Dáil Éireann Debate, Thursday - 26 April 2018
3. Deputy Jackie Cahill asked the Minister for Agriculture, Food and the Marine when the €25 million low-cost loan scheme announced in budget 2018 for farmers and fishermen will open for applications; if the scheme criteria will be published in 2018; and if he will make a statement on the matter. [18461/18]
View answerI ask the Minister when the €25 million low-cost loan scheme announced in budget 2018 for farmers and fishermen will be open for applications, if the scheme criteria will be published in 2018 and if the Minister will make a statement on this. We are six or seven months past budget day and we have not yet seen the details of the scheme. There are extreme cashflow pressures after a wet autumn and the very late spring we are having.
One of my priorities is to improve access to finance for the agrifood sector. Food Wise 2025 identifies competitiveness as a key theme and includes a recommendation that stakeholders work to "Improve access to finance for agriculture, forestry and seafood producers and Agri-food companies".
I launched a new Brexit loan scheme on 28 March in co-operation with the Ministers for Business, Enterprise and Innovation and Finance, which will provide up to €300 million of affordable, flexible working capital to businesses that are currently affected by Brexit or that will be in the future. The scheme will be available to SMEs and mid-cap businesses. My Department’s funding model ensures that at least 40% of the fund will be available to food businesses, particularly in light of their unique exposure to the UK market. The finance will be easier to access, more competitively priced, at a proposed interest rate of 4% and at more favourable terms than current offerings. This will give Brexit-affected businesses time and space to adapt and grow into the future. The scheme will remain open until 31 March 2020.
I announced in budget 2018 that my Department is considering the development of potential Brexit response loan schemes for farmers and fishermen and for longer-term capital financing for food businesses. These schemes are developed and delivered in co-operation with the Strategic Banking Corporation of Ireland, SBCI, and take time to develop and operationalise. Consideration and discussions are ongoing in this regard and I will announce further details as they become available.
While continuing to explore additional funding mechanisms, I also liaise with the main banks on issues relating to the agrifood sector, all of which have specialised products available and have expressed a commitment to servicing the future financing needs of the sector.
The Deputy asked about a €25 million low-cost loan scheme. The €25 million is the cost to the Exchequer of the scheme. This money will come from my Department's Estimate. I anticipate that the loan fund will be multiples of that, as was the case in the initial venture we had here and the €150 million low-cost loan scheme. It is my intention that the criteria relating to the scheme will be published in 2018.
I understand that the €25 million is just a lever and I also understand how it worked in 2017. The month of May is approaching and the Minister has still given no commitment as to when the money from this scheme will become available. There is a serious cashflow crisis in all sectors. The horticulture sector suffered extreme difficulties with frost, wind and extreme rain during the winter months. Tillage farmers suffered hugely and we have debated providing assistance to them a number of times in the past six to 12 months. It is the same with the dairy and dry suckler sectors. There is huge pressure for working capital. Farmers are extremely anxious to know when the money will be made available. The Minister's reply was extremely vague. On the previous occasion, this was given over 100% to the main banks. Some of those who needed funding most did not receive it. There has to be Government intervention this time in order to ensure that those who are strapped for cash and under extreme pressure for credit are able to avail of these low-cost loans. The Minister referred to an interest rate of 4% for businesses. On the previous occasion, the rate was 2.95% and this should be maintained for farmers.
We are receiving numerous requests that the fodder scheme announced by the Minister be extended in view of the fact that poor weather conditions and poor growth continue to obtain. I ask him to consider extending the date for the fodder scheme.
The Deputy has stumbled across one of the dilemmas in the context of this proposal, namely, whether it is a working capital scheme or a capital investment scheme. My Department is engaged in consultations with the SBCI on that matter. The previous scheme was, as the Deputy said, a working capital scheme. An interest rate of 2.95% applied on that occasion, but the trade-off between the interest is in the volume of the fund that one can leverage. There was more demand in respect of previous funds than there was funding available. The outturn in respect of the previous fund was €150 million and there were 4,246 approved borrowers. The average loan was €34,000 and the average loan period was 41 months. If we opt for a lower interest rate, we will have a smaller fund. This scheme was oversubscribed. The question is what is most advantageous and whether it is a working capital or a capital investment fund to assist on-farm investment in primary production or the fishing industry. These issues are being teased through. We have had the initial €150 million. We have €300 million now for SMEs. I am trying to get this done as quickly as possible. It is not simply a case of having €25 million and therefore having a scheme. It takes much engagement with the European Investment Bank, the SBCI, the pillar banks here and the Department of Finance. There are many moving parts. I am trying to get it as quickly as possible but it will likely be the back end of the year.
The Minister referred to the 2017 scheme. When that was announced, I said that the money available would not be enough to meet demand. I was ridiculed when I said it. Unfortunately, my finger was on the pulse and the amount of subscribers for that scheme greatly exceeded the money available. The Minister talked about whether this is for working capital or long-term capital investment. The reality is that all sectors are under pressure for working capital. Merchant credit is also a major issue. Co-operatives and private businesses are carrying much of that credit at the moment but they will not be able to carry it in the medium to long term. In the aftermath of the extreme weather conditions over the past six to eight months, the real pressure is for working capital. The Minister must recognise that. This scheme needs to be skewed in that way for people who are under immediate pressure to clear their bills. On the past couple of occasions we had the opportunity to discuss these issues, we referred to the mental pressure on farmers and farm families. Farmers being able to clear their bills would be a major achievement in relieving that pressure. If farmers get access to working capital, they would be able to achieve that objective.
I appreciate that working capital at this time of year is always an issue in the context of merchant credit, etc. On the difficult weather, I have engaged with many, if not all, of the co-operatives directly and have been assured by all of them, in the context of the difficulty that some farmers are experiencing, that merchant credit is not an issue. I appreciate that this has to be paid back. The dilemma we face is the competing demands for capital investment as opposed to working capital. We are trying to work through that in the Department. This is a space that the State should not be in but it reflects that we do not have, relative to our competitors, competitive financial products available to Irish farmers at a cost comparable with other member states in the European Union. We are trying to address a gap in the market by developing a new product that meets that.
What about Deputy Cahill's point on the fodder scheme and a one-week extension to it?
A question has been tabled in respect of that matter.
I beg your pardon.
A question has been tabled in respect of it.
I will allow Deputy McConalogue in when there is a question on it later.
