30% jump year-on-year in land purchase loan approvals – BOI
A 30% jump year-on-year in land purchase loan approvals for 2017 was recently reported by Bank of Ireland (BOI).
This was driven by a 25% lift in the total number of acres approved – which totalled 25,400ac.
The average loan approval increased by 2% to about €5,100/ac, reflecting the strong equity levels available to support agricultural land purchase, according to Bank of Ireland.
The average sized land parcel approved for purchase equalled around 30ac, it added.
The financial institution also witnessed a “significant increase” in the number of farm development finance applications during 2017.
A “large proportion” of applicants were weighted towards dairy; but, there were also applications from across beef, tillage, sheep, pig and poultry sectors seeking finance for building upgrades, renovations and machinery.
Speaking about the increase, head of Agriculture, Business Banking at Bank of Ireland, Sean Farrell, said: “2017 was a positive period for much of the agri sector which contributed to a growth in confidence and appetite for expansion, particularly for our dairy customers.
Despite the threat of Brexit, agri enterprises are expanding where and when they can to maintain productivity, drive efficiency levels and enhance capability for the future.
“Margins increased for most enterprises, driven by higher farm-gate prices and production levels – with a record year for milk production, which exceeded seven billion litres for the first time. This has resulted in higher cash flows and lower overdraft usage across many enterprises.
“Looking ahead for 2018, we expect to see continued farm expansion and a rebalancing of the positive trends for dairy – with a reduction in milk prices and an increase in the cost of fertiliser and fuel,” he said.
Continuing, Farrell also believes the outlook is for further growth in Irish beef supplies as global demands grow and Irish exporters diversify into Asia and Europe.
Global grain demand is forecast to grow and recent bouts of cold and dry weather in Russia and the US respectively may drive up future grain prices, he added.
He explained that Irish pig meat exports will continue to be UK-dominated, where Irish producers will have strong competition from European suppliers; but prices and profit margins are expected to decrease from 2017 levels.
Farrell added that opportunities may arise in this sector as China increases its level of pig-meat imports.
Concluding, he said: “At Bank of Ireland we provide a range of supports to aid farm development and expansion to help agri businesses survive, thrive and grow.
“Across farming enterprises, financial needs can differ significantly from season to season and county to county. Whether it is a cash flow requirement or capital for expansion, we are here to support and will support any discussions around future funding needs.”