Irish farmers are being charged up to 3% more in interest on farm loans and finance compared with other European countries, the Irish Creamery Milk Suppliers’ Association (ICMSA) has said.

ICMSA farm business chair Pat O’Brien said the rate of interest being charged by pillar Irish banks is “crippling” farmers, disincentivising investment and threatening generational renewal.

A recent ICMSA members’ survey showed that over 45% of respondents are paying between 5% and 6% of an average interest rate on farm debt, while over 12% are paying between 7% and 8%.

The farmer representative body said this is in comparison to farm finance interest rates of between 3.25% and 5.5% in Spain and 3.5% to 4% in France.

Generational renewal

The farm business chair said generational renewal is one of the biggest threats to the future of Ireland’s agriculture sector and the rate of interest is affecting farmers’ ability to invest in their farms and therefore affecting the viability of the next generation.

The European Central Bank (ECB) has implemented reductions in interest rates in recent months. However, this has done little to improve Irish farmers’ positions in accessing affordable loans, O’Brien added.

“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.

“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 [to when they] receive the monies is far too lengthy and onerous a process,” he said.

Meeting

The ICMSA said it 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 speedier decision making and approval by banks.

“We do encourage farmers who are seeking finance to engage with banks as early as possible and to shop around for better rates that may be available to them.

“Banks should be supporting farming and the way to do that is through competitive interest rates.

“If they [the banks] can’t or won’t do that, then the relevant State authorities need to intervene and ensure that real competition is brought back into Irish banking,” O’Brien said.