Farmers are beginning to burn their way through cash reserves accumulated over 2022 during what was a relatively good year for farm incomes, according to the country’s two main agri lenders.
At the National Ploughing Championships, both AIB and Bank of Ireland have seen a rise in the number of farmers enquiring about the options available to ease cashflow issues.
The cashflow pressures are arising from lower farmgate milk and cereal prices, while input costs remain high, AIB’s head of agri-sector lending Donal Whelton told the Irish Farmers Journal.
“In terms of cashflow supports, certainly more conversations being had in relation to it and what options are available,” Whelton said on day two of the Ploughing.
He described incomes for many farmers in 2022 as providing a “buffer” against income drops this year.
“Obviously, farmers are eating into the cushion, eating into that buffer as the year progresses and it could be quarter one of next year when they need that cashflow support.”
However, Whelton added that the pig sector stands out as improving on 2022’s performance.
Mood still upbeat
Bank of Ireland’s head of agri Eoin Lowry stated that farmers are still showing signs of optimism, despite the expected drop in incomes.
“Surprisingly for us, the mood is very upbeat, which we were expecting to be a little more downbeat given I suppose where the commodity prices have fallen in the last number of months, particularly on the dairy and the grain side,” Lowry told the Irish Farmers Journal.
“Farmers have come into 2023 in a very strong position and a good 2021/2022 year and the cash situation has been quite strong.
“Since the start of this year, it has changed and cash has started to dwindle, so those cash reserves are tighter and margins are a bit tighter.”
Another issue being raised frequently by farmers with banking representatives at the Ploughing has been the size of 2022 tax bills coming due shortly, Lowry added.
“The tax bills are going to be coming in the next few months and they will be particularly high this year because of the strong year in 2022.”