The appetite for significant investment inside the farm gate has weakened this year, even as incomes have risen, according to a recent report from Bank of Ireland.

The bank said that overdraft usage is down 25%, farm deposits are projected to rise by €1bn, and total farm debt has dropped to a 25-year low of €2.65bn. This has been driven by strong income growth in the beef, dairy and sheep sectors.

Eoin Lowry, head of agri sector at Bank of Ireland, said: “What we’re seeing is that farm deposits are significantly up from where they were this time last year.

ADVERTISEMENT

“Our overdraft utilisation levels have fallen back to the lowest level in a number of years, and farm debt levels are at 25-year lows.

“So farmers are in a really strong position at the moment, financially.”

Borrowing for investment, however, has dropped with new lending down 19% in the first quarter of the year as the industry as a whole faced uncertainty caused by Trump’s trade measures.

Dairy, which is often the most investment-heavy sector also still has the derogation decision hanging over its outlook.

Cultivate

The Credit Union Cultivate product aimed at farmers published a report on its lending showing a drop of 7% in the first quarter of the year, well below the drop in overall lending to farmers of 19% reported by the Central Bank of Ireland. The lender said its drop was driven by lower demand for working capital which Cultivate said was a sign of strong cashflow in the industry.

Cultivate also announced it is raising its unsecured borrowing limit from €75,000 to €100,000 for a period of up to 10 years. The new limit will be available from 30 September.

In the first half of the year, beef farmers accounted for 70% of Cultivate’s loan applications, with the average loan size reaching €39,021, an increase of €1,000 from the same period last year.