Farm Ireland

Monday 23 October 2017

Banks finally see the value of our farming industry

Bank of Ireland’s Richie Boucher has some farm time in Corrin Mart last week.
Bank of Ireland’s Richie Boucher has some farm time in Corrin Mart last week.
Declan O'Brien

Declan O'Brien

Are the bankers finally realising the potential of the farming sector?

The fact that Richie Boucher swapped the swanky surrounds of Dublin 4 for some face time with farmers at Corrin Mart last week is noteworthy.

The Bank of Ireland supremo was the main attraction for Bank of Ireland's agri conference which was held at the Cork Marts Co-Op headquarters last week.

Entitled '2020 Vision, Opportunities in the Dairy and Agri Food Business', the focus of the conference was obviously on the expected expansion in the dairy sector.

That close to 600 farmers showed up for the event confirms not only the drawing power of the said Mr Boucher but also the hunger that exists in the farming sector for solid financing arrangements.

In his speech Boucher told farmers that the bank had the capital, the funding, the infrastructure and the strategic need to support Irish farmers.

That is good news and will be welcomed by farmers.

However, I wonder if the experience of farmers dealings with banks at the moment is all that positive.

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Anecdotal evidence suggests that the attitude of banks is varied but that farmers carrying significant debt levels are getting few breaks from lenders who appear more interested in getting money in than giving funds out.

Indeed, in many instances, short-termism appears to be the order of the day.

Projections of future income levels appear to cut little ice with bean counters who are more determined to squeeze the maximum repayment levels out of businesses. In effect, they are choking cashflow and killing expansion potential.

"Some of the banks are throwing shapes but are not really up for doing real business," was how one financial adviser summed up the situation.

Away from the banks, there was good news on the financial front over the past week for farmers who have single farm payment entitlements leased and were in danger of losing them without any compensation because of the recent CAP changes.

The announcement by Finance Minister Michael Noonan of a Capital Gains Tax (CGT) exemption for these farmers will obviously be a cause for relief.

The decision will be worth around €7,000 on average for the 6,400 farmers affected by the CAP changes.

During the past year, these payment entitlements have been selling for around 2.3 times their annual value, which would work out at €19,800 on the average farm.

Since capital gains tax is levied at 33pc, the average value of this exemption could be between €6,000 and €7,000.

This is a real case of common sense prevailing and the farm organisations, as well as both Minister Noonan and Minister Coveney, deserve credit for their efforts on this issue.

Indo Farming