There has been an increase in the number of farming families struggling to meet domestic bills, according to the latest Irish Examiner/ICMSA opinion poll.
While 26% of farmers agree that their level of farm debt is too high, that is a drop of 8% compared with the findings from last year’s poll.
Dairy farmers in particular, following the abolition of milk quotas, have made more borrowings in recent years as they sought to expand their milking operations.
Conversely, the poll shows a rise in those who struggled to meet household bills in the last year — up 5% to 35% of those questioned.
Tillage farmers, those aged 45-54, and/or those with smaller farms are the more likely to agree they struggled financially in the past year.
In July, the Teagasc National Farm Survey for 2018 showed a 5% rise in overall debt on farms.
However, it also showed two-thirds of farms have no farm-related debt at all and that the level of debt varies considerably by farm type, with six out of 10 dairy farms having borrowings in 2018, compared to only two out of 10 on sheep farms and three out of 10 on cattle and tillage farms.
Kevin Hanrahan, head of Teagasc’s Rural Economy and Development Programme, said debt levels are mainly concentrated on dairy farms.
“I think there are also new players on the farm credit scene — the credit unions — that are now seeking to be providers of credit to farmers, particularly focused on the cash-flow needs of non-dairy farmers,” said Dr Hanrahan.
“There may be a need to for additional credit due to Brexit shocks and farmers should be talking to their credit suppliers about how they will deal with the likely period of lower prices and volatility that is likely coming down the track due to Brexit.”
ICMSA president Pat McCormack said: “Income has improved somewhat for dairy farmers following an extremely expensive 2018 and have fallen considerably for beef in the last year. Inflation is obviously low but the cash-flow in farm families remains a major problem, which is one reason why ICMSA has stressed the need for Basic Payment Scheme, ANC [Areas of Natural Constraint], and Glas payments to be made absolutely on time this year.
“The survey’s findings that farmers appear to be intent on paying down debt might also reflect the more general economic pessimism that pervades most sectors right now — the feeling that things are going to get more challenging and it won’t be pleasant for those with high borrowings.”
He said any discussion of the issues around farm debt and farm borrowings will quickly run up against the astonishing rates that Irish lenders habitually charge over-and-above their continental counterparts.
“ICMSA has repeatedly drawn attention to the difference of between 2% and 2.5% that Irish borrowers pay over the rates charged by, say, German or Dutch institutions lending to similarly secured farming enterprises,” said Mr McCormack.
“The Central Bank seems very comfortable with the astonishingly more expensive rates paid by Irish farmers.”