Lending institution Finance Ireland is in talks with co-ops to offer loans with repayments adapted to milk supply conditions to dairy farmers outside Glanbia, which has been pioneering the scheme since 2016.

Farmers can borrow up to €300,000 over eight years through participating co-ops under the MilkFlex scheme to finance working capital and investments, except the purchase of land, or refinance some existing loans. No security is required but Finance Ireland will assess the business strength of each application.

Co-ops will deduct repayments from milk cheques, with bigger payments during the summer and none during the winter.

Repayments will slow down if the milk price falls below 28c/l including VAT and they will accelerate if the milk price is over 34c/l including VAT.

A six-month repayment break will apply if the price falls below 26c/l including VAT or when a farm suffers a disease outbreak.

Unlike the €100m Milkflex fund offered by Glanbia in the past two years, Finance Ireland and its funding partners Rabobank and the Government’s Strategic Investment Fund have not set a limit on the amount available for this new round.

Dairy expansion

Rabobank’s global head of dairy Kevin Bellamy said he expected dairy expansion to continue in Ireland.

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The variable interest rate of MilkFlex loans is set at 3.75% above the Euribor monthly benchmark rate, equivalent to 4.18% annual percentage rate (APR).

“We still don’t have banks delivering credit at a rate that is comparable to our competitors,” such as northern European countries, Minister for Agriculture Michael Creed said as he launched the loans on Tuesday.

Finance Ireland has held formal meetings with nine co-ops and is planning more later this week and is expecting to assess the first applications next month. Dairygold representatives said they were preparing to introduce the scheme to their members shortly.