Department seeks advice on Government-backed, low cost loans for farmers

The Department of Agriculture has published a request for tenders around advance assessment on any possible current failures in relation to access to the finance market in Ireland.

This is a first step towards the potential introduction of Financial Instruments under the Rural Development Programme.

The proposal stems from a recent agreement in Europe in relation to a further package of measures for the struggling dairy and pigmeat sectors.

Among these was the making available of more flexible state aid support.

It will now be possible for farmers (as Small to Medium Enterprises) (SMEs) to access temporary finance up to a maximum amount of €15,000 per farm per year in circumstances where they either make a commitment to freeze or reduce production compared to a given reference period, or use the funds to bridge a liquidity gap.

Aid, as provisionally envisaged, would be granted in the form of direct grants, loans or guarantees in the case of freezing/reducing production, and in the form of loans or guarantees in the case of liquidity assistance (remunerated in the form of an interest payment).

IFA National Dairy Chairman Sean O’Leary called on Minister Creed to show greater urgency in implementing a state aid funded scheme to relieve dairy farmers’ cash flow pressures from superlevy and merchant credit.

Meanwhile, another dairy aid package is currently being considered by the European Commission and will be presented to EU Agriculture Ministers in July.

At this week’s meeting of the Council of Agriculture Ministers, Commissioner Hogan was asked to come up with another financial package to help farmers in the face of ongoing volatility in the dairy and other markets.

Ministers hope the package can be financed from existing EU funds but it is understood that a number of Member States indicated that they are willing to use the Crisis Reserve should it be necessary.

Such a move would be politically sensitive in my EU countries as it would involve a reduction in the EU payments of all farmers.

The Minister for Agriculture, Food and the Marine, Michael Creed has called for maximum flexibility for member states, including Ireland, to be factored into the package.

It comes as pressure mounts from a significant number of Member States that any further aid package from the Commission would be coupled with milk production cuts.

It is understood that the new package which will be on the table at the next Council meeting in July will include measures to reduce milk production across Europe.