Greatest demand from counties Cork, Tipperary and Westmeath
Bank of Ireland has reported an almost 30% increase year on year in land purchase loan approvals for 2017, driven by a 25% lift in the total number of acres approved [c. 25.4k]. Reflective of the strong equity levels available to support agricultural land purchase, the average loan approval increased by 2% to c. €5.1k per acre with the average sized land parcel approved for purchase c. 30 acres. The greatest demand for funding in 2017 in terms of acres and value came from counties Cork, Tipperary and Westmeath.
Bank of Ireland also saw a significant increase in the number of farm development finance applications during 2017. With a large proportion of applicants weighted towards dairy, there were also applications from across Beef, Tillage, Sheep, Pig and Poultry sectors seeking finance for building upgrades, renovations and machinery.
Speaking about the increase, Sean Farrell, Head of Agriculture, Business Banking at Bank of Ireland said; “2017 was a positive period for much of the Agri Sector which contributed to a growth in confidence and appetite for expansion, particularly for our Dairy customers. Despite the threat of Brexit, agri enterprises are expanding where and when they can to maintain productivity, drive efficiency levels and enhance capability for the future. Margins increased for most enterprises driven by higher farm gate prices and production levels with a record year for milk production which exceeded 7 billion litres for the first time. This has resulted in higher cash flows and lower overdraft usage across many enterprises.
“Looking ahead for 2018, we expect to see continued farm expansion and a rebalancing of the positive trends for Dairy with a reduction in milk prices and an increase in the cost of fertiliser and fuel. The outlook is for further growth in Irish beef supplies as global demands grow and Irish exporters diversify into Asia and Europe. Global grain demand is forecast to grow and recent bouts of cold and dry weather in Russia and the US respectively may drive up future grain prices. Irish pig meat exports will continue to be UK dominated where we have strong competition from European suppliers but prices and profit margins are expected to decrease from 2017 levels. With China set to increase its level of pig-meat imports it may also bring opportunities to this sector.”
“At Bank of Ireland we provide a range of supports to aid farm development and expansion to help agri businesses survive, thrive and grow. Across farming enterprises, financial needs can differ significantly from season to season and county to county. Whether it is a cash flow requirement or capital for expansion we are here to support and will support any discussions around future funding needs.”
Key to a successful business is careful cash flow management which helps to predict daily inflows and outflows. You can download a simple and effective agricultural cash flow planner here.