Banking worries traps farmers in costly credit
A fear of rejection is preventing farmers from converting high-cost merchant credit into more sustainable loans, banks have claimed.
However, farmers' reluctance to engage with banks could put their longer-term investment plans at risk, they warned.
Merchant credit is running 33pc higher than normal this year, with annual interest rates of 12-18pc.
But, overall, bank credit remains quite low.
Credit supplied by Dairygold to farmers has increased by 38pc compared to last year, with half of the increase (52pc) extended to dairy farmers and the remainder to tillage and beef farmers.
The average credit extended to Glanbia farmers is running at €40,000/hd, a rise of 35pc on 2012.
Speaking at a meeting of the Inter Agency Fodder Committee in Portlaoise on Thursday, banking representatives from AIB, Bank of Ireland and Ulster Bank said farmers were in danger of compromising their future investment potential by not tackling farm debts early enough.
Sean Farrell, of Bank of Ireland, said banks viewed farmers in a much more positive light than other sectors.