Charlie McConalogue (Donegal, Fianna Fail) | Oireachtas source

At the outset, I acknowledge the work of Deputy Collins, his colleagues and Mr. Honohan and the work and consideration that has gone into the Bill. I also acknowledge that the intentions behind the Bill are genuine and that the primary concerns of the Deputies are based on protecting the family farm. We all share that concern.

The family farm is the bedrock of our €14 billion export sector and it ensures a balanced regional economy. It plays a huge role in the fabric of all our lives. The Irish farming model is almost exclusively based on the family farm. Approximately 30% of our farms, mainly dairy and tillage, are classified as full-time in terms of labour input required but still relying mainly on family workers. However, the majority of Irish farms are part-time small-scale family farms relying on diverse income streams, including off-farm employment. That structure undoubtedly has its challenges but it is the family story behind Irish food and drink which is part of what makes it unique for our own consumers and for consumers all over the world.

Farmers are the foundations of our sector.

For them this is not just a business, it is a tradition and an honour that is passed down from generation to generation. Farmers are the first to recognise that for this to continue it must be done sustainably. I know this first hand. I was born on a suckler and sheep farm in north Inishowen in Donegal. It is a farm that reared me and my five siblings. I was honoured to run the farm before entering politics. It is now run by my brother.

Every family hopes the farm will be handed down to the next generation when the time is right. Protecting and enhancing farm incomes is at the very heart of everything I do as Minister. Our shared vision for the future of the sector, Food Vision 2030, states that for farming the family farm model is key to economic, social and environmental sustainability. In common with everyone in the House I really want to protect this model. However, I do not believe the Bill will assist farm families. Fundamentally the restrictions it places on debt recovery in the sector are such as to dissuade financial institutions from lending to the sector in future. Land mobility is very important as is access to land.

Primary responsibility for banking and credit policy lies with my colleague the Minister for Finance while enterprise policy lies is with the Tánaiste and Minister for Enterprise, Trade and Employment. Access to finance is a crucial business need. As well as liaising with the main banks on issues relating to the agrifood sector, the Department and I work closely with the Tánaiste and Minister for Enterprise, Trade and Employment and that Department, as well as the Minister for Finance and that Department. This has been a good working partnership that has yielded important supports for businesses through the Strategic Banking Corporation of Ireland. This was to ensure they had access to finance to help deal with the challenges brought about by Brexit, Covid-19 and the impact of the war in Ukraine. Finance for business is required for two main reasons. The first is as working capital to ensure the efficient functioning of businesses on a day-to-day basis. The second is as investment capital to develop and evolve to meet future needs and challenges. I am working to ensure farmers, fishers and food businesses have access to appropriate supports, whether through private provision or with the help of State-backed schemes.

As a small economy, we must pull our resources to provide appropriate business supports, for example, the future growth loan scheme supports strategic long-term capital investment by small and medium enterprises, farmers and fishers and delivers approximately €800 million in competitively priced loans. The unique characteristic of the scheme is that loans of up to €500,000 are unsecured making it a viable source finance for young and new entrant farmers, especially the cohort who do not have high levels of security. It also serves smaller-scale farmers who often do not have the leverage to negotiate for more favourable terms with their banking institutions. The future growth loan scheme has been in high demand generally and especially in the agrifood sector, with approximately 46% of loans by number and 31% by value. This represents loans to 1,289 farmers with a value of €155 million.

The agrifood sector has a demonstrated capacity to plan for the long term even when grappling with more immediate challenges. The Government also delivered the Brexit impact loan scheme to businesses impacted by Brexit, including farmers, for working capital, investment and refinancing. This was then extended to Covid-19 impacted businesses when the worst effects of the pandemic were being felt. Again, large numbers of farmers and businesses in the agrifood sector generally were able to avail of these initiatives, with 55% of the overall number of loans and a value of 40%, or 850 farmers and a value of €68 million in loans.

In addition, in response to liquidity concerns when the pandemic hit, the Government introduced the Covid-19 credit guarantee scheme with a capacity of up to €2 billion to facilitate the provision of eligible financial products to Covid-19 impacted SMEs and small mid-caps including farmers. In budget 2023 I was happy to announce with the Tánaiste the development of a new long-term lending scheme. It will ensure there is an appropriate option available to farmers, fishers and food businesses to access finance for strategic and investment purposes. The new proposed €500 million growth and sustainability loan scheme, GSLS, will facilitate strategic investment by farmers, fishers and businesses and ensure their continued viability and sustainability. We are also working together on a Ukraine credit guarantee scheme to assist businesses, including farmers, fishers and food businesses, to meet their liquidity and development needs especially in this time of economic uncertainty.

All the main banks have specific agricultural products and services, including dedicated advisory services. I speak with the banks regularly to ensure the sector is well serviced. Central Bank data shows that credit advanced to primary agriculture was €686 million last year and has been consistently at this level over the past decade. Credit outstanding at the end of 2021 was just over €3 billion, slightly lower than the €3.3 billion outstanding the year before but down from a high level of €4.7 billion in 2010. We monitor debt levels on an ongoing basis. The Teagasc national farm survey for 2021 shows that across all farm systems six out of ten farms have no farm business related debt. However this figure varies considerably, as we can imagine and understand, by farm type. Two thirds of dairy farms had borrowings in 2021 compared to one third of cattle farms. Just over one third of sheep farms had outstanding farm debt in 2021 with close to half of all tillage farms reporting borrowings.

When farms without debt are excluded, the average dairy farm debt last year was €139,000. The average debt on cattle rearing farms was almost €30,000 at €29,900, with cattle finishing farms having an average debt of €46,700. On sheep farms it was just over €21,000. The data indicate the average debt on tillage farms was €64,000. The majority of farm-related debt, at approximately 72%, was classified as medium to long-term with a further 18% relating to hire purchase or leasing and the remaining 8% considered to be short-term debt such as overdrafts. This data on credit advanced and credit outstanding strongly suggests the primary agriculture sector is well placed to manage debt and default rates are generally among the lowest in the economy.

Introducing the Bill and its conditions and requirements would immediately jeopardise farmers' participation in any horizontal access to finance supports. It would also jeopardise their ability to access credit generally. In addition, the Government opposes the Impaired Farm Credit Bill 2022 on the grounds that impaired farm credit arrangements are already provided for under company law where the farm business is incorporated as a limited company, or under personal insolvency law where the farm business operates as a sole trader as is the case in the vast majority of instances.

Existing legislation for personal or company insolvency already requires well tried and known pathways for resolving farm debt as well as any other collateralised debt. Section 115A of the Personal Insolvency Act allows courts to impose debt restructure on secured creditors. It is a very carefully balanced and exceptional provision and strikes a very carefully calibrated balance between the various constitutional rights concerned. It was introduced only after very detailed impact assessment, policy analysis and consultations between all relevant Departments and the office of the Attorney General. The Central Bank has a code of conduct on mortgage arrears which sets out the framework that lenders must use when dealing with borrowers in mortgage arrears or in pre-arrears, including use of the mortgage arrears resolution process, MARP. There are already strongly protection on the treatment of the family home, including the farmhouse where that is the family home.

Looking at the Bill objectively there is no evidence base to support the proposals that a separate debt management protocol and legal framework is required for agricultural property. The introduction of a law relating only to the treatment of farm debt would likely require constitutional justification as to why farm debt should be treated differently from all other small business debt and consideration of how farm business activities secured on farmland is to be treated. The Bill proposes to limit certain financial regulatory functions and make them subject to the consent of the Minister for Agriculture, Food and the Marine in a manner that is inappropriate. For example, the Bill proposes the Central Bank shall report annually to the Minister for Agriculture, Food and the Marine on the trends noted in the quantum and beneficial ownership of lands charged with repayment of such loans, and that the Central Bank shall establish and manage a brokerage supporting farmers seeking finance and refinance from elsewhere in the EU.

The Bill provides any transaction that may have the effect of besting beneficial ownership of farmland in collateral recovery businesses or in securitisation vehicles shall require the consent of the Minister for Agriculture, Food and the Marine, and provides conditions attached to such consent. The Bill also requires that the National Treasury Management Agency shall make available for sale credit default swaps with a view to supporting access for farmers to shadow banking intermediated liquidity on a second mortgage basis.

These detailed proposals suggest the exercise of specific financial regulatory functions will be subject to the consent of the Minister for Agriculture, Food and the Marine. This would constitute an unwarranted interference in the independent functions of the appropriate regulatory bodies. Importantly, these are areas of policy for which my Department does not have responsibility.

I am committed to ensuring the agrifood sector has appropriate access to finance. The ability to access finance at the lowest rates possible will be crucial to the continued success of the agrifood sector, especially at a time of considerable challenge for the industry. The requirements and conditions within the Bill would hinder rather than assist farmers. While well intentioned, it is fundamentally flawed and the Government, therefore, opposes its introduction.

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