Written answers

Thursday, 14 May 2015

Department of Agriculture, Food and the Marine

Rural Development Programme

Photo of Charlie McConalogueCharlie McConalogue (Donegal North East, Fianna Fail)
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94. To ask the Minister for Agriculture, Food and the Marine if he will provide further details, as soon as possible, on the new European Union credit facility announced in March 2015, following the approval of Ireland's rural development programme, in order for struggling farmers to access vital funds; and if he will make a statement on the matter. [18937/15]

Photo of Simon CoveneySimon Coveney (Cork South Central, Fine Gael)
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The recent announcement by the European Commission and the European Investment Bank refers to planned and ongoing cooperation between those two bodies in relation to financial instruments programmed through co-funded Rural Development Programmes (RDP) and funded accordingly through RDP budgets. Financial instruments are defined in the relevant EU regulation as measures of financial support provided on a complementary basis from the budget in order to address one or more policy objectives of the EU. They may take the form of equity or quasi-equity investments, loans or guarantees, or other risk sharing instruments. In order for any such instruments to be put in place, an ex ante assessment must first be carried out. I have recently secured a letter of comfort in relation to Ireland’s RDP following an extensive design and negotiation process with the EU Commission , and the RDP commits to keeping the possible use of financial instruments under review during the programming period which runs to 2020.

In addition, my Department has been active in exploring new and more competitive sources of funding and will continue to do so in the context of evolving market requirements. The recent announcement by the Strategic Banking Corporation of Ireland of a new product, ‘Agriculture Investment Loans’, is a welcome addition to the sources of funding currently in the market. This credit is available, subject to qualifying criteria, at favourable terms (i.e. longer term and lower interest rate) for investments by agricultural SMEs involved in primary agricultural production, the processing of agricultural products or the marketing of agricultural products.

In relation to accessing finance and credit terms generally, I have recently been in contact with the main banks. I emphasised that this is a critical phase in Ireland’s dairy expansion and that the increased investment and output from production and processing will have significant downstream benefits across the economy generally, including for the banking sector. In order to support the on-going development of the dairy sector and to mitigate the current difficulties caused by milk price volatility, I asked them to explore the full range of potential measures that could serve to alleviate the loan repayment burden facing farmers and offer maximum flexibility for dairy farmers in what will be a difficult year ahead. I believe that it is essential that short term cash flow difficulties are not allowed to undermine prudent investment plans or the longer term competitiveness of their operations. I will continue to communicate with the main banks on issues affecting the sector.

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