An ESRI report published in December last year showed that the cost of finance in Ireland to businesses, including farms, is high by European standards.

For small to medium business loans, which include farms and captures loans smaller than €250,000, the interest rate in June 2017 was 5.2% compared with the eurozone average of 2.52%.

The study also found that the average interest rate on new loans for all Irish businesses, which includes farms, was 2.54%, while the eurozone average was as low as 1.74%. The report concluded that while interest rates are down year-on-year for farms and other small businesses, interest rates remain considerably higher than for their European peers.

New lending soars

Figures from the CSO show that new lending to farmers soared 30% or €100m in the first half of 2017 compared with the same period in the previous year.

With a total of €434m of new money given in the first six months of this year, the amount advanced is up 65% on six-month 2012 figures.

The large increase in new lending in the first half of the year has largely been driven by the €150m made available under the Government’s low-cost loan scheme, which became available at the end of January 2017.

There was huge demand for the loans due to the attractive 2.95% interest rate, with the fund fully exhausted within weeks.

The CSO figures also show outstanding debt on Irish farms at the end of September now stands at €3.21bn, 1.4% lower than the same time last year. Outstanding debt on Irish farms is now down 30% (€1.3bn) since the peak hit in 2009.

The peak was driven by debt associated with farm waste management compliance and since then has seen a continual pay-down.

Overall, while total debt levels on Irish farms have fallen, the large increase in new lending means that the debt profile is younger.