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Total farm debt in NI was reduced by £88m in 2022, with total borrowings falling to £965m, down from £1.053bn in 2021.
NI farm debt is now at its lowest level since 2018 when total borrowings amounted to £957m.
Financial institutions lending to the farming sector saw loan applications falling through each consecutive quarter last year.
In Q1, there were 500 loan applications approved but by the final three months of last year, loan applications had fallen to 297.
The value of capital borrowed consequently fell in each quarter, with lending facilities worth £214m loaned to the farming sector in 2022.
Deposits
While borrowings did fall, the level of cash on deposit increased last year, rising from £584m in 2021 to £614m.
Several factors led to reduced lending activity in 2022.
Higher farmgate prices improved cashflow on many farms, particularly dairy enterprises, and despite the rise in input costs, representatives from the main banks indicate some capital expenditure projects were able to be completed without the need for borrowing.
Higher inputs also saw farmers reducing expenditure, easing the pressure on overdraft facilities, while the sharp rise in interest rates in late 2022 also reduced the appetite for borrowing money.
Planning permission has also become much harder to secure and led to a downturn in capital expenditure projects on farm, again reducing the requirements for bank support.
Outlook
However, banking officials are expecting an upturn in loan applications and borowings during 2023, with capital investments being funded under Tier 2 of the Farm Business Improvement Scheme.
In addition, they anticipate the downturn in milk prices will significantly reduce cashflow on farms, leading more farmers to utilise overdraft facilities.
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