Some of our common questions
Answers to the most frequently asked questions about our MilkFlex products and services.
How will loan repayments be collected?
On the irrevocable consent of the milk supplier, MilkFlex loan repayments will be made by the participating Co-op during the key milk production months and passed directly to Finance Ireland Agri. The precise amount of the deduction from the supplier’s milk payment will be advised monthly to the participating Co-op by the loan administrator, Finance Ireland.
Can a MilkFlex loan be used to fund land purchase?
No, it cannot be used to fund land purchase. At eight years, the term of the MilkFlex Loan is not appropriate for financing land purchase in Ireland, given the prevailing price of €7,000 to €11,000 per acre.
Can a farmer switch dairy processor during the term of the MilkFlex loan?
A valid Milk Supply Agreement (MSA) in a format approved by the participating Co-op must remain in place for the duration of the MilkFlex loan term. If a supplier breaches his / her Milk Supply Agreement (MSA) or ceases to supply milk to the participating Co-op during the term of the loan, he / she will be required to repay any outstanding balance due on the loan.
Can a supplier repay the loan early?
Yes, a borrower can elect to repay – in part or in full – his / her MilkFlex loan on any monthly payment date during the term of the loan. They will not incur any penalty or cost if they elect to do so.
If the MilkFlex triggers are applied for an extended duration, can the term of the Loan be extended indefinitely?
No, the changes to the repayments are designed to allow milk suppliers adjust to the market. The loan period can be extended by a maximum of two years in total. This consists of the following:
When the participating Co-op’s milk price is 28 cents per litre (cpl) including VAT or below for three consecutive months, both the interest and principal are deduced by 50% for the following six months. This can be activated four times over the duration of the loan.
When the participating Co-op’s milk price is 26 cpl including VAT or below for three consecutive months, MilkFlex loan repayments (interest and principal) are reduced by 100% for the following six months. This can be activated twice over the period of the loan.
In summary, all MilkFlex loans drawn down in 2020 will have to be repaid in full by 2030 at the latest.
Why are suppliers being charged 3.75% above Euribor?
Some dairy farmers with low borrowings and large repayment capacity are reported to be in a position to avail of interest rates of below 4% in cases where they supply a large asset as security – eg land. The MilkFlex loan product does not require the farmer to lodge title deeds beyond providing permission for deductions at source from their milk payments. For a valid comparison, the MilkFlex loan rate should be compared to other unsecured lending products. Compared with mortgage debt, a MilkFlex loan will be cheaper and more efficient to execute.
Is life assurance a requirement before drawing down a MilkFlex loan?
No, the MilkFlex loan product does not require the borrower to take out life assurance. However, we would encourage all applicants to seek independent advice from a Qualified Financial Adviser on whether they should have such a policy in place.
Are there any specific taxation implications of a MilkFlex loan?
All borrowers are advised to seek independent tax advice from a suitably qualified adviser in relation to this loan scheme.
What happens if the Euribor rate increases?
MilkFlex is a variable rate product that will move in line with Euribor rate, which is currently set at a floor of zero.
Can a farmer opt out of the price triggers?
The flex triggers are applied automatically. However, a farmer can – without penalty – choose to make additional payments to fully or partially clear the loan.
Is approval for a MilkFlex loan required before an investment project can commence?
No. Qualifying investments / projects can commence before the loan approval process is complete, but loans will only be advanced if all of the eligibility criteria are met.
What diseases trigger a reduction in the MilkFlex repayment?
Any disease officially listed by the Department of Agriculture as a notifiable disease. The current list is: Bovine Brucellosis, Bovine Tuberculosis, Bovine Leukosis, BSE, Cattle Plague (Rinderpest), Contagious Bovine Pleuropneumonia, Lumpy Skin Disease and Warble Fly.