Cultivate, the collaborative credit union finance lending platform for farmers, released analysis of its 2021 loan applications, which shows that year-on-year, there has been an increase of 66% in the number of loan applications.
The average loan application from farmers in all sectors was up 14% year-on-year to €28,370 and this was mainly used for a number of key on-farm activities including, farm buildings (24%), stocking and working capital (23%) and tractor purchases (18%).
This is the first year that farm buildings have featured as the most popular use for Cultivate loans, which Cultivate said highlights farmers’ confidence in completing longer term investments.
With strong prices being received by farmers across all of the main agricultural sectors in 2021, farmers looked to secure short to medium-term finance to complete on-farm developments, according to Cultivate.
Value of loan applications
In comparison to 2020, there was an 89% increase in the total value of loan applications.
When adjusted for new credit unions joining Cultivate, the like-for-like comparison reflects a 77% increase in loan application value.
Loan terms increased marginally, which would be prudent as the average loan value also increased. Average loan terms increased from 69 months to just under 71 months (+2%).
Speaking on behalf of Cultivate, chairperson Joe Healy said: “We have seen demand for Cultivate loans increase across the country and are delighted to see the number of participating credit unions growing alongside the number of loan applications.
“Cultivate offers a specialised finance option to farmers as we look to work with our farming members to develop their business. We offer flexible unsecured loans up to €75,000.
“Farmers availing of a Cultivate loan appreciate being able to work with someone who understands their farming needs and dealing with a local member of their community,” Healy added.
Types of farmer applicants
Beef farmers continue to account for the majority of Cultivate loan applications, driving over two-thirds of the total loan applications in 2021, while dairy farmers accounted for 21%, sheep farmers for 8% and tillage farmers for only 2%.
May 2021 was the busiest month for loan applications accounting for 14% of total applications, driven by beef farmers. That month saw the greatest number of monthly Cultivate loan applications in a single month since the brand was introduced to the market.
February was the second busiest month for applications last year, driven by applications from dairy farmers accounting for 13% of total dairy applications. August was the quietest month overall for applications.
The average debt per farm applying for a Cultivate loan dropped marginally year-on-year, down 3% to €105,648.
The level of debt varies significantly depending on the enterprise of the farm, with the debt on dairy farms averaging €162,906, while beef farms on average have €92,649 of debt.
Beef and dairy comparison
The average loan to a dairy farmer was just over €32,000 in comparison to €27,715 for a beef farmer.
The period saw an increased focus by beef farmers applying for farm building projects while dairy farmers prioritised equipment investment projects.
Dairy farmers were also bigger landowners, owning on average 43ha of land in comparison to the 30ha owned on average by beef farmers.
Off-farm income continues to be a major differing factor for beef and dairy farmers as 92% of beef farmer applicants had some sort of off-farm income, compared to 68% of dairy farmers having off-farm income.
In comparison to 2020, the average dairy herd size per farm applying for a Cultivate loan was up by almost 5% or four cows to 85 cows, while the number of sucklers owned by beef farmer applicants dropped by 11% from 18 suckler cows to 16.
“The demand we have from farmers for an alternative flexible finance lender continues to rise as highlighted by our 2021 review with an increase of 66% in the number of Cultivate loan applications received year-on-year,” Healy continued.
“Cultivate is currently available at 39 participating credit unions who have over 125 offices and we are excited to see these numbers grow in the coming months.”