Farm Ireland

Tuesday 20 March 2018

Bank finance of €3k to €6k/cow on offer

Caitriona Murphy

Caitriona Murphy

Dairy farmers seeking finance for farm expansion should be able to secure funding of up to €3,000/cow this year if their businesses are fundamentally sound, a spokesman for AIB told farmers at the Emerald Expo in Kilkenny on Friday.

Pat O'Meara, agri-finance specialist with AIB, told the conference that although it was "dangerous to be talking about rules of thumb", finance packages of up to €3,000/cow should be possible.

He added that finance of €3,000-6,000/cow could be available to "good farmers", while anything over €6,000/cow would require a "very good farmer".

Mr O'Meara said the bank would take into account the track record of the farm, including trading accounts, variable costs on the farm taken from the Teagasc profit monitor and the single farm payment.

He added that the single farm payment would have a major bearing on the bank's decision to lend.


When questioned, the AIB man said 20-year loan terms were available for expansion (at 4.4pc), but the asset being bought would be key to securing finance. He maintained that given the volatility of milk markets now and in the future, it would be advisable for farmers to consider a 20-year term.

The finance specialist was reacting to figures produced by Laois farmer Kevin Flynn who told the conference that he doubled milk output on his farm by buying a neighbouring farm.

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Now supplying one million litres to Glanbia, Mr Flynn has costed his expansion at €7,000/cow.

Meanwhile, Glanbia Ingredients CEO Jim Bergin told the conference that he could see dairy markets remaining weak for the rest of this year, with a recovery in 2013.

Mr Bergin described current milk prices as "a dip rather than a trough", because demand for dairy products was still strong. Some 40pc of Glanbia suppliers have signed up for fixed milk price contracts for 20pc of the co-op's milk supply.

In response to questions, the CEO rejected the possibility of paying farmers a bonus on top of milk price based on the performance of Glanbia Plc.

"Cross-subsidisation is not an economic activity that a plc could become involved in," he insisted.

"The role of the plc is to give money back to the shareholders who invested in shares."


He added that Glanbia was planning to survey its suppliers later this year to confirm whether farmers were following through on their earlier plans to increase milk production by 56pc.

The CEO maintained that Ireland could become a "global superpower" in milk production in the coming years, with the fifth lowest milk production costs in the world and a solid reputation for quality and sustainability.

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