Debt in the agricultural sector is at its lowest level for more than 10 years, Central Bank figures confirm.

The latest Central Bank data shows that debt levels in the agri-sector dropped by €235m to €2.8bn in the 12 months to the end of June – the lowest level in 10 years.

Figures for new borrowings in the 12 months up to the end of June were also well back, falling by €196m or 25% compared to the period from 1 July 2020 to 30 June 2021.

Total borrowings for the 12 months up to the end of June this year were €589m, compared to €785m for the 12 months up to 30 June 2021.

High commodity prices over the last two years have boosted cashflow and driven down borrowings on farms, while inflating farmer deposits.

Eoin Lowry, head of agriculture at Bank of Ireland, said overdraft utilisation rates are running at around 13% to 14%, compared to the usage that would normally be around 25%.

He said farm deposits have increased by 60% since the onset of COVID-19 in March 2020.

However, the Bank of Ireland official predicted that demand for lending at farm level will increase through the winter as bills for feed and fertiliser hit kitchen tables.

“While costs on farms are going to increase this year, farmers are generally coming into this period in a very strong position,” Lowry said.

He added that Bank of Ireland has “plenty of capacity” within its €100m Agri Assist package to deal with any farm-sector working capital requirements.

Donal Whelton of AIB said there was good confidence in the farm sector at the moment and this was reflected in strong demand for new lending.