Minister for Agriculture Simon Coveney said that he is working with the European Commission on a range of measures for delivering cheaper types of credit for farmers.
One method would be offering lower than usual interest rate loans for on-farm investments through TAMS. Minister Coveney made the announcement at the ICMSA AGM in Limerick on Friday.
Funding would be provided through the European Investment Bank (EIB) at interest rates as low as 0.5%. The funding could then be distributed through Irish banks as traditional loans or through guarantee funds like TAMS schemes. For every €1 the Irish State contributes, the EIB would contribute €5.
Minister Coveney was responding to concerns raised by ICMSA president John Comer who said banks are “gouging” on interest rates.
“With regard to credit, interest rates and charges are going up, competition is in decline and services are declining rapidly at branch level,” Comer said.
“Based on Central Bank data, Irish farmers on an annual basis are paying €80m more in interest charges than their EU counterparts,” he added.
Minister Coveney dismissed concerns that money from other RDP funds would be used for the initiative.
“We’re using it (funding) on a temporary basis and it will be a relatively small amount of money. If we want to make loans available through the EIB for TAMS then we might only need €3m to leverage €15m. We’d be using it as a guarantee fund. As long as that guarantee fund isn’t drawn down then we can use it towards the end of the Rural Development Programme so there shouldn’t be any cost to us if we’re smart,” the Minister said.
Minister Coveney confirmed that the Department will seek to make an amendment to the RDP in February 2016 in order to get the measure introduced next year.