NI farm borrowing up 9% according to Danske

Written by Rachel Martin

Northern Ireland farm borrowing has increased around 9% over the last financial year, mainly driven by investments in expansion and efficiency, according to one of the region’s main agricultural lenders.

Speaking during a briefing for the Guild of Agricultural Journalists, Danske’s head of agri-business in Northern Ireland, Rodney Brown, explained that on average farm borrowing rose from £39,724 in 2017-18 to £43,374 in 2018-19.

It’s in addition to other average debt of £6,778, which was made up of hire purchase payments, leasing, family borrowings, and other small loans.

The figures from Danske Bank also showed that around 47% of farms were operating without any bank loans.

Dairy farmers had the largest level of borrowing – averaging a hefty £104,894 – compared to just £10,404 for cattle and sheep farmers in less-favoured areas at the opposite end of the scale.

Lowland cattle and sheep farms borrowed £20,153 on average, followed by pig farms at £47,468 and mixed farms £70,290.

“Cash generation seems to have been quite good through those times and most farmers had an ability to fund some of this investment from their own resources. However, on the flip side, there are still a few businesses who are operating at or below break-even,” Brown said.

Our view is that when there is a good business in place and the correct fundamentals, we will continue to work with them and bring them through that. Although, like all businesses, there are still a few that need to address underlying problems and we will support these while they continue to address these issues.

Addressing the challenges that could come with Brexit, Brown said: “We need to make sure we are aware and well prepared for the possible outcomes.

“That said, farmers are very resilient – they have become the masters of adapting to change – and will, no doubt, be agile enough to overcome whatever the industry brings.

“However, our politicians need to ensure we are not at the bottom of the pile when it comes to being in a position to trade with our island neighbours and also be competitive to the world market.”

Future-proofing your business


Looking forward, Brown said it was an important time for every farmer to consider ways their business could become more efficient.

“We need to identify growth opportunities, look at the market – and keep an eye on where it’s going – we have to supply the market, not market to supply – we have to look at what processors need and what processors want,” he said.

“Even further down, we need to consider what consumers are after as well. We need to evolve and drive efficiencies – if your business isn’t efficient, it’ll not move forward.

We need to invest in only assets that will deliver a return – whenever we are looking at the pound spend on farms today, we need to ensure that whatever we spend is going to give us some return.

“We don’t need an asset sitting on our business which is just sitting in the corner and not doing anything – we need it returning all the time.

“We need to look at de-risking the business – whether that’s taking a look at what you can buy, and how you can buy it, or our outputs – can we get into fixed-price contracts, but we also have to take a look at debt and if there are ways to avoid any potential increases to interest rates.”

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