True story of how Irish farming nearly went to the wall

In these dire financial times this story is even more relevant, although it is 12 years old.  However it was revealed for the first time in 2002, twenty years after the events occurred.  It says much for the loyalty of those involved in the IFA that these events were never spoken about publicly prior to that time.

The True story of how Irish farming nearly went to the wall

It was the best of times, it was the worst of times. In the mid-1970’s, flares and flower power were back in fashion, and another F -farming- was the business enterprise to get into.

Farmers who saw their chance and expanded up to 1977 never looked back. But what a difference a year made. Farm development from 1978 onwards, often involving expensive land purchases, ended in tears for most. In the early 1980’s, interest rates zoomed over 20%. EU price guarantees decelerated, Irish inflation was in the high teens and farm incomes halved from 1979 to 1981. Interest repayments spiralled to 27% of Irish farm income, a disastrous and distressing experience for many farmers. This was Irish farming’s equivalent of the Wall Street Crash. In what looked like a rewarding and promising business, 10,000 Irish farmers were unable to service their debts.

That farming survived, and eventually prospered, is a lasting tribute to the farmers and bankers who brought the industry through, with the minimum of casualties. Amazingly, many of the details have only just come to light of how the Irish Farmers Association led the industry out of its crisis. They have been revealed by the main player on the farmers’ side, former IFA president, Tom Clinton. His account of farming’s Crash of the ’80’s came to be told a couple of months ago at the Rosscarbery Historical Society’s Autumn History School, in West Cork.

To understand Ireland’s farm credit crisis one must picture our agriculture industry of the late 60’s and 70’s. The dairy industry was in its infancy; there was a coastal strip of tillage from Louth to East Cork and some in the south midlands. Cattle and sheep were almost everywhere. Two de Gaulle veto setbacks delayed EEC entry, but in 1973, Ireland went from supplying cheap food to Britain to full market access to 250 million Europeans, backed by intervention price support. Farm product prices increased, up to a 1978 peak. But, from 1979 onwards, the only thing expanding fast in Irish farming circles was debt. If not serviced, the money to be repaid to banks could double in four or five years; a lesson which 10,000 farmers learned the hard way. Some 5,000 of them learned the dreaded new words in Irish farming, “restructuring” and “write-off”. The government recognised the crises, and introduced an interest subsidy scheme, but it was too little too late in a lot of cases, according to Tom Clinton, as farmers struggled to hand over nearly 25% of their shrinking incomes in interest payments. Some worked their way through, but farmers who expanded rapidly, purchased land at high prices, had cattle disease outbreaks or had expensive family settlements never had a chance, particularly so after the EEC introduced milk quotas in 1983.

For IFA, farmer indebtedness became issue number one, and the association’s president, Joe Rea, entrusted a special sub-committee of Frank Masterson, Don Hadden, Pat Butler and Tom Clinton with the onerous task of “managing” the crisis. Clinton had taken over from Masterson as chairman of IFA’s tax and credit committee, the very name of which signified how credit had become a huge farming worry. The IFA met representatives of all the banks, but were getting nowhere in their efforts to ease the trauma for farmers. The Bank of Ireland had been particularly aggressive lenders to farming at the end of the 1970’s and had put up enormous sums for land purchase. AIB would have been the next biggest lender followed by the Northern Bank (who later became National Irish) and Ulster. As the crisis grew, it became clear to the bankers that if they called in all the debts that farmers had defaulted on, or looked likely to default on, they would only make things worse. Land prices would have collapsed and some of the banks’ own equity base would have been jeopardised.

Still, Tom Clinton and his colleagues were coming up against huge resistance to debt write-offs and to allowing IFA to have any role in loan restructuring negotiations. They encountered a view in banking circles that if any organisation was allowed in to negotiate on behalf of farmers, it created a whole wave of new precedents which bankers were most unwilling to contemplate. So there was six months of meetings and stalemate. By 1983, Irish farming debt was a clearly visible crises. There were enormous sums at stake, multiplying rapidly. IFA’s tax and credit committee invited Peadar McCanna and John Clifford of Bank of Ireland to yet another meeting in IFA’s Farm Centre HQ in Dublin. This time, Clinton raised the case of a farmer in Meath, his own county- who had made the headlines because of the amount he had borrowed from Bank of Ireland. The farmer had done his best. He had a large family and was totally backable from an IFA point of view. Tom Clinton asked Peadar McCanna, chief agricultural advisor to the Bank of Ireland at the time, what he would do with the Meath farmer. McCanna said that he would get him to sell the land he had bought, allow him some years to raise his family and then sell him out. Tom Clinton said that he had looked him in the eye and told him “On that day I would meet him at the gate.” Such statements left bankers in no doubt as to the possible repercussions of a hard line approach to debts.

As for Clinton, he felt that this was a defining moment for IFA, for Bank of Ireland, for the other banks and for the farmers in difficulty, ACOT farm advice authority. As for himself, he says it utterly changed his life. Negotiations after that pivotal meeting were still slow, but the lending institutions soon realised that the IFA negotiators were genuinely willing to put their necks on the line. And, most importantly, they learned they could keep a secret, and would not talk carelessly about debt settlements. Bit by bit, bankers and IFA leaders began to thrash out settlements for over indebted farmers. It usually started with a phone call to an IFA negotiator, with information that “so and so” was in difficulty. It was always requested that a farmer in trouble contact a negotiator directly. A meeting was set up, preferably with the farmer’s wife present. Mr Clinton said, “It was always amazing to watch people realise that after bottling up their problems for months or even years, there was someone who understood it from their point of view and were prepared to help.”

The IFA decided that both the lending institution and the farmer involved would have to make sacrifices. Important criteria were the farmer’s age, family circumstances, what had they bought, how much had they borrowed, the pressures that led to such borrowing. The IFA objective was to determine how much of a write-off was needed to leave a farmer hope for the future. As for the banks, the IFA thinking was they should realise they had made a serious mistake and should pay a price for over extending credit.


What were the IFA guidelines in each case? (a) If a farmer had a future, lending institution would accept a lump sum from sale of livestock, land or other assets and lend to that farm at reduced interest rate over 10-15 years. (b) If the farmer was 48 years or over, or if the farm was unable to make repayments the banks would accept a lump sum in settlement. Most of these farmers had then to change banks. Lending institutions in a write-off were not inclined to re-lend to the farmer. The amount written off varied, but it was never below 10%. Each case threw up complex negotiations, traumatic for the farmers. But invariably, within six months, they would appreciate what was done, as the weight lifted off their shoulders, recalls Tom Clinton. He does not know how many individual debt crisis settlements IFA made because all the farmers involved did not come personally to the IFA. But he was personally involved in 1,500 to 2,000. These cases would have averaged at least 100 acres each, involving the Co Meath farmer in settlements involving almost quarter of a million acres. And nearly 2,000 settlements were negotiated by the rest of his tax and credit team. Amazingly, there was little public knowledge of this huge farm rescue operation, farmers having been directed to keep their settlement details confidential. Even the iFA leadership and management were no more than broadly aware of what was being done. No one person knew the overall numbers of farmers involved in write-offs, or overall sums written off.

Mr Clinton said there has been for some time a recognition that the story of the farmers who came to the rescue of debt stricken colleagues should be put on records. The Rosscarbery Autumn School was the opportunity to pay tribute to the IFA members who gave unselfishly of their time, to ease the trauma of crippling debt afflicting Irish farmers. Fittingly, the Autumn School was organised by local historian Fachtna O’Callaghan, one of 15 key people, who Clinton said deserve to be named for posterity. The others are, Pat Butler, Wexford, Don Haddon and the late Larry Cullen, Wicklow, Stephen Liffey, North Tipperary, Dan Ryan, South Tipperary, Eddie Cunningham, Waterford, Michael Coughlan, Cork, Frank Masterson, Kildare, Larry Hannon and Liam Egan, Offaly, Pat Donnellan, Galway, Tom Bradley, Carlow, John Boylan, Monaghan and the late Dee Donoghue in Kerry. He also paid tribute to their wives, who gave tea and sympathy to the callers seeking relief from their crushing debts. “There was total harmony among us” said Tom Clinton of the IFA credit team’s unity of purpose, once they had agreed basic settlement criteria. There were many other farmers involved in negotiating settlements, too numerous to mention, he added. He also paid tribute to the banks’ agricultural advisors who, having given out too much money in the first place, realised that they had a huge problem and helped to sort it out. The length of time to get settlements varied from three to six months at the beginning. In the finish it took from a week to a month to lift the crushing debt burden on individual farmers. The fastest was one hour and Tom Clinton did not meet the farmer involved until many years later. When he heard that Tom Clinton was in his town, he came in to meet him. “I didn’t get home early that night,” says the man who successfully led the IFA campaign against land tax and later became president of the association, but will be best remembered as a saviour when bankruptcy threatened. Carol Gilbert (c) Irish Examiner


And I add my own recollection of  what was said before a stunned audience on that Sunday morning.   Up to 10,000 farmers had their debt written off or set aside in some way, up to one million euros.  The most telling statement for me in understanding the situation at the time was when the man sitting near me stood up and said, ‘You have just explained how my neighbour’s widow and her young sons kept their farm, following their father’s suicide.’

Hard times are upon us again as people lose their homes and farms wholesale – we need another Tom Clinton but this time someone acting for everyone.


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