Three out of every ten dairy farms in Iceland are in severe debt. The total debt of the country’s 700 dairy farms amounts to ISK 30 billion (USD 264 million, EUR 204 million) in total and some farms have individual debt of up to ISK 150 million (USD 1.3 million, EUR 1.0 million).
According to Baldur Helgi Benjamínsson, managing director of the Association of Icelandic Dairy and Beef Cattle Farmers, 50 farms desperately need support from the authorities to survive, Fréttabladid reports.
From a dairy farm in Iceland. The picture is unrelated to the story. By Páll Stefánsson.
“Those who owe the most are those who have been improving their facilities and purchasing milk quota,” said Sveinn Sigurmundsson, managing director of the Agricultural Society of South Iceland.
“These farmers tend to be younger rather than older, as it happens. In many cases they have young children, which adds to the seriousness of the situation,” Sigurmundsson explained. There are around 260 dairy farms in south Iceland.
Erna Bjarnadóttir, an economist of the Farmers Association of Iceland, said the debt level of Icelandic dairy farms increased significantly after Landsbanki acquired the Agriculture Loan Fund for in 2005.
Landsbanki acquired the fund for ISK 2.5 billion (USD 22 million, EUR 17 million), outbidding KB Banki (currently Kaupthing) and Íslandsbanki (later re-branded as Glitnir and has now become Íslandsbanki again).
Benjamínsson said it is no secret that after Landsbanki acquired the fund, other banks tried to win farmers over with their marketing initiatives. “Bankers traveled the countryside to offer loans and to win farmers’ business.”
Click here to read about an innovative dairy farm in Iceland.