IFA pledges to support farmers dealing with vulture funds
The IFA will support farmers with credit difficulties dealing with vulture funds, according to IFA President Joe Healy.
Healy was speaking as the IFA announced the key principles it will apply when dealing with vulture funds.
It is also hoped that a farmer support network, to deal with individual credit cases, can be built upon.
The IFA President wanted to send a ‘strong and clear’ message that anybody who tries to take on farmers, who are genuinely attempting to resolve their credit difficulties, is taking on the IFA.
“Vulture funds want to exit the Irish market in a very short timeframe, of three years or less.
This is unacceptable, as it leaves absolutely no scope for the borrower to propose a medium or longer-term solution.
“These funds are taking a short-term and ruthless approach to farmers whose loans they have acquired.
“We cannot have a situation where farmers could be forced to sell their land, when restructuring arrangements would allow them to pay off their loans over time.” he said.
The IFA President set out five key principles on which negotiations must be carried out, where the farmer is willing to engage in a reasonable way to reach a solution.
“There is a fear of the unknown among the farming community. I want to reassure farmers with credit difficulties that the IFA will provide strong support to help them to reach a sustainable solution,” he added.
- No forced sale of farming assets which would undermine the viability of the family farm and where the farmer has meaningfully engaged to find a workable solution.
- Full and final agreement must be reached between the borrower and loan owner, prior to the disposal of any assets.
- Assets must be sold for their full market value and with proper advertising.
- No forced collection of debt that is not yet due.
- Where delays in arriving at a decision are due to the loan owner’s actions, there can be no interest or penalty accumulated on the outstanding debt in that time period.
Strengthening a support network
The IFA Farm Business Committee is also strengthening the IFA’s support network to assist individual farmers in trying to resolve credit cases. The IFA Credit Helpline is: 1890 924 853.
This will consist of a team of farmers who have experience of dealing with credit cases, the IFA’s Farm Business Chairman Martin Stapleton said.
“The number of cases involving credit difficulty that will come to a head in the next year or two is set to increase. We are encouraging farmers to seek assistance and to engage as early as possible.
“To loan owners, we are very clearly saying that the IFA is standing strongly behind [them] and directly supporting farmers to find a sustainable solution that protects the family farm,” he said.
Engagement with Government
The IFA has written to the Minister for Finance, Michael Noonan, outlining its concerns on the damaging impact on, and threat to, family farms resulting from the purchase of distressed farm loans by vulture funds in recent years.
It has proposed that the funds that have purchased loans must be regulated.
The Financial Regulator can only have proper oversight if they have information on the loan owners, the number of loans they own and the profile of borrowers, according to the IFA.
The IFA has identified that there must be some means whereby information on the actions of these funds can be made publicly available, through Oireachtas scrutiny.
The Government must give a commitment to re-balance the power between borrowers and loan owners, the IFA said.
Background to situation
The collapse of the financial system, back in 2008, led to a number of banks exiting the Irish market, while others have sold some of their loan books to third parties as part of their restructuring process, it added.
Since 2015 in particular, there have been a number of loan sales that have included farm debt.
As part of their ongoing restructuring processes, the IFA is concerned that other institutions may sell off some of their loan books, including farmer debt, in the coming months.
A Central Bank SME market report for the second half of 2016 indicated that the sector with the lowest share of performing loans transitioning to default has consistently been the Primary (PRI) sector, comprised mostly of agricultural loans, where roughly 1% of performing loans enter default each six months.
The report added that the total debt outstanding by the agriculture sector at the end of 2016 was €3.4 billion.