The Minister for Agriculture said he would take up with the banks the financial difficulties faced by farmers because of the foot-and-mouth disease threat. "I have not made contacts with the banks but there is no doubt they are doing extremely well from the Irish economy and the farming community in general," said Mr Walsh.

"I expect they will take a benign and considered approach in this matter. I will make direct contact with the banks and take the issue up with them."

The Minister said the co-ops in the general region of Louth and Monaghan had been quite helpful on milk collection. "They have been doing a very good job in installing fitters, milk tankers and so on to allow a very difficult situation to be ameliorated for dairy farmers."

The Labour spokesman on agriculture, Mr Willie Penrose, said there was a sense of shock and devastation on the part of farming families in the north Louth area.

"The core of the economy in the region is being dismantled. Does the Minister agree it is important that the compensatory procedure is implemented as a matter of urgency because many of those farmers have been without incomes for between five and six weeks?"

Mr Walsh said he had instructed the Department's payments section to pay out the compensation to farmers who had their herds depopulated. "I also met the valuers concerned and my understanding is that there is market value and that there has been no difficulty relating to valuation."

Replying to Mr Seymour Crawford (FG, Cavan Monaghan) the Minister said that as a result of the outbreak in the UK last month, his Department had cancelled on-farm inspections for all farm income support and investment schemes.

If this continued, the possibility of providing alternative assurance as to the veracity of applications under the premium schemes would have to be considered. His Department had already been in touch with the European Commission about the problems.

"With regard to farm investment schemes, it is my intention to process payments for projects completed and inspected. However, on the basis of the advice received from the expert group, chaired by Prof Michael Monaghan, it is not possible to carry out any farm visits, either to inspect completed works or to process new applications for on-farm investments.

"In this context, it is also considered inappropriate to approve works to proceed on farms which would involve the entry of contractors, builders, etc on to the farms."