Farming: ICMSA calls on banks to pass on ECB rate cuts
ICMSA surveyed over 500 of its members in February 2025 on the interest rates they are paying for farm debt.
With the ECB announcing a further interest rate cut recently, and with the ECB rate falling by 1.75% since June 2024 to the current rate of 2%, the President of ICMSA, Denis Drennan, has called on all banks and Credit Unions to immediately spell out their policies in relation to passing back ECB interest rates reductions to farmers.
If they have not done so already, he is calling on them to pass back the reduction to borrowers who had seen rates rise dramatically over the last number of years.
According to the CSO, net interest payments increased from €63.5m in 2021 to €161.6m in 2024, which shows the impact of increased interest rates on farmers, which added to the pressures in 2023 and 2024, both very difficult years for farming in Ireland.
ICMSA surveyed over 500 of its members in February 2025 and the survey showed that 45% of members were paying between 5-6% for farm debt, while 13% were paying over 7% - which would give a minimum margin of 3% to banks at present.
ICMSA said this is "completely excessive given the quality of the agriculture loan book and low default rate".
Interest rates are also higher on short-term debt, including overdrafts.
Mr. Drennan said that the banks have seen ECB rates come back substantially in recent months and he called on the banks to spell out their policy in terms of returning interest rate reductions to farmers.
Mr. Drennan also advised farmers to check with their banks on what interest rate they are paying, whether they have received the interest rate reductions and to look at refinancing with other banks or credit unions where a more favourable interest rate is available.
