First Trust Bank is lending to agriculture

Eoin Donnelly, Agri Business Manager at First Trust Bank, has confirmed to AgriLand that his organisation is actively making additional finance available to the farming sectors.

“We have a number of schemes available targeting the agriculture. These allow farmers to invest in the further efficiency of their businesses and to acquire additional land. And the good news is that farmers are actively drawing down on the monies that are available.”

He continued: “We recognise that farmers must continue to invest n the future of their businesses. And the prospects for agri food are extremely bright at the present time. The latest predictions indicate that farming and food has the potential to grow in turnover terms by an additional 50% between now and 2020.

“All of this hinges on producers becoming better and more efficient at what they do. For some this will mean investing in new and improved technologies. Other farmers will also want to consider starting up new enterprises on their farms. And, again, First Trust Bank is keen to consider all of these options on a client by client basis.”

US agri finance specialist Dennis Kaupilla, from the University of Vermont, who is currently on sabbatical with Teagasc, confirmed to AgriLand that farmers will need extra capital to expand their businesses.

“However, the reality is that some farmers will overstretch themselves and end up in a situation where they cannot meet their financial commitments in full,” he added.

“Most farmers in Ireland, and anywhere else for that matter, will have no option but to secure additional finance if they wish to grow their businesses over the coming years. And to make this work, milk producers will have to show that they currently have enough equity in their businesses, that their business plan for the future stacks up, and, perhaps most importantly of all, that their cash flow projections make sense.”

The University of Vermont representative went on to point out that the banks will lend, at most, 80 per cent of the capital requested.

“But in most cases, they will only lend 50% of the money requested,” Kaupilla further commented.

While commenting on the different approach to lending that banks take in North America, compared with their counterparts in Ireland, Dennis Kaupilla pointed that US financial institutions accepted livestock valuations as a component of the equity contained within every farm business.

“This is not the case here. And I have often wondered why this is,” he concluded.

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