Loans for fertiliser purchases this spring will be made available by the country’s credit union network through its Cultivate finance package, the Irish Farmers Journal has learned.

The move will provide much needed cover for independent merchants who had indicated they would be unable to provide credit to farmer customers due to the doubling in fertiliser prices this winter.

It is understood that the merchants and credit unions will equally share the risk, with each taking a 50% share of what the farmer borrows for fertiliser purchases.

The credit facility provided by the credit union through the Cultivate package will be in the form of working capital loans.

The interest rate is 6.55% and the loans will generally be based on a 12-month term. However, this can be extended to 18 months in certain cases.

The loans will be available from 40 credit unions operating 120 branches across the country.

Up to 1.5m tonnes of fertiliser are purchased by Irish farmers each year, at a cost of €500m

The surge in fertiliser prices this year – which has resulted in the cost of standard products such as urea spiralling to over €900/t – prompted fears of serious credit difficulties in the trade.

Up to 1.5m tonnes of fertiliser are purchased by Irish farmers each year, at a cost of €500m. This spend looks set to increase sharply this season.

However, independent merchants and Cultivate representatives have been in discussions over the last month and both parties insisted that the finance package will provide certainty around the provision of credit for fertiliser purchases.

It is an initiative which will be of benefit to both farmers and merchants

“This is good news for the agriculture sector. It is an initiative which will be of benefit to both farmers and merchants,” said Cultivate chair and former IFA president Joe Healy.

Pat Ryan of Liffey Mills agreed. He pointed out that financing fertiliser purchases this year was a serious but “short-term problem”.

“This initiative offers a solution to the finance challenge, and is a win-win for all involved,” Ryan maintained.

The loan facility offered under Cultivate for fertiliser purchases will be dependent on the repayment capacity of individual farm businesses.

Cultivate is an initiative of a group of credit unions that provides short- to medium-term loan opportunities built specifically around the needs of farmers. It has provided €60m in loans to the sector over the last three years.

Farmers can borrow up to €50,000 unsecured under the package, but the average loan is €20,000.