There has been a slowdown in farm development loans on the back of a lot of investment in previous years, Seán Farrell, head of business banking with PTSB has said.

He told the Irish Farmers Journal that with the uncertainty around the nitrates derogation, dairy farmers are looking to insulate themselves.

“For some, that means more land and they may be paying a premium now to maintain current stocking levels.

“The bank looks at each individual farm loan on an individual basis,” he said, adding that farmers are acutely aware of what could happen with regard to the derogation.

Farrell said that it has been a challenging year on farms and that this was reflected in a slight increase in take-up of overdraft facilities.

Derogation

Agriculture adviser with AIB Eamonn O’Reilly said the possibility of the nitrates derogation being brought down to 170kg N/ha is under review at the bank, and that it is watching court action on the Nitrates Action Programme closely.

“Some dairy farmers we’re talking to; cashflow is the one particular aspect that they say has been an issue for them mainly due to weather causing increased input usage. However, overdraft utilisation hasn’t increased very much at all over last two to three years. While we would have given an increase in limits, those limits aren’t being utilised, with good headroom in many cases.”

He said that lending to the beef, sheep, tillage and poultry sectors is steady.

Head of agriculture at Bank of Ireland Eoin Lowry said that while the sector looks to be in rude health, there are signs of financial stress at individual farm level where there are increased levels of debt to earnings and increasing concern for long-term viability.

“In our experience, much of this can be solved by engaging with their accountant and financial provider, examining the structure of debt and the business and providing a path forward,” he said. Lenders are available to discuss these options and possible solutions with their customers, he added.