With reform measures taking effect up to 2019, he didn’t envisage much of an impact on repayment capacity on loans up to terms of five to seven years.
But longer term loans than seven years would have to be stress-tested for CAP reform, he indicated. He said the bank didn’t get as many farmers looking for help due to fodder difficulties as they expected, even though AIB wrote to all farmer clients offering help.
Mr Buckley said co-ops and merchants, many offering credit which was interest-free up to the summer, took the brunt of extra lending needed, and a share of that extra lending is now moving over to banks. He advised farmers it is better to re-finance their fodder crisis borrowings with banks, and said AIB is also working with co-ops to cope with increased farmer indebtedness.
Fewer farmers are in financial difficulty after 2012 than after 2009, said Mr Buckley, who pointed out that, along with weather havoc over the past year, farmers were getting improved prices for produce. As a result, 2012 was a relatively good year for farm income, second only to 2011 of recent years, and much better than 2009 or 2008.
AIB regional director John O’Doherty told the briefing that AIB has 40%-50% of the farming loans market, and it is their least “troublesome” sector in terms of risk profile.