

While they may not be as high as fellow bailout countries Greece, Cyprus or Portugal, farmers’ groups including the IFA have been lobbying the European Investment Bank (EIB), the EU’s longterm lending arm, to see if it can help to offset the problem.

The EIB has a specific loan guarantee scheme for agriculture and rural development, and is working with banks like Credit Agricole to finance farming succession in France.

But the EIB is still a bank, one whose portfolio is guaranteed by EU member states, and so it is less inclined to invest in countries where there has been a major banking crisis.

Alan Jagoe, President of the European young farmers’ association (CEJA), says there needs to be more flexibility, particularly for younger farmers who don’t have the credit history to tap loans.

“Banks need to look at the bigger picture,” Jagoe says. “There needs to be a will there, both politically and within the financial institutions, to do it.”

One solution could be for the EIB to help fund and promote national schemes, such as the Glanbia MilkFlex fund.

The fund blends company money with contributions from the Ireland Strategic Investment Fund to provide cheaper loans to Glanbia suppliers, with repayments linked to variations in milk prices.

Guarantees are another option. Lithuania’s Agricultural Credit Guarantee Fund underwrites a portion of loans to farmers wanting to purchase new livestock or equipment.