ECB Interest Rate Reductions Must Benefit Farmers
Following the announcement last week by the European Central Bank (ECB) of another interest rate cut, IFA Farm Business chair Bill O’Keeffe has called on all lenders to pass back the reduction to all non-fixed loans and overdrafts facilities to their farmer customers.
While many variable rates loans and overdrafts will be linked to the Euribor rate (Euro Interbank offered rate) and will result in a reduction, the time lag for this to benefit farmers must be minimised by all banking institutions.
“This latest ECB interest rate cut of a quarter of one percent is the third such reduction in 2024. On the back of falling ECB interest rates, financial markets have seen a falling Euribor rate (Euro Interbank offered rate), which is key in determining the cost of funds for Irish banks lending to Irish farmers,” he said.
Farmers have endured an average 57% income crash across all sectors in 2023 as reported in the Teagasc National Farm Survey (NFS) 2023.
Higher costs of production reported in the Teagasc NFS have remained the underlying reason for tight cashflow and squeezed margins on many farms throughout 2024.
As the calendar year end comes into sight, it is an opportune time for farmers to re-evaluate all their credit facilities. There are opportunities available to secure improved arrangements with banks and the Credit Unions that will see a reduction in the cost of interest.
Bill O Keeffe said, “If your lender is not matching a competitive rate that is available elsewhere, consider moving your business in consultation with your accountant”.
“Farmers need every support they can receive right now after a difficult 18 months of poor weather, poor grass growth and higher costs of inputs and services,” he concluded.
