The banking sector must focus urgently on addressing the “very low” levels of trust farmers have in lenders, an Irish Banking Culture Board (IBCB) report has concluded after including farmers as a separate reporting category for the first time.
The recommendation came as farmers were reported to have far lower levels of trust in banks than the general public and non-agricultural business owners.
It was also found that farmers have a more pessimistic outlook of the economy than non-farmers, as 79% of the farmers interviewed believed that the economy will worsen over the coming year.
The majority of farmers interviewed cited input cost volatility, rising energy prices and the war in Ukraine as top causes of financial concern.
The report commented that these new financial concerns were “dwarfing” worries that had been cited in last year’s interviews.
Farmers were also questioned on the changing regulatory environment in which they farm, which most said they were concerned about.
Just under one third of farmers were also worried about succession planning.
The interviews were conducted with 1,002 members of the general public, with the 98 farmer interviewees recruited through the Irish Farmers' Association's (IFA) database.
Almost half of all farmer participants agreed that banks “do not deliver a quality service”, while four in 10 thought that lenders are not sufficiently responsive when dealing with farmers.
The IBCB responded to the findings by reiterating that it saw no “quick fix” to rectifying such farmer views, stating that a “consistent focus on customers” is needed to improve the metrics on trust.
It added that a farming-specific event would be held in autumn of this year to address “some of the concerns identified”.
IFA treasurer and member of IBCB’s board Martin Stapleton stated that the absence of trust among the farming community must be addressed “without delay”.
“Farmers are integral to Ireland’s heritage and economy and their perspective needs to be understood, esteemed and supported and their needs met by banks,” Stapleton commented.
The findings of the report are in line with the IFA’s messaging on finance and are understandable given recent developments in the banking sector, according to the association’s farm business chair Rose Mary McDonagh.
“The results today are particularly bleak and support what we in the IFA have been saying for some time,” said McDonagh on the release of the report.
“It’s hardly surprising that sentiment towards the banks is so negative among farmers, when you consider the Ulster Bank exit and the level of branch closures [and] withdrawal of services throughout rural Ireland.
“You’d hardly know anyone now in the bank. Bank officials don’t know farmers or understand their business either. It’s a far cry from what it was in the past,” she claimed.
Under ‘huge pressure'
The farm business chair added that farmers’ financial situation is one of immense pressure, given surging input costs’ impact on farm margins.
“There is huge financial pressure, uncertainty and worry among farmers at the minute. Farmers across all sectors are being hit by an array of spiralling input costs, which are eroding already low margins for most,” McDonagh added.
“Farmers need to know that their financial provider is there for them when needed and that they have a range of low-cost finance options to meet their business and financial needs. Anything less is just not acceptable.”