Written answers

Tuesday, 19 May 2015

Department of Agriculture, Food and the Marine

Strategic Banking Corporation of Ireland

Photo of Mattie McGrathMattie McGrath (Tipperary South, Independent)
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214. To ask the Minister for Agriculture, Food and the Marine his views on concerns regarding the high rate of interest charges for farmers, and the agribusiness sector; the reason for Ireland's disproportionately high rates of such charges, in comparison to the European average; if he will address such concerns to the Central Bank of Ireland for urgent attention; and if he will make a statement on the matter. [19686/15]

Photo of Simon CoveneySimon Coveney (Cork South Central, Fine Gael)
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In recognition of these issues, the Strategic Banking Corporation of Ireland (SBCI) was established last year by the Government as a state development bank. The SBCI aims to deliver lower cost, long-term, innovative and accessible funding to Irish SMEs, by offering tailored flexible products through its lending partners.

With regard to agriculture specifically, my Department and I have 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 SBCI 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 any potential 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 may 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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