Dr. Anne Finnegan:

I will start with Deputy Penrose. I am sorry for bamboozling the Deputy with the numbers on our team. There are 16 agricultural graduates on the team. Four of those are centrally based and 12 are regionally based, and they are all customer facing. We make a point of hiring agricultural graduates into this team because the technical capabilities and understanding are key to delivering an appropriate service to farmers. I always say we can build bankers and we can build credit but it is difficult to build the sector knowledge and expertise.

In terms of the point around volatility, similar to Bank of Ireland, we are cognisant of the volatility. We take a through-the-cycle approach to lending to all sectors, not only the dairy sector. We look at repayment capacity over a three-to-five year period trying to account for any particularly good or particularly bad years, and we base our budgets on budget prices for each of the sectors which are usually somewhat on a divergence from the market prices of the day, for example, at present our budget price on dairying is 30 cent a litre.

In terms of the availability of credit, Senator Paul Daly asked has the problem not come to our door yet. I would say it has not. The figures we gave to the committee for overdraft utilisation and current account cash balance show the strength of the sector at present. Cash balances and current accounts in AIB for the farming sector were up 25% year on year at the end of quarter one. We do not expect that picture to continue throughout the year. Those bills - all of that feed that is being purchased on credit - will fall due in 30, 60 or 90 days and will have to be repaid. We will start to see that flow through current accounts and we will be encouraging farmers, particularly to come and talk to us, not to put undue pressure on the overdraft and to look at what other options are available.

In terms of the principal option that is available from AIB, we talk about two types of working capital solutions. The overdraft, which works in tandem with the current account, is the default position. It is for the unforeseen circumstances and most farmers will operate an overdraft alongside their current account. We also encourage farmers to take out our farmer credit line. This is a flexible working capital solution which gives farmers an unlimited number of drawdowns in a 12-month period. It works similar to an overdraft in that it has to come into credit for 30 days within the year but farmers only pay interest on the drawn balances. The current rate on that product is 3.825%, which is a competitive rate for farmer working capital. It takes an amount of management. Farmers can manage that online, on the phone or through their branch. We encourage customers to look at that alongside an element of overdraft. The farmer credit line should be for their planned seasonal expenditure and what is known, using the overdraft for the unforeseen circumstances.

In response to Senator Paul Daly's question about customers who have not met their commitments or defaulters, we have not seen any sign of pressure on loan accounts or current accounts. There was some small amount of pressure, very variable, between individual farmers coming up to the April milk cheque and the milk cheque has more or less washed that out. There were small numbers of cases.

Senator Paul Daly spoke to the suckler sector and the tillage sector. Approximately 25% of the new money that AIB lends on an annual basis goes to the beef sector. If one takes the points in relation to CAP, the announcement last week was key for the sector. We have been stress testing for a reduction in CAP payments post 2019 and we will continue to do so. Whether the finality of CAP means that there is a reduction in the overall budget where we see greater flattening of payments, or, indeed, if we saw the budget maintained but more funds going from Pillar I into Pillar II, there will be a range of issues and matters on the table that could ultimately impact on farmers in Ireland. We are already stress testing for that when we lend to farmers for the post-2019 period. Up to 2019, we are already taking account of what the previous reform has accounted for.

The Chairman commented on the SBCI and I will give the figures of our own fund last year. Fifty-five per cent of the amount of SBCI funding that we loaned to farmers under the low-cost loan scheme was for more than five years and only 4% was for up to one year last year. We were fairly confident that where farmers came to us with a proposal, we did our best to meet that. We did not put any tolerances around the amount that had to be loaned over any particular period. We met the requirement as it came in to us. Perhaps our figures are somewhat related to the fact that we have a fairly dominant dairy business and the demand was for longer-term finance there.

The Chairman made the point that it was hard to comprehend that we are not seeing cashflow pressure at present. We are just not seeing it in the current accounts - they came off a strong position last year - but we fully expect to see that materialise throughout the summer months and into the back end of the year. It is anybody's guess how much can be saved between now and middle of August in terms of a normalised weather pattern, grass growth, and how the cost bases materialise. We expect this to come to our door. It just has not arrived yet but we will see it coming.