Central bank warns of banks exposure to agri sector as no-deal Brexit looms
The Central Bank as highlighted the 'significant' exposure of the Irish banks to the agriculture sector as a risk to the economy in the event of a no-deal Brexit.
Irish banks have a lending exposure to the Agriculture of over €3.4bn noting that most vulnerable areas to a crash-out Brexit are in the Midlands and Border counties where agriculture and food processing accounts for around one in five jobs.
Debt on Irish farms increased in 2018, according to figures from Teagasc's National Farm Survey the increase was modest however, up 5pc overall.
Farm debt levels vary considerably by farm type with six out of ten Dairy farms had borrowings in 2018, compared to only two out of ten on Sheep farms and three out of ten on Cattle and Tillage farms.
On dairy farms average farm debt increased by 12pc in 2018 to €121,453.
Despite reduced investment on Cattle Rearing and Sheep farms, debt also increased on average, presumably to help mitigate the cost-price squeeze.
According to the survey, the majority of farm debt (75pc) was classified as long-term (more than ten years) in 2018 with 81pc of average Dairy farm debt categorised as such.
The Central Banks warning comes as the Government is appealing to agri-food businesses, traders and hauliers of agricultural commodities to act immediately to ensure that they have taken the necessary steps to prepare for a 'No Deal' Brexit.
The Minister for Agriculture, Food and the Marine, Michael Creed said while Ireland does not want a no-Deal Brexit, there is no hiding from the fact that a 'No Deal' Brexit will be a challenge and will impact on trade.
"Hoping that it won’t happen is not a sound strategy and will not make it go away. It is far better to prepare now and to do everything that you can to make sure that you’re ready.
It comes as more than £2 billion has been set aside by the UK Government to prepare for a no-deal Brexit, as Boris Johnson’s administration steps up its contingency planning.
Minister Creed urged farmers and agribusiness to check their supply chains, review their regulatory obligations and engage with their suppliers and clients.
“If you are a business that move animals, plants or animal and plant to or from the UK and has received letters from Revenue please engage with my Department so that we can help ensure you are familiar with the requirements for importing or exporting such commodities from/to the UK," he said.