Tom Barry (Cork East, Fine Gael)
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I thank the representatives of the organisations for attending. As there will be more cases such as the TLT one, governance needs to be considered. Agribusiness has changed in recent years. We applied credit liberally across the agribusiness area, including in the sector I am in. However, that does not happen anymore. That period of adjustment was very difficult because we were telling people we knew well that we could not get extra credit and so could not pass on extra credit. It was difficult to do. If credit is applied now, it is being applied very strictly and those receiving it are being asked difficult questions. They are being asked for a guarantee from their bank that they are good for the credit. Appearances do not merit anything anymore. A business, including a mart, cannot become a bank. Farmers or marts selling on the goods have the responsibility to establish that there is a reasonable chance of getting paid.

There cannot be a dribble-down effect. The farmer down the line from those who sell abroad should not be the one to be caught because he or she has not been part of it.

What bad debt provisions are in place for marts? What are the amounts of bad debts, in percentage terms, which have been written off in the past three years? Are customers asked to provide credit guarantees from their banks? Is work done to ensure a decision to provide credit is correct? Those asking a bank for a loan will go through a lot of hoops before they get the money. It should not be assumed one should receive credit just because it has always been the done thing.

It was mentioned that marts were competing on the level of credit given and that this was quite dangerous. The marts are becoming a banking service and are not dealing with their core business. Liberal credit will distort the price in the marketplace. It happened in the property sector. When those who do not have equity or substance behind them can have cash flow to compete in the marketplace because of the availability of credit, it will bring it down like a house of cards. I am concerned about this. Mr. Bryan mentioned price competition. Marts need to have a policy on credit across the board. Perhaps legislation is required. We cannot have one mart doing better than another based on the availability of credit because it is building a bubble which will hurt farmers.

We must distinguish between good will and reckless trading. Reckless trading hurts everybody. Neither the mart nor the primary producer can afford to take losses in this day and age. We cannot use Government credit insurance to cover bad practices. The industry must get itself in line first and then we will discuss these issues. I am not so sure about HSBC and will wait to hear the response of delegates on it.