Farm Business & Inputs Council Report May 2022

Inputs

• Affordability more than availability appears biggest concern re fertiliser, particularly among Drystock sectors. Teagasc survey of close to 1,000 drystock farmers found almost half hadn’t applied any N to grazing pasture by mid-April. Availability in backend and into 2023 of growing concern for all – full inventories of available stocks needed 
• Seed sale +5% despite Tillage Incentive scheme (+200k tonne expected) – low uptake protein crops
• Internationally, weather issues in US / Canada / Brazil / Pakistan / India dampening crop forecasts and alternatives to UKR exports, but still time to recover somewhat
• €55m Silage Support announced for beef/sheep farmers (incl hay) – €100/ha for max 10ha. T&C to be confirmed
• Presentations made at numerous County Executives

Commission on Taxation and Welfare:

Commission is due to submit its report to the Minister for Finance by 1st July 2022. 

IFA submission made Jan 17^th – available on request. FB representatives attended Industry Stakeholder engagement session March 3^rd& 4^th and issued follow-up letter, again re-iterating key IFA issues, to CoTW March 16^th. Summary points re-iterated: 

• The Irish Agri-Food sector, both directly and indirectly, has successfully delivered more balanced regional development; employment and prosperity, particularly in rural areas. Existing interventions to promote agricultural activity; asset transfer and balanced rural development need to be maintained even strengthened in the years ahead as macro factors of influence intervene. Taxation cannot be an impediment to business; 
• Given same, it is essential that the design / re-design of the taxation/welfare system is governed by principles of equity/fairness; flexibility; simplicity and an evidence-based approach;
• Significant opportunity exists, via VAT exemptions and accelerated capital allowances, to further support increased investment and adoption of more environmentally friendly practices, therein supporting climate change ambitions of carbon neutrality by 2050. Careful consideration needs to be given to the presence of viable alternatives to existing fossil fuel sources where added/new levies are being proposed. Otherwise, the outcome may be purely added financial burden on businesses; hampered economic activity; and potentially greater reliance on welfare supports; 
• Targeted measures rather than blunt instruments must be utilised in support of the Housing crisis, with recognition and clear distinction made between productive land use for food production and vacant development land. Any introduction of a Site/Wealth Tax on productive farm land will be strongly opposed from IFA given the asset rich, cash poor status of Irish farmers. Design of any such measure is crucial, targeted at ability to pay and current land use.  

Meeting with Brendan Heneghan, Cultivate Loans

• New scheme well received. No significant uplift in working capital applications to date. Expect to increase in coming months. Thanked IFA for continued support & profiling. New scheme covering Agri Contractors possibly forthcoming.
• 50% farmers potentially covered with Cultivate. Discussed Common Bond – ‘living/working in area’ may overcome some of existing challenges where Credit Union (CU) not within vicinity. 
• Extending coverage to c.50 locations (easing blackspots in Wicklow/Kildare/Wexford). 
• Highlighted key role of Credit Unions in provision of financial services in rural areas as Banks exit. 
• Volume of lending permissible from CU influenced by assets held. If >€100m, 15% permissible; if <€100m only 5% permissible.  

Meeting with Bank Of Ireland (22/04/22)

• Relayed significant input price challenges. In general (excl pigs) no significant increase in working capital requests, but expect same to increase in months ahead, as personal deposits/merchant credit utilised.  
• Overdraft utilisation levels running at only 10% – lowest in 5yrs. Recent Central Bank data to year end 2021 shows €400m drop in on-farm debt so capacity within Banks to support the sector. Capital & capacity is there – situation is not like 2008. Deposits rose 50% through Covid – declining as people get out and about again.  
• Noticeable increase in working capital requests coming from pig farming customers in recent weeks. BoI took proactive campaign with pig farming customers. Almost all now approaching bank for support. Complemented IFA for work securing financial supports for pig sector. Debt will only solve so much. Doing some w/c debt over 3yrs, which is somewhat risky given another downturn in this period may be possible.
• Significant internal focus on staff training so they are aware and understand farming customer needs. New BoI Agri Development Manager recruited, joining team in June. All deal with more complex or cases >€300k. 
• Encouraged farmers to engage early with the Banks, complete cashflow projections and quantify their working capital need for the coming 9-12mths rather than come in with multiple applications. 
• BoI have seen above expected (+150%) level of queries re transition from Ulster Bank and secured a number of New Business cases in recent weeks. Will devote increased staff resources to support switching – in branches; and dedicated support line. Range of support guides also available. 
• Discussed CAP, likely direction; NSP feedback & BoI approach re CAP payments in repayment capacity analysis. Policy re treatment under the new CAP not yet finalised given overall CAP infrastructure still under review. 
• Discussed Sustainability and Bank approach – key focus. 
• FGLS and CGS complete in BoI. BILS well received and good uptake among farmers. Emphasised need for replacement finance offer to support continued on-farm investment in absence of SBCI products.
• Discussed Electronic Funds Transfer & online payment options for farmers 

Exit of Ulster Bank:

• FB Committee met with UB rep’s 5^th May. AIB Loan sale approved by Competition Authority. Decision re PTSB ongoing.
• Relatively small number of farmers involved in AIB loan sale. Appears however will be more straightforward migration given Relationship Managers will also transfer and help manage the transition. AIB loan sale also includes Overdrafts which PTSB does not. Requirement to clear UB excess on accounts to formally close accounts.
• Formal letters being issued to customers currently – 6mths to action & close accounts. Will receive multiple reminders. AIB migration expected to complete Mar/April ‘23
• Relayed challenges in switching process and time delays opening new current accounts. UB continue to monitor and engage with other stakeholders. Other Banks to recruit c.1,000 staff to support transition. Switching governed by Regulation so defined timelines. Potential challenge re Direct Debit originators etc as not governed by same. Important also to highlight that not all transactions covered by Switching process – customer will need to manage Income receipts and also some standing orders/payments themselves. Key message, start the search for new Bank early and don’t wait until formal letter received.  
• UB confirmed support existing customers as normal & transition to New Bank. Dedicated supports in place
• If customers do nothing, they will transfer seamlessly to AIB / PTSB (depending on profile) and retain all existing UB rates, arrangements etc.
• If customer decides to move to other finance provider themselves, they will incur costs of moving (releasing security; legal charges etc) and also have to negotiate / re-negotiate existing rates etc themselves. 

Zoned Residential Land Tax 

• Article within IFJ Land Market Report   
• Letter sent to Minister Daire O’Brien – awaiting reply

IFA Debt Support Service

• The DDS continues to work for family farms that have financial difficulties. Unfortunately, many contacts made through the IFA DSS line are at the final stages of receivership and in many cases are gone beyond the possibility of restructuring or refinancing. Please urge IFA members to act early with their lenders if they experiencing financial difficulties and to contact the IFA debt support service as soon as they foresee issues arising. Progress on individual cases is extremely difficult once legal proceedings have started or a receiver has been appointed. 

Upcoming events:

• Meeting PTSB May 10^th Farm Centre
• Meeting FBD May 10^th Tullamore
• Meeting AIB & irish Banking Culture Board – dates TBC
• Retail Banking Review Meeting, May 16^th Tullamore Court Hotel
• Pre-Budget submission – welcome all Committees input on items for consideration /inclusion