Finance options for farmers buying machinery appear to be tightening fearts have been expressed that more leading players are to exit the business.
Permanent TSB, one of the leading agri-finance players, has restricted its lending because of severe difficulties accessing money on the capital markets. As a result the 13-strong agri-finance team has seen its lending plummet from a high of well over €100m-a-year in 2007 to just €30m in the past year. The company recently decided to pull out of the year's biggest dedicated machinery show being held next week in Punchestown.
Permanent TSB's troubles come on the back of a huge clear-out of finance companies from the market. Over the past two years, GE Capital, ACC, New Holland Finance and Friends First have all exited the market.
This exodus left just the two banks, AIB and Bank of Ireland, AGCO Finance, ECI JCB and Permanent TSB available to farmers seeking to finance machinery purchases.
The premium rates being demanded of Irish banks seeking money on the international markets has forced Permanent TSB into what is believed to be a loss-making situation, where it is actually charging farmers less than the rate at which it is being forced to buy the money wholesale.
Typical rates for many five-year deals on a machine purchase are 6.5-7.5pc.
The increase in the capital reserves being demanded of banks following the passing of the Finance Bill will further jeopardise Permanent TSB's position. It is expected that the requirement on banks to increase their reserves from 8pc to 12pc will come into effect by the end of next month. Permanent TSB has been linked with a number of separate buyout offers in the past few weeks.
In the absence of stiff competition from Irish-based banks, AGCO Finance, the operation linked to Massey Ferguson, Fendt and Valtra tractors, has seen its lending soar by 40pc in the past year.
AGCO Finance's southern area manager Geoff O'Shea said that the bounce had seen the company equal its best year on record before the downturn in 2008. This is despite the fact that last year's national machinery sales stayed at depressed levels.
Just 1,315 tractor units were sold in 2010, compared with the historical high of 5,029 units in 2007.
FTMTA's Garry Daly said that while sales have picked up so far this year, the highs of 2007 and 2008 will never be seen again.
While the best finance deals from AGCO remain for its in-house brands, it has begun financing other machinery items such as loading shovels and diet feeder wagons.
ECI JCB is the latest player to join the market, having this month launched its finance package for farmers.
ECI managing director Denis Murray said that the recent demise of so many finance companies left ECI struggling to organise credit for its customers.
"This has been operating in the UK for many years," he said.
"Three-and-a-half percent will be a good ballpark rate for most of the deals that we'll be doing."
The finance will be limited to new and used machines being sold by ECI.