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“Most young people don’t have the financial skills to deal with high levels of debt.” That was Kevin Moran’s opinion while delivering his report, entitled Access to finance for young and expanding farmers, at the seventh annual Nuffield Ireland conference.
He recommended the establishment of a funded mentorship programme for young people to work with more experienced farmers to learn how to apply for finance and of their experience of working with farm debt.
“While there also needs to be more emphasis put on financial learning in agricultural colleges, I learned most by applying to banks and getting refused and fine-tuning my business plan and trying again,” he said.
Moran acknowledged that having debt comes with a burden that some people can handle while others can’t.
The abolition of quota and the increase in collaborative farming arrangements require a change in mentality in the lending institutions, Moran maintained.
“Traditionally, banks would have used land as collateral. However, with more collaborative farming coming on stream, this model of banking becomes outdated,” he said.
Finance
Kevin said: “You often hear the saying, four wheels depreciate, four legs appreciate. But it’s easier to get finance for a tractor than cows at the moment.” He added that the sector is behind in terms of accessing finance by using livestock as an asset.
There needs to be a change of mentality from our banks and Government towards livestock lending, in terms of risk and term offered, he argued. With this in mind, Moran recommended a committee be put in place with a representative from each of the relevant stakeholders within the industry to formulate a submission to the Minister for Agriculture on how to introduce chattel mortgages.
These exist in many countries, such as New Zealand and the USA, and Moran maintained that this could be replicated here, arguing that they are more advanced in terms of lending using livestock as collateral.
In the course of his presentation, he also said there is scope for a cow-leasing entity similar to Cowbank in Australia, which leases 48,000 cows to 250 farmers.
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