Mr. Tadhg Buckley:

I thank the Chairman and members of the committee for inviting AIB to discuss with the Oireachtas the cashflow challenges that the ongoing weather-related difficulties have created for Irish farmers and their families. My name is Tadhg Buckley. I am head of agriculture with AIB and I am joined by Ms Margaret Brennan, head of small and medium enterprise, SME, sector strategy with AIB.

Agriculture is an integral part of AIB’s business. With about €1.7 billion in lending, the bank holds over 40% of total outstanding lending balances to the sector in Ireland. Supporting the sector, we have a nationwide agri-advisor team of 15 agricultural science graduates providing financial and technical expertise to our front-line staff as well as engaging directly with customers. This team has substantial experience in dealing with farm income and cashflow difficulties, particularly during 2009 and 2013 when farmers faced similar challenges to those currently impacting the sector.

The last 18 months have been a most challenging period for Irish farmers. Weather-related difficulties have been ever-present during this time with all extremes experienced, including severe wet periods, substantial snowfall and a sustained drought. A combination of increased meal and fodder feeding, lower yields and higher input prices has resulted in farmers across all regions and sectors, including both livestock and tillage, being impacted. This is a key differentiator from previous crises which were often more sector-specific or region-specific. AIB is working proactively to support our farming customers in overcoming any financial challenges they currently face. While the sector is currently experiencing cashflow pressure, AIB continues to maintain a positive long-term view of the sector and will assess repayment capacity based on long-term output and input prices rather than the current situation.

In recent months AIB has undertaken a number of initiatives to encourage farming customers who may need financial support to engage with us. These initiatives include a communications programme with local press articles and online articles to urge farmers to identify their winter requirements and engage with the bank where additional cashflow support is required. Since weather difficulties emerged in late 2017 we have regularly briefed all front-line staff on the challenges facing our farming customers and on AIB’s range of cashflow options, which are available to help overcome these. We intend to continue both internal and external communications in the coming months to help ensure our customers remain informed on how AIB can support them through this current difficult period.

Moreover, local drought response task forces have been formed in the regions most heavily impacted, with customer contact programmes initiated in these regions. A fodder cashflow survey has been undertaken of farmers attending the AIB Irish Grassland Association dairy summer tour and the Tullamore Show to better inform AIB of the type of challenges facing our farming customers. AIB’s agri-advisory team has participated and presented at a number of fodder-related events across the country, including industry workshops and discussion group meetings. This team is planning several further workshops in conjunction with the Irish Farmers Association, IFA, and Teagasc in the coming weeks. In addition, a fodder shortage panel discussion was held at the Tullamore Show, with participants from across the industry offering advice on how to deal with current on-farm challenges. We plan to roll out further initiatives shortly.The primary focus of these will be on helping our farming customers to estimate the likely financial impact the current weather-related difficulties will have on their business and outlining the various options available to our customers to overcome any financial challenges they are likely to face.

Customers can engage with our team of 280 business advisors throughout the country. These are available through our branch network, on the phone or online at www.aib.ie/farming. In addition, our dedicated 15-person agri-advisory team has a nationwide presence and is supporting both our front-line staff as well as interacting with customers who are seeking cashflow support. This team is a touch point for distress cases as they come to light. We are also very conscious of the stress the current difficulties can place on the overall well-being of farmers and their families. We ask any farmer who is under severe cashflow pressure to contact the bank and we will prioritise that request urgently. Extended contact hours are available for farmers via our customer phone line, 1890 47 88 33. This is available from 8 a.m. to 9 p.m. from Monday to Friday and from 9 a.m. to 6 p.m. on Saturdays.

AIB has a range of financial options to support our farming customers. These include 48-hour decisions on business loans, farmer credit lines, overdrafts up to €60,000 for AIB customers and flexible working capital finance by way of an AIB farmer credit line, which is currently available at a variable interest rate of 3.5% to 5% to all directly and indirectly-impacted sectors, such as the pig sector. I refer also to our PromptPay working capital facility, which allows farming customers to spread payment of Revenue liabilities, accountancy fees and pension payments over an 11-month period. We will retrospectively finance capital expenditure or breeding herd expansion which is already funded from cashflow in 2017 over terms of up to seven years. We offer interest-only periods in the form of capital repayment holidays where appropriate.

To date we have had a substantial level of proactive one-to-one engagement with customers on cashflow. In many cases, farmers have indicated that they will require additional cashflow support over the coming months but are currently focusing on the day-to-day operational challenges that the drought has placed on their farm businesses. Accordingly, we anticipate the level of cashflow support requests to substantially increase as we progress through autumn and winter. We have no limit on the amount of working capital, in the form of the farmer credit line, PromptPay or longer-term loan finance, available to support farmers through this short-term challenge. Our advice, as it has always been, is to engage with the bank early if additional finance is required. We will work with the customer to find the most appropriate solution for individual circumstances.

AIB continues to engage with stakeholders across the farming sector to address the current difficulties. We participated in the fodder action group in the north-west last winter and are currently part of the Teagasc interagency fodder group. In addition we are partners of the Teagasc Grass10 programme, also supported by the Department of Agriculture, Food and the Marine. This programme focusses on improving efficiencies in grassland production, a key element in helping to avoid a repeat of the fodder shortage currently affecting the country and maximising the grass growth potential to year end.

In conclusion, AIB recognises the challenges currently facing the sector and the role we will play in helping our customers overcome them. Experience has taught us that no single solution will suit all farms. Accordingly we will work with our customers on a case-by-case basis, supporting their financial needs as appropriate to their requirements. On behalf of AIB I want to again express my thanks to the committee for affording us the opportunity to address it. We will be happy to address any questions members may have for us.