Willie Penrose (Longford-Westmeath, Labour)
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27. To ask the Minister for Agriculture, Food and the Marine his plans to introduce a second tranche of a low cost loan scheme administered through the Strategic Banking Corporation of Ireland and the commercial banks; if he will revise the terms and conditions of eligibility for participating persons; and if he will make a statement on the matter. [27978/17]

Michael Creed (Cork North West, Fine Gael)
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One of my priorities has been to address the impact of the change in the sterling exchange rate and lower commodity prices in some agriculture sectors. Last month I welcomed the release of preliminary information from the Strategic Banking Corporation of Ireland (SBCI) regarding the uptake of the Agriculture Cashflow Support Loan Scheme. The Scheme, which was developed by my Department in co-operation with SBCI, makes €150 million available to farmers at interest rates of 2.95%. Distributed and administered through AIB, Bank of Ireland and Ulster Bank, the Scheme provides farmers with a low cost, flexible source of working capital, allowing them to pay down more expensive forms of short-term debt, ensuring the ongoing financial sustainability of viable farming enterprises.

SBCI used the €25 million of public funding provided by my Department to leverage the total amount of €150 million and, along with the European Investment Fund’s ‘COSME’ (the EU programme for the Competitiveness of Enterprises and SMEs), is providing the guarantee required to underpin the loan’s flexibility and lower the cost of the loans. My Department’s contribution of €25 million includes €11 million from the EU’s ‘exceptional adjustment aid for milk and other livestock farmers’. It was this exceptional aid package which facilitated the Scheme from an EU State Aid perspective and a second tranche is not possible under this particular arrangement. Other sectors, such as tillage and horticulture, were facilitated by national funding under the ‘de minimis’ State Aid rules.

The SBCI reported that €60.2m has been drawn down by farmers to the end of April. The average loan size is €32,000, with more than half the loans being advanced for terms of four years or more.

I am pleased at the very positive reaction by farmers to the Scheme, which has proved that significant demand exists for low cost flexible finance. I have met with the Chief Executives of the participating banks to discuss this and other access to finance issues relating to the agri-food sector. I have asked the banks to respond positively to the demand that has been demonstrated by reducing interest rates and providing more flexible terms for cash flow loans in the future.

The banks advise that all of the remaining €150m is committed and is in the process of being drawn down. My Department is expecting another update on the progress of the Scheme from the SBCI shortly.