Irish farmers paying a ‘crippling’ 3% more than European counterparts on loans and financing
CMSA Farm Business Committee Chairperson, Pat O’Brien, is urging financial institutions to reduce interest rates for farmers as crippling rates are disincentivising investment and threatening generational renewal.
The Farm Business Chairperson said that Irish farmers are often being charged up to 3% more for finance by Irish pillar banks than their continental counterparts, despite the sector’s positive repayment record.
Mr. O’Brien said that while Irish farmers are competing at European market scale for their produce, they often don’t have access to typical European rates for borrowings and are stuck paying rates not on par with other countries.
Mr. O’Brien described it as frustrating for Irish farmers to see their European counterparts paying interest rates of between 3.25% and 5.5% in Spain for example, and 3.5% to 4% in France.
A recent ICMSA members’ survey showed that over 45% of participants are paying between 5% and 6% of an average interest rate on farm debt, while over 12% are paying between 7% and 8%.
“Young farmers – like all farmers – are keen to invest in their enterprises and start their careers in the best possible position financially, but it is very difficult for them to do so if they are struggling to get approved for finance and, when they do get approval, they face interest rates of anything up to 6% and beyond,” Mr. O’Brien said.
“It is also an issue that farmers over the last number of years – due to the impact of weather and geopolitical events – have needed speedy access to finance, however the turnaround from when they first get in touch with the bank and receive the monies is far too lengthy and onerous a process”, said the ICMSA Committee Chairperson.
ICMSA is meeting with pillar banks in the coming weeks to relay farmer concerns on a number of issues including the need for competitive interest rates to be applied, and also the need for speeder decision-making and approval by banks.