Mr. Sean Farrell:

I will try to touch on some of the points. Some of my answers are similar to what we have heard from AIB. Deputy McConalogue asked how we assess customers who are on the edge of viability. To some extent, we need to take a step back and look at the overall sector. Most farmers are very lowly geared. They have fairly low levels of borrowing. Many of them have no debt levels at all. When we are looking at repayment capacity, we look not only at a year like this, which is obviously a difficult one from a payment capacity point of view, but also at a number of years. We do not get carried away with a particularly good year or overly concerned with a challenging year like 2018. We look at repayment capacity in that way. In general, farmers and agribusinesses have a higher approval rating than non-agribusinesses. Farmers have an approval rating of over 90% with Bank of Ireland.

I can respond to the query about where we are seeing the greatest impact by saying it is similar to what we have heard from AIB. I would like to add another angle to that. It is somewhat unusual that we are seeing commercial farmers being impacted to a greater extent. It is a change that we are seeing large-scale commercial farmers - typically dairy farmers but in some cases arable farmers who have been heavily affected by drought - being impacted in this way. As such farmers have invested, they will need significant support. They have been making strategic plans and, in many cases, recognising that they have problems coming down the tracks in addition to the problems they are facing right now. They are making plans to deal with those future problems.

Like AIB, we do not impose restrictions on new entrants to the dairy sector by saying that those applying for lending need to have been in dairy for six months or six years. We have no restrictions on new entrants because they comprise a key market for us.

I would like to speak about why we have particular interest rates and why we provide support in a particular way. The proposition we have launched today is our way of saying this is a very important sector for us. We have stressed that in the correspondence we have outlined. It is a sector that has stood by us and performs well for us. This is our way of being able to say we want to support the sector at a time when it is facing a particular challenge. Our way of doing that is to apply an interest rate which is supportive of cashflow.

Deputy Cahill had a query about revising costs of production, which is something we do on an annual basis. We do a budget for each year in the context of the money we lend not just for one year but for three or five years, or 15 or 20 years in the case of land purchases. We make our projections on that basis. It may be worth noting that while costs of production can increase, they have decreased in certain years. As the dairy farms that have been mentioned by the Deputy have scaled up, there have been efficiencies of scale that have reduced overall fixed costs in many scenarios, particularly from a fixed-cost perspective. A similar point can be made from a debt perspective. Our experience is that pig, dairy and other types of farms that have expanded have higher debt levels, as a percentage of overall units of output, than those that have not expanded. It might be measured as a cent per litre of increased overall output, for example. Over the past couple of years, debt levels per unit of increased milk output have fallen in Ireland because of profitability, funding expansion from cashflow and the fact that we are lowly borrowed by comparison with the Netherlands, Denmark or New Zealand. The gap is not nearly as significant with our pig farmers because they typically operate on a larger scale. They are more commercial and there are fewer of them. That sector has gone through significant consolidation. The gap is not as big in the pig sector. In the dairy sector, where we are seeing the most growth, the average debt level is still significantly lower than in any of the areas outlined by the Deputy.