Dr. Ailish Byrne:

Good afternoon, I am Ulster Bank’s head of agriculture and I am joined today by my colleague, Mr. Eddie Cullen, managing director of our commercial banking division. I thank the Chairman and the members of the committee for the opportunity to discuss Ulster Bank’s ongoing support for the agriculture sector, particularly following a prolonged period of adverse weather conditions and the significant pressures on farming communities. As one of our key sectors, Ulster Bank takes a long-term view of agricultural lending and supporting farmers through volatile income cycles. We continue to build on our extensive knowledge and expertise in this sector with a risk appetite that supports lending to farmers, and we really want to grow this business.

The increased volatility evident in the agricultural sector over the past few years, either due to weather, price or unexpected individual on-farm challenges, is a reality the sector must learn to manage. In light of current difficulties, Ulster Bank launched a weather fund in July to support farmers seeking additional working capital funds to alleviate cashflow pressures on farms. We anticipate that this designated fund will ease some of the burden placed on farmers during these really challenging times.

Our agri team regularly updates our front-line colleagues on issues impacting on the agricultural sector to help support them in their ongoing contact with our farming customers. We proactively engage and interact with farmers and industry stakeholders, including a recent meeting with the Minister for Agriculture, Food and the Marine, Deputy Creed. I will attend the inter-agency fodder committee meeting next week.

At Ulster Bank, we welcome the initiatives to support the sector through this period, namely, the fodder import scheme, flexibilities to the GLAS scheme, securing advance payments of EU aid under pillars 1 and 2, the fodder incentive scheme for tillage farmers and the extension of the period for spreading chemical and organic fertilisers to allow farmers avail of late seasonal grass growth.

I would like to highlight a number of key issues regarding the pressures farmers are currently facing. The nature and extent of the current challenges are not uniform throughout the country but every sector of farming is affected. The significant variation in weather across the country in the past 12 months means that a winter fodder plan will need to be developed specifically for every farm. We work with farmers throughout the country every day and we have heard first-hand accounts of the cumulative effects of a long winter, a very short spring and an unprecedented dry spell. All livestock sub-sectors are experiencing fodder shortages, while yields in the tillage sector are well below average. The completion of a fodder budget by farmers is an essential exercise to help minimise and manage any potential deficit. There is no single solution to filing the gap and it needs to be addressed from both the supply and demand side.

The shortfalls to which I refer are placing a financial and mental strain on many farmers and farm families. Working with and talking to farm consultants, advisers and other farmers, either through discussion groups or as an individual, will assist. We believe that due to the physical and mental strain on farmers over the past 12 months, they may not have yet reacted to the possible financial impact of the current situation. Farmers are working hard to feed their stock and secure feed for the months ahead.

Ulster Bank has experienced a modest increase in demand for working capital facilities to date. We believe that the factors that have contributed to this are: the fact that the sector entered 2018 with relatively strong cash balances; the support offered by some co-ops in respect of credit facilities for their members; current farm commodity prices; and the extent of the physical workload on farms. However, we recognise that farmers need to plan for the possibility of larger than normal tax bills in November and some may also need to reassess their infrastructure requirements on expanding farms.

Farmers use a variety of mechanisms to manage working capital, including bank funding and merchant credit. Depending on the nature of the enterprise and the working capital cycle, Ulster Bank has a number of options available, including business overdrafts, trading stock facility and seasonal input facility. A farmer may avail of one or all of these in combination to support his or her working capital requirements.

In recent weeks, we have engaged with our farming customers to ascertain if they are under cashflow pressure. Some farmers requested small temporary increases in their overdraft limits to pay for feed and fertiliser. We have also received requests from farmers to extend their stocking loans, while others indicated that they might need additional finance as the year progresses. No farmer advised to date that he or she could not get access to feed. Farmers will have significantly increased feed costs due to the fodder issues compared to what they budgeted for and they all advised that they had learned valuable lessons this year.

Ulster Bank offers support and solutions to all its customers during periods of pressure once the underlying core business is sustainable into the future. One thing I would like to emphasise is that farmers should talk to their banks if they are in any way concerned about their financial circumstances.

We are taking a proactive approach to supporting farmers, with our local managers attending industry farm walks and meetings that were organised to discuss fodder issues. This allowed them to interact with farmers and gain a full understanding of the extent of the fodder issues in their areas and subsequently provide support for farmers. In the past few weeks, Ulster Bank has partnered with Teagasc to support a dairy farm open day in Cork and supported local agricultural shows in Carlow, Kilkenny, Mullingar, Cavan and Donegal.

I reiterate that Ulster Bank is committed to the agrifood and farming sectors. Our aim is to partner with farming businesses to enable them to grow and to continue to support the agricultural sector through the difficulties that arise. We have developed flexible solutions to support our customers, including the weather fund, the dairy expansion loan, the dairy farmer toolkit and pasture loans, as well as participating in the SBCI agriculture cashflow support loan scheme. Ulster Bank looks forward to further engagement and collaboration with all stakeholders in the industry to consider a range of options to address the fundamental difficulties facing the sector.

I thank the Chairman and members for affording Ulster Bank the opportunity to address the committee. Mr. Cullen and I will be happy to address questions members may have for us.