Banks must learn farming isn't like other businesses
Over the last six months, our main banks in Northern Ireland are back reporting profits again, promoting the fact that they are lending, and even some going as far as to say that they are not receiving enough requests for funding from the SME community.
So would we be right in thinking that we are out of the woods and the bad old days of the global financial crisis are well behind us?
Unfortunately I would say no, as the figures tell us that Northern Ireland Ireland is still the region with the highest household debt per head. Our SME community continues to face a legacy debt overhang from the property crash and the lack of finance available for development and construction projects continues to have a serious impact on the construction sector.
The other sector really struggling right now is our farmers who have done so much over the years for all of us, never mind the contribution they have made to our economy. The reality today is that farmers in Northern Ireland face crippling debts, with an increase in borrowing, increases in costs of production as the collapse of the dairy market the pressure on the agricultural sector is substantial and increasing.
UK-wide, farms are still struggling to make a come back after extreme weather conditions from early 2013. In addition, banks are lending to farms in a similar way to SMEs, even when the two are wholly different.
Research has shown that farmers struggle to make repayments as the repayment structures aren't representative of their businesses. Farmers have significantly different 'ups and downs'. This needs to be represented in the bank's lending and the farmer's repayments. Farms have also been under increasing pressure this year due to the effective 'collapse' of the dairy market. Supermarket wars drive the price of milk down, which negatively impacts revenue, whilst Russia's ban on importing EU produce has led to a significant amount of stockpiled dairy products.
It is imperative that such external influences must be taken into consideration with our farmers here. They simply cannot operate at a sustainable rate when faced with such obstacles.
Rural charities across the UK said they have been inundated with calls from farmers and their families who are struggling to make ends meat. They said many were facing the effects of prolonged stress and 'physical and mental exhaustion', coupled with worries over bovine tuberculosis and single farm payments. It has also been reported that farmers often leave it too late to communicate such problems, according to support group the Farming Community Network.
It is no wonder that farmers are mentally exhausted and not coming forward about their problems. There is currently no-one on the farmer's side. Farmers need a third party to step in and mediate with banks to, not only alleviate their concerns, but to try and 'fight their corner'.
With banks being the main source of lending for farms, predominantly used to purchase land, buildings and working capital requirements, there is a lot at stake for farmers with expensive machinery, equipment and land. Certainly we have seen a vast increase in enquiries to our own business in the last 12 months, with the the common thread being that the farming community are struggling to pay down their debts and also the lack of flexibility being shown by the banking industry to their specific needs.
Conor Devine is principal at property advisory group, GDP