According to national think-tank, the Economic and Social Research Institute (ESRI), despite rising interest rates for almost all sectors, farmers pay an average of just 3.7% interest on the loans they have from lending institutions – significantly lower than other SMEs.

Businesses in the manufacturing sector pay an average interest rate of 4.8%, construction sector companies pay 5.1% on their loans while professional services companies like accountants pay an average of 5.9% interest on their loans.

ESRI economist Conor O’Toole said EU supports such as the Single Farm Payment as well as the security of farmland means that banks are willing to offer farmers more favourable loan terms than other sectors.

“Agricultural firms pay the lowest average rate of interest. We suspect this is due to the abundance of collateral agricultural firms can offer as security in the form of both farmland and equipment as well as the availability of risk-free income streams through EU subsidy supports,” O’Toole said.

The ESRI study also found that the average loan taken out by a farmer is somewhere in the region of €78,000.

The study showed that just 38% of Irish businesses are debt free with the majority carrying some level of borrowings.