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Dairy farms in Northern Ireland (NI) have continued to make progress in repaying debt, Danske Bank’s head of agribusiness Rodney Brown has said.
Speaking to reporters in Belfast on Thursday, Brown said that the recovery in milk prices over the past two years has allowed some dairy farmers to clear debts completely.
“There are still a few that struggle, but those numbers are in their tens rather than anything else,” he said.
“If fundamentally it’s a good business behind it and it's properly managed, we will work with them with restructuring. If the fundamentals of the business aren’t right, tinkering around the edges will not address the issues,” Brown said.
Borrowed sector
Dairying is the most borrowed sector in NI farming.
Extended overdrafts and interest-only loan repayments were required by many in the sector when milk prices were on the floor.
The most recent figures from DAERA show that the average debt on borrowed dairy farms in NI stood at £109,515 in 2016/17.
“We would expect the trend to be definitely down this year… The expectation is that debt will be further reduced as we go forward,” Brown maintained.
Volatility
During his presentation, Brown said that extra cash available this year is allowing dairy farmers to catch up on investments that were sidelined when finances were tight.
However, he warned that volatility will continue to be a factor in the future.
“It’s about managing your debt, paying it down whenever the cash is there,” Brown told reporters.
Borrowings in other sectors are significantly lower than dairying and 43% of all farms in NI were carrying no debt at all during 2016/17.
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