Farmers urged to talk to banks as 'cashflow deficit' looms
Farmers have been urged to look "honestly" at their current financial position and talk to lenders as a "cashflow deficit" is looming.
According to the Irish Creamery Milk Suppliers' Association (ICMSA), farmers need to have a "contingency plan" in place when it comes to cashflow.
Pat O’Brien, chair of ICMSA’s Farm Business Committee, said the organisation is advising its members to talk to their banks about their cashflow requirements.
He believes it is important that farmers must "honestly assess" what their current financial position is and get a plan in place.
“I’m a typical and lifelong farmer and if money could talk, all mine would say is goodbye - farmers must plan and work to that plan if we are to ensure cashflow," O'Brien added.
Banks
The ICMSA believes farmers should be pro-active when it comes to dealing with the financial challenges facing them at this time and this includes dealing directly with their banks and lenders.
Following a meeting with representatives from the country's major banks, O'Brien said the message is that farmers have options - such as refinancing capital investments.
He added: “Have the discussion even if you don’t think you’ll need it. There’s no harm in having that safety net ready to go if needs be.
"One of the biggest issues for farmers is protecting their credit rating and the banks themselves acknowledge that farmers will go to extraordinary lengths to meet repayments, often putting themselves under severe financial pressure.
"A simple conversation with the bank may reduce this pressure".
According to the chair of the ICMSA’s Farm Business Committee farmers are set to face a "cashflow deficit" this year.
He said this is chiefly because of reduced output prices, increased input costs and a very long winter.
"The positives of last year are being eaten up and farmers are worried that they will find themselves stretched for cash.
"There’s also the reality that many farmers will face significant tax bills in the months ahead, while also trying to cope with high input costs and low milk prices.
"That’s going to be a challenge, but it can be navigated where the banks are approached, options examined and plans put in place”, O’Brien said.
