In the event that stocking rate limits are lowered in the nitrates derogation, both AIB and Bank of Ireland have said that any changes to the derogation will be factored into their lending policies.

The upper stocking rate limit could drop from 250kg organic nitrogen per hectare to 220kg organic nitrogen per hectare if water quality doesn’t improve by 2023 – a condition which IFA dairy chair Stephen Arthur said “slipped under the radar.”

Agriculture, food and fisheries sector specialist at AIB John Farrell said: “Stocking rate and indeed derogations are something that we consider as part of a customer’s lending application, and if any changes are made to the nitrates derogation, we will look to factor this into our lending policies.”

Farrell added that all of AIB’s new lending criteria is based on “sustainable and viable business plans.”

This, he said, incorporates financial, social and environmental considerations also.

Repayment capacity

Changes to policy or regulation that affect the farmers’ ability to make repayments will “always be a factor”, according to Bank of Ireland.

Repayment capacity is the primary consideration when lending to farmers, Eoin Lowry, head of agriculture with Bank of Ireland, told the Irish Farmers Journal .

“In so far as regulation or policy changes impact on repayment capacity, the bank will always factor these into our analysis. We will also stress test for possible further policy changes where we feel that is appropriate,” he said.

Another factor that is under assessment by Bank of Ireland is what stocking rate will be used when stress testing loans.

When asked if the bank would stress the repayment capacity of a farmer stocked at 230kg organic nitrogen per hectare at 220kg or 200kg or 170kg, Lowry said: “Currently, this is being assessed on an individual farm and case by case basis.”