ICMSA say banks proclaimed appetite for farm business at odds with their interest rates and charges – “They’d take the milk out of your tea and come back for the sugar”

The Chairperson of ICMSA’s Farm Business Committee Chairperson, Pat O’Brien, has called on the so-called ‘pillar’ banks to support farmers with fairer and more realistic interest rates and loan flexibilities through 2026 and a farming environment that he said was already “obviously” challenging.

Following a productive meeting between the Strategic Banking Corporation of Ireland (SBCI) and ICMSA, Mr. O’Brien said banks regularly point to their positive risk appetite for agriculture, reflecting the low level of loan defaults in the sector.  

“That’s lovely to hear, but their recognition of that lower risk rate and appetite for farm business is certainly not reflected in the interest rates they apply to farm loans and finance – and it’s high time that it was”, he said.   

Mr. O’Brien said banks should provide farmers including young farmers with structured loan products at lower interest rates, as well as a facility to restructure loans without consequence or penalties that would them (the young farmers) to keep going through difficult periods and provide a realistic chance of establishing viable farm businesses.

He added that current lending practices are placing excessive pressure on farm families.

“At the moment and in terms of interest and fees – and conscious of the pun for a dairy farmer organisation – the banks would ‘take the milk out of your tea and come back for the sugar’. That has to stop. We need low-interest loan products, particularly over the next two years, to support farmers and to encourage the next generation into farming. We need the kind of lending and feasible financing options that allow farmers invest in measures such as slurry storage.”

Mr. O’Brien said the history of farming clearly shows that farmers repay their loans, and he added that the Government has a role in ensuring banks support productive sectors like agriculture.  While acknowledging Central Bank governance rules and collateral requirements, Mr. O’Brien rejected the idea that these in any manner justified crippling interest rates.

“When margins are already tight and farmers are frequently operating below the cost of production, a half-percent difference in interest rates can mean everything. An unsecured loan rate of 5% over seven years might look manageable on paper, but in reality, it places enormous strain on farm businesses. Banks have to show that they understand farming and with all respect, we don’t need find phrases about how low farmer bad debts are; we need low interest rates and more flexibility on Ts & Cs without fess or penalties”, said the ICMSA Farm Business Chairperson.

ENDS     19 January 2025

Pat O’Brien, 087-4904424

Chairperson, ICMSA Farm Business Committee

Or

Cathal MacCarthy, 087-6168758

ICMSA Press Office