The lack of financial understanding young farmers have in relation to the performance of their business can slow down the lending process, head of agri at Bank of Ireland Eoin Lowry has said.

Speaking at the CEJA European council of young farmers conference on Wednesday 25 January, Lowry said this is the greatest weakness young farmers have in terms of education.

“We’ve identified this as a weakness within the sector and over the last number of years we’ve been working closely with partners within the sector to try and identify how can we can best support young farmers to understand the financial operation of their business.

“In a lot of cases, farmers are busy, particularly young farmers. They have a lot of activities going on on the farm and they outsource the financial understanding and the financial activities to their accountant or adviser,” he said.

This is a great service for farmers to avail of, Lowry said. However, by outsourcing it, it disengages them with the financial performance of the business.

Farm Pro

Bank of Ireland partnered with ifac to launch Farm Pro. This is a digital financial management and planning service for young farmers.

“Ultimately, it’s where we support the subscription of the farmer to go on to the system and it is about a farm team - you have the financial accountant, the farmer and your bank, all having access to financial information on the cloud,” he said.

The accountant uploads the data on a monthly basis, depending on the size of the farm and the level of activity, so the bank always has access to the financial information of that farm, Lowry explained.

It also allows farmers to engage better and see how their farm is performing on a day-to-day basis in terms of profitability, he said.

“The fundamental purpose of it is, yes we are improving the financial understanding of the farmer because they’re getting visibility on a one-to-one basis, but when it comes to a time when they want to access finance, they will have access immediately.

“So it speeds up the lending process. We are very clear on the information we need and we have it there to hand,” he said.

The project is in its third year now and there are almost 3,000 farmers across all farm systems in Ireland signed up.

Three buckets

Bank of Ireland, Lowry said, is changing how it looks at loan applications from young farmers by adopting a “three-bucket” approach.

“In the past we would have just looked at a financial bucket - how the farm is performing - and we would lend on that basis.

“We now look at two other buckets, one being the person and their understanding of that farm business and their ambition, their work-life balance.

“The third bucket is the environmental bucket,” he said.

Lowry added that Bank of Ireland’s financial investors don’t want to work with businesses that partake in poor environmental practices.