ICSA urges caution over new farmer loan scheme

‘Question whether further investment is warranted.’

‘Farmers should not assume they will be immune from making full repayments.’

Sligo News File Online

Farmers are being advised to avoid raising loans except where they have an absolute need to.

Seamus Sherlock, Chair, ICSA Rural Development Committee

That broadly is the recommendation of the country’s leading farm organisation, the ICSA.

Seamus Sherlock, the chairman of the association’s rural development committee, has said that while interest rates of the 2.95% loan scheme are low, “it is vital that farmers carefully assess their borrowing capacity.”

The message is one with which no doubt farmers who have seen the trouble that some have ended up in will readily identify. Owners of many holdings have found themselves and their family outside the farm gate because of a misjudgement or temptation to seek loans where the prospects of repayment were uncertain.

Noting that the new loan scheme is being promoted “partly on the basis that loans are unsecured,” Sherlock stresses that while this may lead to faster approval, “farmers should not assume they will be immune from making full repayments.”

He said, “Even in the case of an unsecured loan, banks are fully entitled to seek a court judgement which could be registered against the farmer’s assets.

“The message is that these loans should only be used by farmers who have carefully weighed up their repayment capacity and have a plan to reduce other forms of expensive credit.”

He strongly urged farmers to “question whether further investment is warranted in the enterprise if it’s not profitable.”

He also criticised the proviso which excludes those who, he pointed out, most needed loans from the new scheme. These, he said, were farmers “tied into long-term loans at high interest rates which impact greatly on cash flow. Unfortunately, these loans cannot be refinanced under the new scheme, and many farmers will continue to struggle with debilitating farm debt.”

Earlier this year, David Hall, CEO of the Irish Mortgage Holders Organisation (IMHO) reportedly said vulture funds to which banks have turned over farm debts “are heaping misery on the agriculture community.”

He is quoted as saying that these funds “are now in possession of significant lands the length and breadth of the country. Farmers are under immense pressure. Many have family homes on the land; it’s all cross securitised.

“When they lose the land, they lose their life and their children lose their futures too.”