Call for ‘farm banking structure’ to avoid dependence on contractor credit

The Association of Farm & Forestry Contractors in Ireland (FCI) is calling on the Minister for Agriculture, Michael Creed, to create a properly functioning farming banking structure.

This is necessary, says the FCI, to “provide expanding commercial farmers with the necessary working capital requirements to develop modern and sustainable farm businesses”.

Image source: Shane Casey

The contractors’ body says that Ireland is now the only country in Europe without an agricultural bank. It says that the impact of this has been a strangulation of balanced farm expansion, through a lack of funding.

The FCI is calling on the minister to put this new banking structure in place to replace the significant dependence of Irish farming on contractor credit.

“We know that farmers are struggling to meet daily cash-flow needs and this has been made acutely obvious with the current fodder crisis,” said FCI national chairman Richard White.

“FCI members have been anticipating this crisis as we have seen first-hand evidence of the shortages of fodder, because we – the contractors – are the ones who harvest the silage crops.

Image source: Shane Casey

“Working across thousands of Irish farms, our members have seen dairy cow and cattle numbers rise, while silage pit sizes remain static – in unrealistic attempts to emulate New Zealand systems that have been developed for a milder climate and different soil types.

“We know that farmers cannot expect to meet the targets of increased animal numbers without adequate silage crops. All of this demands proper working capital funding on farms,” White added.

Slurry spreading difficulties

Poor ground conditions are also preventing slurry spreading on many farms. FCI members report having large volumes of unfinished slurry spreading work, as they struggle – piecemeal – to prevent slurry build-up in sheds.

“In these circumstances our members cannot invoice their customers, further adding to cash-flow problems for contractors,” explained White.

Image source: Shane Casey

“This situation further emphasises the need for working capital on Irish farms, to allow contractors and other service providers to continue to offer sustainable support for Irish farming,” he added.

Irish contractors can no longer act as unpaid bankers to an agricultural industry that is struggling to meet its ambitions to expand, due to a lack of working capital.

“The current challenge facing our members is to manage their debt levels, as their farmer customers now struggle to cope with the additional costs of a national feed crisis,” he added.

System in other countries

“As part of our membership of CEETTAR – the European Organisation of Agricultural, Rural and Forestry Contractors – we at FCI have surveyed our fellow European contractor associations on the issue of farmer working capital and contractor debt,” said White.

“European contractors report sensible working capital funding on farms. Providing asset funding for machinery investment alone does not meet the criteria for sustainable business expansion on farms and in agricultural contracting.

“This is where Irish banking needs to change,” he concluded.