Bank of Ireland has this week launched a range of new flexible loans, AgriFlex, specially targeted at supporting the development of Ireland’s agricultural sector. These flexible new loan products have been developed to support farmers during times of commodity price volatility and the potential impact these can have on farmer income.
Bank of Ireland has also announced a new €1 billion fund to support the ongoing development of the agri sector up to the end of 2017. The agri sector has seen strong growth in jobs and exports, up 11.1 per cent in the first quarter of this year. This new fund will enhance future growth with support available for a range of farm investments and improvements including the purchase of livestock, land, and farm machinery.
The bank’s new AgriFlex farm loans will offer customers the opportunity to align their loan repayments with their farm’s cash-flow. With features including interest only repayment periods, AgriFlex will help offset the impact of sudden falls in farm gate prices to its customers.
Speaking at the launch, Sean Farrell, head of agri, Bank of Ireland Business Banking said: “Bank of Ireland is providing more than 50 per cent of all new and increased agri lending. Land acquisition, farm buildings, including milking parlour investment and increased stocking requirements, are the main drivers of growth. We have seen a steady increase in both applications and approvals from this sector over the first six months of the year. Our lending approvals to the agri sector during the first six months of 2014 have increased by 18 per cent compared to the same period last year. We anticipate that this demand will continue to strengthen as evidenced by the latest CSO data which shows that the agriculture, forestry, and fisheries sector is performing very well – the sector grew by 5.5 per cent in 2013, and in the first quarter of 2014 was up 11.1 per cent compared to the same period last year. The abolition of the milk quota in April of next year provides a unique opportunity for renewed growth in this very important sector of the economy. Our commitment to this important sector remains core to our strategy. We recognise that many farmers are looking to expand or change their businesses but need some support to address the potential challenges which they can face as a result of fluctuating prices, variable weather patterns, and increasing costs of doing business.
“Among the most frequent risks and concerns identified by farmers when considering borrowing money to grow their businesses is price volatility. We understand these concerns and recognise that financial ups and downs are a feature of farming. We have developed the AgriFlex farm loans which will provide our farming customers with the flexibility to reduce monthly repayments [eg, through availing of interest only repayments] in these situations. In addition, we continue to actively support the agricultural processing sector and to explore a range of other options to deal with volatility at processor level, including the potential to provide some hedging capability via the commodity futures markets.”
Welcoming the new product and fund, Eddie Downey, IFA president, said: “With increasing income volatility in farming in recent years, IFA has identified the need for the banking sector to develop products that respond to this and which will support farmers to manage their enterprises through difficult periods. We welcome Bank of Ireland’s new AgriFlex product as part of their commitment to addressing the problem of income viability on Irish farms. We would encourage farmers to consider AgriFlex as an option to help address short-term on-farm cash-flow financial pressures.”
Sean Farrell concluded saying: “A further key part of the bank’s successful approach to the agriculture sector is our network of highly experienced agri managers which are available across the country to support farmers and to help them to ensure that they make the right investment choices.”