Jackie Cahill (Tipperary, Fianna Fail)
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16. To ask the Minister for Agriculture, Food and the Marine if he will provide an update on the low cost loan scheme that was announced in the budget; and if he will make a statement on the matter. [4838/17]

Jackie Cahill (Tipperary, Fianna Fail)
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The low cost loan scheme announced in the budget is most welcome relief for farmers under severe financial pressure. Is there a timescale for when the Minister expects that money to be released to farmers?

Michael Creed (Cork North West, Fine Gael)
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I was pleased to announce the launch of the agriculture cashflow support loan scheme on Tuesday. One of my priorities has been to address the impact of the change in the sterling exchange rate and lower commodity prices in some sectors, which have caused cash flow difficulties for farmers. The scheme was developed in co-operation with the Strategic Banking Corporation of Ireland, SBCI, which has confirmed that AIB, Bank of Ireland and Ulster Bank will distribute the loans making €150 million available to farmers throughout Ireland at interest rates of 2.95%. It will provide farmers with a low cost, flexible source of working capital and will allow them to pay down more expensive forms of short-term debt, ensuring the ongoing financial sustainability of viable farming enterprises.

This loan scheme forms part of a “three pillar strategy” in response to income volatility, which I announced as part of budget 2017. Along with tax measures and farm payments, it will alleviate some of the pressures being caused by the recent market difficulties, which have been compounded by the uncertainty around Brexit.

The loans will be available to all livestock farmers, tillage farmers, horticulture producers, including mushroom growers, and others involved in primary agricultural production, including poultry producers. The loans will be for amounts up to €150,000 for up to six years. The interest rate at 2.95% will represent a significant saving for farmers when compared with other forms of short-term unsecured finance currently available. The loans will be flexible with interest only facilities of up to three years.

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It will provide farmers with a low-cost, flexible source of working capital and will allow them to pay down more expensive forms of short-term debt, ensuring the ongoing financial sustainability of viable farming enterprises.

This loan scheme forms part of a three-pillar strategy in response to income volatility, which I announced budget 2017 and which also includes tax measures.

The loans will be available to all livestock farmers, tillage farmers, horticulture producers, including mushroom growers, and others involved in primary agricultural production, including poultry producers. The loans will be for amounts up to €150,000 for up to six years. The interest rate at 2.95% will represent a significant saving for farmers when compared with other forms of short-term unsecured finance currently available. The loans will be flexible with interest-only facilities of up to three years.

The SBCI has demonstrated its commitment to the agriculture sector and has worked with my Department to get this product to the market in a timely manner. I welcome the participation of the main banks, which will ensure nationwide coverage for the scheme. The fact that most farmers will have an existing relationship with the participating banks should facilitate the loan application process. Normal lending assessment criteria will apply although the loans will be unsecured in nature, thereby facilitating a more straightforward application process. Potential applicants should note that the loans will be disbursed on a first-come, first-served basis and will need to be allocated by late summer 2017 to comply with the requirements attaching to the European Union funding.

Eugene Murphy (Roscommon-Galway, Fianna Fail)
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Four Deputies are offering and they are all entitled to speak. I ask them for their co-operation, starting with Deputy Cahill, whose question it is. I will then call Deputies Heydon, Deering and Aylward.

Jackie Cahill (Tipperary, Fianna Fail)
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I welcome the announcement of the scheme. I asked the Minister when he expected the first of the money to be released to farmers and how that can happen. He said it was to be on a first-come, first-served basis. I believe the scheme will be oversubscribed and some people will be left waiting at the door. Unfortunately, the ones under the most financial pressure could be the ones left outside because their relationship with the financial institution might not be the best. I do not know about the fairness of a first-come, first-served basis and it could work out very unfairly.

I hope the scheme does not get buried in paperwork. There are significant difficulties with the payment of TAMS 2 at the moment owing to IT problems in the Department. I hope this scheme will be able to work in a far more friendly way and that the money can be given quickly to farmers so that they can reduce their debt and help them with their cashflow.

Eugene Murphy (Roscommon-Galway, Fianna Fail)
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I thank the Deputy.

Jackie Cahill (Tipperary, Fianna Fail)
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I hope the scheme does not get into an administrative mire and I have reservation about the first-come, first-served basis.

Eugene Murphy (Roscommon-Galway, Fianna Fail)
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I know I pushed the Deputy somewhat even though it is his question. However, I promised to get in the other three Deputies and I ask them to keep their comments short.

Martin Heydon (Kildare South, Fine Gael)
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I will be very short; I appreciate the opportunity to get in. I thank the Minister for his reply. Following on the point made there, I ask the Minister to clarify the flexibility for those farmers who, as I mentioned earlier, might be in financial difficulty. Surely the bank would be very happy to see them coming to make an application for this scheme, which might allow them to restructure debt. When the Minister mentions flexibility, does he mean one might be able to restructure more expensive debt with this lower interest rate?

In recent years it has been very difficult for farmers, particularly beef and tillage farmers, working off significant merchant credit. They build up the bill all year and the big cheque at the end of the year is supposed to clear it. Unfortunately, there have been a few years where the cheque has been insufficient, resulting in the debt rolling on at a high level. Will this scheme also cover that merchant debt?

Pat Deering (Carlow-Kilkenny, Fine Gael)
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I thank the Acting Chairman for letting me in. I welcome this fund and it is important that as many as possible apply to the fund. I know that in my part of the country the banks will be making funds available next week. If Deputy Cahill gets stuck in Tipperary, he is more than welcome to come to Carlow for funding.

In the event that it is oversubscribed, is it planned to develop a similar fund in future? This is a very innovative way to get cashflow to farmers and it should be developed further for the future.

Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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Further to Deputy Cahill's question, could this scheme cover the purchase of stock? Many farmers have asked if it could be used for the purchase of cows or even cattle for fattening. Could the scheme be open for that?

Eugene Murphy (Roscommon-Galway, Fianna Fail)
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I ask the Minister to give answer the four questions in one minute.

Michael Creed (Cork North West, Fine Gael)
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I am satisfied that this will be a really good scheme. The Central Bank reported that the cost of credit in the first quarter of 2016 was significantly out of kilter with our EU counterparts. That is a significant input cost. This scheme is a response to that and it also addresses some Brexit-related challenges.

I am somewhat taken aback by the volte-facefrom the Opposition benches. Two weeks ago certain Deputies - not Deputy Cahill - more or less rubbished the scheme as offering nothing to farmers.

Charlie McConalogue (Donegal, Fianna Fail)
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It should be complementing the tillage crisis.

Michael Creed (Cork North West, Fine Gael)
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I very much welcome the volte-face. I point out to Deputy Cahill that it is available in high-street banks such as AIB, Bank of Ireland and Ulster Bank. In reality there is no other way to deal with it other than on a first-come, first-served basis and I advise farmers to engage.

The terms and conditions of the scheme are as constructed. For farmers paying high interest in overdraft facilities or paying credit card rates to cover merchant credit, this is an opportunity to substitute one with the other, which will improve cashflow and enable them to do the other things the Deputies mentioned.

Eugene Murphy (Roscommon-Galway, Fianna Fail)
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I have to stop the Minister.

Michael Creed (Cork North West, Fine Gael)
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There is sufficient flexibility to deal with that. That is the point Deputy Heydon mentioned.

Eugene Murphy (Roscommon-Galway, Fianna Fail)
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We must move on.

Michael Creed (Cork North West, Fine Gael)
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I say to Deputy Deering that we will have to wait to see the success of it. I think it will be successful and success generates its own problems. That is something we will revisit at a later stage.

Eugene Murphy (Roscommon-Galway, Fianna Fail)
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I thank Deputy Cahill, in particular, for his help and co-operation with that last question. I thank other Deputies for making their points briefly. I thank the Minister, the Minister of State and all the Deputies who participated in putting questions to the Minister.