Extra funding can’t be added to low-cost loan scheme pot

The Minister for Agriculture, Michael Creed, has said it’s not possible to add more funding to the low-cost loan (or Agriculture Cashflow Support Loan) scheme.

The banks involved in the scheme – Bank of Ireland, Ulster Bank and Allied Irish Bank – have all confirmed that the funding made available to them, which totalled €150m, has been exhausted.

The Department of Agriculture contributed €25m to the scheme. The Minister said that €11m of which was from the EU’s ‘exceptional adjustment aid for milk and other livestock farmers’.

“It was this exceptional aid package which facilitated the scheme from an EU State Aid perspective, and additional funding is not possible under this particular arrangement.

“Other sectors, such as tillage and horticulture, were facilitated by national funding under the ‘de minimus’ State Aid rules,” he said.

Responding to a parliamentary question from Fianna Fail’s Kevin O’Keeffe, Minister Creed said the Department’s contribution was used by the Strategic Banking Corporation of Ireland (SBCI) to leverage the total amount of €150m.

And, along with the European Investment Fund’s ‘COSME’ programme, it provides the guarantee required to underpin the loan’s flexibility and the low cost of the loans.

Minister Creed also said that he is very pleased at the positive reaction by farmers to the low-cost loan scheme.

The scheme, he said, has proved that significant demand exists for low-cost flexible finance.

I hope that the commercial banks will respond positively to this demand by reducing interest rates and providing more flexible terms for cash flow-loans in the future.

“I plan to meet with the Chief Executives of the banks shortly, to discuss this and other issues relating to access to finance in the agri-food sector,” the Minister added.

“One of my priorities has been to address the impact of the change in the Sterling exchange rate and lower commodity prices in some agriculture sectors.

“This scheme is significant in this regard, providing farmers with a low-cost, flexible source of working capital, which allows them to pay down more expensive forms of short-term debt – ensuring the ongoing financial sustainability of viable farming enterprises,” he concluded.