Dr. Ailish Byrne:

Last year was a good year for Irish farmers, as reported in the Teagasc national farm survey results. This, combined with the SBCI funding that was available in 2017, left farmers in a strong financial position coming into 2018. However, they have had it difficult over the past six or seven months due to the adverse weather conditions, a fall in milk price and, for the tillage sector, a delayed spring that will mean that harvest prospects for spring-growing crops will look poor, which will put extra pressure on the tillage sector.

This term loan funding may also be used to finance an additional tax bill that farmers could have coming up to the November period.

We are currently seeing very little demand from farmers for increased working capital facilities. I feel that is due to the pressures on farms in terms of the physical workload now; stock was housed for much longer than farmers had anticipated and they are also busy as temperatures rise and ground conditions improve. Farmers are getting fertiliser out on land, sowing crops and ensuring that they get their business back on track so that they will have enough feed in place for next year. Their big focus was on getting enough feed, getting the physical performance of their businesses back on track and then they can examine the financial impact of this once they have returned their business back to a normal track of activities.

On the suckler, dry stock and tillage sectors, Ulster Bank's geographical footprint means that we have a stronger presence in the agrimarket around the Border regions and midlands where there are more suckler, tillage and dry stock farmers. We support the sector there which was evident in our distribution of the Strategic Banking Corporation of Ireland, SBCI, agri cash flow loan scheme. Ulster Bank had 30% of its funds going out in those particular areas, compared with 15% of the overall fund.

Deputy Martin Kenny referred to the tillage sector. We are supporting that sector, however, harvest prospects for 2018 do not look good as crops were sown much later than normal. Tillage prices may be slightly higher but overall costs for the sector are high and the majority of the demand in the tillage sector is for working capital facilities which we supply to farmers on an annual basis, and which they clear from the proceeds of their harvest.

On the CAP proposals announced last week and the up to 5% reduction, in recent years we have been stress testing CAP payments for our loans that extend beyond 2019. On milk price, we use a base milk price of 28 cents per litre, plus VAT and fat and protein bonuses on top, regardless of the market milk price. We try to take a sustainable long-term view of businesses rather than short term, for instance where in 2016 the milk price was very low or last year when it was very high. Instead we take a medium to long-term view.

The Vice Chairman, Deputy Cahill, asked about SBCI. Some 50% of Ulster Bank's loans which went out on the SBCI scheme were for a period of three years or more and another 30% of loans were between for periods of one to three years. We have extended more facilities than the overall fund into the Border and midlands area.

I will now hand over to my colleague, Mr. Cullen.