Bank of Ireland increases loan facility to fund farm level expansion

Bank of Ireland approved €580m for the agriculture sector up to end of October, a 13% increase over the previous year.

Bank of Ireland increases loan facility to fund farm level expansion

Executives told the Oireachtas joint committee on agriculture the bank has a €1bn fund in place to support development and expansion at farm level.

They predicted the outlook for agricultural commodities is positive and that prices will increase over the next five to ten years.

However, they warned this increase would not be linear and there would be peaks and troughs similar to what is being seen now by the dairy sector in particular.

Mark Cunningham, director of business banking, and Seán Farrell, head of agriculture, business banking, said it was anticipated that dairy markets will recover from current levels in 2016.

This will prompt additional investment at farm level as farmers capitalise on the post quota opportunity to expand their businesses.

Land purchase, farm development, and annual seasonal loan requirements are typical areas where farmer customers are currently looking for financial support.

The bank approved 93% of agri credit applications to date in 2015.

Earlier this year, the bank partnered with Teagasc to sponsor a research report, which identified an investment requirement of €1.5bn for the Irish dairy sector.

The bank said it will play its part in helping customers manage the impact of sudden price shocks; either falls in output prices or increases in input prices.

“With regard to cash-flow support, to date there have been few additional requests to what we would normally receive from customers,” the bank stated.

“Requests received to date have not typically been milk price related and are as a result of super-levy issues.

"We anticipate that requests for cash flow support will increase in the coming months and throughout the first quarter of 2016.”

The bank’s executives said farmer overdraft utilisation levels with the bank remain low, with typical customers with stronger cashflow in 2015 than they had in 2014.

“Our farming customers have overdraft balances of c.15% of their overall permission level, and the overall risk profile and credit quality of our agri customer base has improved throughout the year,” they said.

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