Have you appropriate financial protection for your farm business?

By Ailish Byrne, Head of Agri, Ulster Bank

Farming is a business. Like any business, farms should be routinely reviewed and appraised.

The existing farm system, work routines and future development plans should be continually revisited to understand the strengths, challenges, opportunities and risks associated with the sector.

This review should also simultaneously consider personal circumstances, family commitments, work-life balance and personal health and safety.

The famous Benjamin Franklin adage ‘failing to plan is planning to fail’ certainly resonates as farm businesses seek to navigate the turbulent seas of price volatility, environmental concerns, labour challenges and weather woes.

Looking to our international counterparts, the importance of the bank manager, accountant, financial advisor and technical consultant when formulating farm plans and pathways is well documented.

At Ulster Bank, the team recognises the importance of agriculture to the core economic and social fabric of the country. It is a core part of its business.

Ulster Banks’ banking relationships in the agri food sector starts with the many farmers who bank with it and include agri-businesses from artisan food producers up to the largest multinational food manufacturing businesses.

Its relationship with many of these customers stretches back for decades.

At Ulster Bank, the team have skilled managers who understand farming. They understand the agri food sector and are committed to supporting both individuals and enterprises, from farmyards to boardrooms in a focused, structured and strategic manner.

The team take a long-term view of agricultural lending, recognising the inherent volatility in farming. Experienced agri managers and advisors are delighted to visit the farm, see the operation and discuss the financial requirements both current and future.

Sitting down with your bank manager allows for open and honest communication, a sharing of minds and experiences and formulation of realistic, time-specific financial plans.

Regardless of the outcomes of the Brexit negotiations, Ulster Bank is committed to helping you address any related challenges.

Its branch staff and dedicated relationship manager teams are here to support you with the opportunities and challenges that Brexit could potentially bring.

For more information on Brexit, click here to visit Ulster Banks’ website

Managing debt and cash flow

The importance of managing debt and cash flow is of critical importance to all people. Farming is a complex business which requires the successful management of an extensive number of inter-related components.

Keeping all such balls in the air requires skill. Farmers must be mindful of the levels of debt borne per litre, per kg, per ha or per farm.

Clearly no two farms are the same and no two farmers are the same. How individuals view debt will vary from person-to-person and farm-to-farm.

While many of our international farming counterparts carry enormous levels of debt per farm compared to Irish farm debt statistics, such debt levels are largely unsustainable and result in inter-generational debt where debt passes from one generation to the next.

Irrespective of farm system, technical efficiency is of paramount importance. There is a clear correlation between the level of on farm technical efficiency and the ability to sustainably carry and repay debt.

Noting the financial implications of extremes of weather, disease and price fluctuations, all farmers borrowing money must consider their ability to repay the loan across the full term of the loan.

Both personal circumstances and farm performance will change and evolve and directly impact repayment capacity, both positively and negatively.

At Ulster Bank, the team continually provide additional help and solutions for their customers across the country, from those starting out to those long established, those farmers seeking to expand or those seeking to retire and pass the farm business to the next generation.

While death comes to all, it is important to plan for such eventualities and understand the financial implications for our nearest and dearest left behind.

With proper planning and financial considerations, appropriate financial protection can be put in place.

As we look forward to 2019 and plan for the year ahead, stay safe, look after yourself and take the time to consider how your farm is performing.

Reward a job well done, surround yourself with positive people and seek assistance where necessary.

Further information

Ulster Banks’ Agri team is ready and available to meet with you; contact them on: [email protected].