The primary agriculture sector was the largest recipient of new lending to small- to medium-sized enterprises (SMEs) from September 2016 to September 2017, totalling €785m. Totalling 16% of new lending to all SMEs, this further demonstrates the importance of farming to the economy and that agriculture is continuing to drive forward.

Outstanding debt on Irish farms, according to the Central Statistics Office (CSO), currently stands at €3bn. While it has increased 2% in the past year, overall debt on Irish farms is at its lowest level in eight years – 30% or €1.3bn lower than peaks hit in 2009. The sector is financially healthy, with low borrowings compared with our European counterparts. Most farms continue to be debt-free.

Just over one-third (35%) of farms have borrowings. Of those farms with debt, the average level of farm borrowings is around €60,000. Tillage and dairy farms have higher than average debt levels of around €80,000 and €100,000 respectively because of the need for tillage farmers to keep their machinery updated and the increased investment that we have seen on dairy farms to support the growth in milk production.

However, a recent ESRI report showed that Irish farmers pay double the interest rate of their European counterparts. It found the interest rate for loans less than €250,000 in Ireland was 5.2%, compared with the eurozone average of 2.5%.

The Government’s low-cost loan scheme addressed some of this, with an attractive interest rate of 2.95%. However, it was exhausted within weeks of opening and there still remains little clarity over whether a similar scheme will be in place for 2018.

What is clear is farmers have an appetite for lower interest rates. Access to funds is also important. The Department of Agriculture has the vehicle and model through the SBCI to repeat the successful low-cost loan scheme.

While the aim of last year’s scheme was to support farmers experiencing short-term financial pressure due to price and income volatility, farmers were mainly attracted to the scheme by the low interest rate and no requirement to provide security. The hope was that the lower interest rate would also help create competitive and lower average lending rates of the commercial banks.

Given the ESRI report, this does not seem to have happened and Irish farmers who take global prices are not playing on a level field.