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Concerns over price volatility

The on-farm effect of milk price volatility was brought sharply into focus at the workshop by AIB agribusiness manager, Tadhg Buckley.

Taking the example of a 500,000l spring milk dairy herd with borrowings of €300,000 over a term of 12 years, Mr Buckley pointed out that a 2c/l drop in milk price would slash farm revenue by €10,000 per year.

"That's the equivalent of a 53pc increase in feed costs or an 85pc rise in fertiliser costs," he warned the young dairy farmers.

Interest-only loans endorsed

Teagasc dairy and financial expert Laurence Shalloo urged young farmers to pursue the option of interest-only loans for the early stages of their farm development.

"In years one to three of the new farm, it can be very difficult to meet the repayments for everything," he said. "Your business may be viable but you might need a moratorium on capital repayments in those early years."

AIB's Tadhg Buckley confirmed that 18-month interest-only finance could be available in some cases to young farmers on long-term loans of 15 years for buildings and 20 years for land.

Irish Independent