ICMSA Call On Banks To Pass On Fully ECB Rates Cuts.

With the ECB announcing a further interest rate cut last week (5 June 2025) and with the ECB rate falling by 1.75% since June 2024 to the current rate of 2%, the President of ICMSA, Mr. Denis Drennan has called on all banks and Credit Unions to immediately spell out their policies in relation to passing back ECB interest rates reductions to farmers and if they have not done so already, to pass back the reduction to borrowers who had seen rates rise dramatically over the last number of years.

According to the CSO, net interest payments which obviously doesn’t tell the full story at individual farm level increased from €63.5m in 2021 to €161.6m in 2024 which clearly shows the impact of increased interest rates on farmers which added to the pressures in 2023 and 2024 which were very difficult years for farming in Ireland.   ICMSA surveyed over 500 of its members in February 2025 and the survey showed that 45% of our members were paying between 5-6% for farm debt while 13% were paying over 7% which would give a minimum margin of 3% to banks at present which is completely excessive given the quality of the agriculture loan book and low default rate.   Quite obviously, interest rates are also higher on short term debt including overdrafts.   

Mr. Drennan said, that the banks have seen ECB rates come back substantially in recent months and he called on the banks to spell out their policy in terms of returning interest rate reductions to farmers, they were very quick to pass on the increases and you would hope that they will be as quick passing back the reductions.

Mr. Drennan also advised farmers to check with their banks on what interest rate they are paying, have they received the interest rate reductions and also to look at refinancing with other banks or credit unions where a more favourable interest rate is available.   With the substantial investments that have taken place on dairy farms in particular over the last ten years, interest rates are a critical costs in terms of farmers’ margin and ability to repay debt, banks need to pass back interest reductions immediately and Mr. Drennan advised all farmers to review their current interest rates and consider alternative sources of funds if the interest is out of line with market realities.

ENDS  12 June 2025

Denis Drennan is at (086) 8389401.                   

ICMSA Head Office (061) 314677.