Michael McNamara (Clare, Labour)
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Some time ago, a specific scheme for financial instruments in agriculture and rural development was agreed by the European Investment Fund. Together with Deputy Doyle, the Chairman of the Joint Committee on Agriculture, Food and the Marine, I met Commissioner Hogan in Brussels and this scheme was one of the good news items he announced to us. While he came to Ireland and spoke favourably of the scheme, I seek to ascertain what is going on between the Minister, Deputy Coveney, and Commissioner Hogan. Where is the money? There is considerable investment in agriculture in Ireland. One hears about how well performing it is and I am delighted it is performing so well. As 61,000 new jobs have been created in Ireland in agriculture, forestry and fisheries since 2013, by any stretch this is a sector that is performing well.

Many farmers are prepared to put their money into agriculture in the future and as the Minister of State is aware, the targeted agricultural modernisation scheme, TAMS, is oversubscribed. This is a scheme whereby a relatively small grant is made towards capital investment in farms such as farm buildings, etc. The Department was obliged to go through the applications before Christmas - I should put on record I am glad it did - to identify and deal with those applicants who were seeking new investments in dairying, such as the building of new milking parlours. Obviously, as cows are calving at this time of year and are beginning to start milking, work must be done and there was a certain amount of bureaucracy in the Department that delayed it. Nevertheless, all these farmers are investing all this money and are borrowing it from the banks at normal business rates. A rate of approximately 6.5% is the average for unsecured loans whereas a rate of approximately 4% obtains if the loan is secured. However, Commissioner Hogan mentioned a rate of 1.5% and Members can imagine the difference such a rate would make to Irish farms.

The Minister, Deputy Coveney, refers to productive farmers and appears to think that farmers from where Deputy Fitzmaurice and I come are not productive farmers, but are the ones who are waiting to be taken over by a productive farmer. I do not accept the Minister's conceptualisation of Irish agriculture. I note it is not his alone but also is the direction in which the Department of Agriculture, Food and the Marine has been going for nigh on 15 years through successive Governments. However, even by the Minister's own definition of what amounts to a productive farmer, he is failing them because the people who are investing in big new slatted houses or big new milking parlours or who are buying land, becoming more productive and achieving economies of scale are borrowing huge sums of money. Moreover, they are doing so at rates of 4.5% if the loan is secured and 6.5% if it is unsecured. Why are such farmers unable to draw down money at a rate of 1.5%, when this is what was promised by Commissioner Hogan? I believe he made this promise in good faith. Some members of my party have taken issue with Phil Hogan and some of what he has done but he is on solid ground in this regard. He pointed to specific examples of these funds being drawn down in other European countries. One example he cited was Romania where huge amounts of money were made available. People obviously are able to leverage more money when interest rates are lower. They are able to borrow more or at least the cost of borrowing is lower for their businesses. Second, banks are prepared to lend more where a guarantee scheme is in place and I note this is a guarantee scheme. However, it is not being availed of in Ireland and I wish to know why not.

Michael Fitzmaurice (Roscommon-South Leitrim, Independent)
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Hear, hear.

Ann Phelan (Carlow-Kilkenny, Labour)
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Under the regulations governing the European Structural and Investment Funds, including the rural development programme, RDP, it is open to member states to fund interventions via financial instruments. Essentially, financial instruments offer an alternative to the traditional grant-based approach whereby schemes under the RDP may be funded via loans, guarantee funds or equity investments. The funding for any such financial instruments would have to draw on the existing RDP allocation of European Agricultural Fund for Rural Development, EAFRD, funding as well as national Exchequer funding. It is also possible to incorporate funding from other sources such as the European Investment Bank for such instruments.

Financial instruments must also be linked to a rural development programme measure and must respect the rules and restrictions applying to that particular measure.

The European Commission has indicated that it is aiming to double the use of these financial instruments in the 2014-20 programming period. The most recent data shows that €429 million has been allocated to financial instruments in seven programmes across five member states and a further 20 programmes, including Ireland, have committed to examine the possible use of financial instruments within the rural development programme.

The Department has been engaging with the European Commission, the European Investment Bank and other stakeholders in order to identify areas where financial instruments could be implemented to best strategic effect. In order to include a financial instrument as a measure in the rural development programme an ex anteevaluation is required by EU regulation. This evaluation can take between three months to a year to complete. It includes a range of steps and must prove that financial instruments are required due to an investment gap in the market place. Once this is done, an agreement must be reached between the Department and any other potential stakeholders or financial institutions on a clear investment strategy that is developed from the gaps, if any, identified in the ex anteevaluation. Following this, a new measure description would have to be drafted and inserted into the rural development programme by way of an amendment.

The Department continues to explore new and more competitive sources of funding for the agrifood sector. For example, the Strategic Banking Corporation of Ireland, SBCI, provides an agriculture investment loans product. This credit is available at favourable terms for investments in primary agriculture products. The features of the SBCI products compared with those currently on the market are lower interest rates, loan amounts up to €5 million and increased repayment flexibility. Since its launch, the SBCI has made €750 million worth of low cost loans available for small and medium enterprises, including farmers. In its last report, the SBCI stated that one third of the loans approved and drawn down by SMEs had been accessed by the agriculture sector. The Minister and his Department are considering the possibilities for farmers in this context.

Michael McNamara (Clare, Labour)
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I am afraid I find the Minister of State's response slightly inadequate. She tells us that a scheme has to be drawn up and approved. We know all of that but is the scheme being drawn up? I am slightly worried about what she says because she stated, "an agreement must be reached between the Department and any other potential stakeholders or financial institutions on a clear investment strategy that is developed from the gaps, if any, identified." Does that mean that the Minister of State's Department will discuss with the banks whether they should make low-interest loans available to farmers due to a gap in the market? I suspect - as a matter of fact, I would be prepared to bet my farm on it - the banks will say there are no gaps and that there is nothing to see here. Of course they will say there is nothing to see here. Of course, they will not encourage the Government to provide loans at 1.5% when they are currently charging 6.5%, or 4.5% if the loan is secured. They will say there are no gaps.

We just heard about our housing crisis. Why is our entire economy being sacrificed to the banks? Farm loans have performed. They are one type of loan that did perform. The banks threw out loads of money on housing and those loans are not performing. Every other area, including SMEs, farms and everyone else, along with their economic futures, is being held back so the banks can reclaim the money they threw out. It seems bizarre in the extreme.

Joseph Stiglitz said today that Ireland would have been better off if we had been allowed to burn the bondholders. That is not necessarily to say that we should have burned the bondholders because we were not allowed to do so. We really have to look at the economic cost to this State of not burning the bondholders. It means the money has to be repaid by the Exchequer if not the banks and the banks have to be helped to perform. This is just one other example in a sector which is performing. It is clear that agriculture is being held back by the banks. It seems to me, reading between the lines, that the Department is giving the banks a veto in this area. The banks do not want low-interest loans.

The Minister of State mentioned the SBCI. The rates it is offering are one quarter of a percentage lower. I was asked by SMEs about it. Despite all the fanfare, a quarter of a percentage does not add up to a hill of beans.

Ann Phelan (Carlow-Kilkenny, Labour)
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The funding for any such financial instruments would have to be drawn on the existing rural development programme allocation of the European agriculture fund for rural development, as well as national Exchequer funding. The door is not closed on this one. Just yesterday, officials of the Department of Agriculture, Food and the Marine held a meeting with officials from the Department of Finance, the Ireland Strategic Investment Fund and the Strategic Banking Corporation of Ireland on the uses and rules of financial instruments and funding requirements for the agrifood sector. The meeting proved useful and informative. The Department of Agriculture, Food and the Marine will reflect on the discussions within the meeting and is considering a series of steps based on those discussions. I suppose it is a matter of advising the Deputy to watch this space.

Michael McNamara (Clare, Labour)
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One never knows.