A PLAN to bypass Irish banks and borrow in Germany has been developed by the Irish Creamery Milk Suppliers Association (ICMSA) and Irish co-ops, the agm of the organisation was told in Limerick yesterday.
Association president Jackie Cahill told the delegates farmers had trusted banks for too long but now the banks had turned against their customers, the people who were rescuing them.
“The ICMSA has, in conjunction with co-ops, developed a plan to secure farm finance from non-Irish banks in the euro area if the margins charged by the Irish banks move significantly out of line with other countries,” he said.
“The system we are examining would involve farmers pooling their borrowings into €10 million lots with the help of their co-ops and financing these borrowing blocks in euros from banks operating in other member states,” he said.
“Banks should be very well aware that this facility now exists and the day when farmers were tied to Irish banks is over. We should bear in mind every additional 1 per cent in interest charged on the total borrowings currently held by farmers, amounts to €50 million annually,” he said.
The president said there was already a widening of the gap in interest rates being charged and this was critically important to farmers because next to feed and fertilizer, interest costs amount to €400 million per annum, the third largest cost for Irish farmers.
“The time for taking action is now and the Government should bring in stricter and legally enforceable measures to control the interest charged by banks. He said the banks were now encouraging farmers to restructure their loans so they could charge them a higher interest rate.
The Taoiseach told the conference, while he understood their concerns about the interest cost being charged by banks, the Government’s job was to address the causes not the symptoms.
By addressing the problems in the economy we would give stability to the banks and lower the cost at which they have to borrow, which should in turn bring down interest rates, he said.
Mr Cowen said the way to close the hole between what we were spending and what was being taken in was to be done through cutting back on what we were spending, raising some taxes and eliminating some tax expenditures to bring forward a plan for growth.
“The agriculture sector has a huge contribution to make to growth and there is a very strong commitment from the farming community to contribute to national recovery and I believe they can,” he said.
Mr Cowen and his Government colleagues were accused by one of the delegates of over paying themselves and behaving like landlords, but the Taoiseach pointed out there had been major cuts in the public service and ministers, including himself, had taken pay cuts and were showing what had to be done to get recovery.