25 Mar 2020
BANKS MUST GIVE FARMERS MORE FLEXIBILITY AND MORE OPTIONSCOVID-19, Farm Business & Credit
IFA President Tim Cullinan said the commercial banks must give farmers the financial flexibility and provide more options to access liquidity at low rates. Covid19 is taking its toll on commodity markets and the supply chain, while disrupting cash flow.
“Many farmers and associated agribusinesses will face significant short-term operational challenges in the coming weeks. It’s critical that banks inject additional cash at low rates into the system to maintain liquidity. The banks must provide farm families with the leeway to get through this extremely difficult period.”
“I would encourage the banks to bring forward a special low-cost term loan products. Extending overdraft facilities when rates are as high as 8% won’t cut it.”
Tim Cullinan said he has been in contact with a number of the main banks emphasising the need for flexibility. “While banks have said they will take a sympathetic approach, it must be matched by real and practical moves at individual account level with farmers on the ground.”
IFA Farm Business Chair Rosemary McDonagh said the banks have a duty to their customers to maintain an efficient service to their customers. IFA is proposing that the banks would provide the following flexibilities to farmers:
- Increase/extend working capital and overdraft facilities.
- Advise and facilitate farmers to switch from overdraft to cheaper term loans where appropriate.
- Develop a suite of lower cost loan products for farmers.
- Allow for interest and capital repayment break of up to six months with a review closer to the expiry date.
- Defer and extend loan repayment periods.
- Renew existing stocking loans and provide for additional loans.
- Provide for a 3-month interest and capital repayment break on mortgage repayments.
- Suspend the need for land valuation reports.