Farmers continue to apply in large numbers for the low-cost agriloan scheme. After just three weeks, almost half of the €150m total funding has now been applied for, according to officials in the three pillar banks operating the scheme.

This points to all available funding being used up well in advance of the September close of applications, even if the high initial surge were to now slow down.

But this week some farmer applicants expressed concern that they were being asked to repay the loan within one or two years, despite requesting longer repayment terms and despite the scheme offering finance for up to six years.

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It could leave these farmers returning to their banks for new loans at higher interest rates without having fully addressed their cashflow issues.

This prompted IFA farm business chair Martin Stapleton to write to the Strategic Banking Corporation of Ireland asking it to address the issue in its overseeing role. He also contacted the pillar banks directly on the matter.

“Short terms of 12 and 24 months on working capital finance would be inappropriate for some farmers,” he said. “The debt they hope to finance has built up over a number of years and cannot be repaid over a short period of time. The demand may make some farmers ineligible.”

Flexibility

The scheme’s intended flexibility would allow these farmers to pay off their debts over a medium time frame of up to six years with a lower annual repayment requirement,” he said. “It would put them into a more sustainable financial position.”

It also emerged this week that one bank is refusing to consider past purchase of trading stock such as cattle or fertiliser as eligible for the scheme, which is contrary to the approach of the other two providers. Martin Stapleton has raised this issue, too, with the SBCI and banks.

The high demand for the scheme shows the need for competitively working capital for farmers, he said.