Went wild during the boom

have shown that having a designated successor for a farm business motivates farmers to borrow money and continue the development of their farm.

I often wonder, have the child successors the same vision? Successors are important in borrowing capacity.

BANK COMPETITION

AIB, BOI and Ulster are the only active banks lending to Irish farmers today.

We have reverted to 1990s-style banking whereby the banks are ultra conservative and overcautious in lending to Irish farmers.

This is understandable in light of the irrational lending practices of the boom years but common sense must prevail with a loosening of the purse strings.

Farmers did not go wild in the boom. A teenager with no assets can get finance to buy a car online without even talking to a human being from a bank just because he or she is clever enough to know the boxes to tick on the online application form.

Yet a beef farmer with a farm worth €1m will go through the hoops for a simple stocking loan.

The mood of banks is a vital cog in the borrowing potential of Irish farms.

It is accepted that the three Cs of banking apply to all loan applications in Irish agriculture today. ÷Capacity: The repayment capacity of the farm business ÷Collateral: The security offered for the loan ÷Character: The person themselves, their track record in banking and in life in general.

The three Cs are important, but they should all be given proportionate credence in each agri-loan application.

Let’s face it, farmers are a safe bet when it comes to lending. Bankers should recognise this fact.

In summary there are two types of debt on Irish farms today: Good Debt (easy to repay) and Bad Debt (difficult to repay).

Whether your farm business has bank debts in the millions of euro, or the average €28,000 per farm, it really does not matter, once you have the profits to meet your monthly repayments.

Mike Brady is an agricultural consultant based in Cork email: mike@bradygroup.ie