Minister Cannot Rely on Improving Milk Prices to Relieve Farmers’ Cash Flow
IFA National Dairy Committee Chairman Sean O’Leary today said Minister for Agriculture Michael Creed must show much greater urgency to introduce the IFA proposed low cost, flexible cash flow loans with built-in repayment breaks, as improving milk prices this month and beyond will not suffice to solve farmers’ 2016 cash flow difficulties.
“Most farmers have been receiving milk prices well below production costs for a number of months now. A 1c/l milk price increase in July, the month after peak, even if, as we believe must be the case, it is followed by further increases in August and beyond, will not suffice to reverse the extreme cash flow pressures on dairy farms,” he said.
“Earlier this summer, IFA made detailed proposals for the Minister to utilise the recent EU concession on state aid as well as the existing state aid provisions to offer farmers in all sectors low cost cash flow loans. For dairy farmers, those must include an upfront moratorium on repayments until milk prices and incomes improve sufficiently. This type of loan would allow farmers to convert their accumulated merchant credit, utility, superlevy, tax and other bills into short term finance, giving them badly needed liquidity relief until their incomes recover,” he said.
“While the Minister and his officials responded very positively to our proposal, they must now bring forward the type of financial package we have proposed with the very same urgency as if the outlook for milk prices were less positive. The fact is that it will take a number of months before milk price increases alone allow farmers to make a sufficient margin above costs to allow them deal with their family needs, pay their business bills, and ultimately also their own labour,” Sean O’Leary concluded.