Podcast Ep 160: Head of Agri at Bank of Ireland Eoin Lowry says the Irish agri sector has a roadmap for climate action and adapting to new ways of farming.
In his recent Insight 2022 and Outlook for 2023, Bank of Ireland’s head of Agriculture Eoin Lowry indicated that Irish farmers came into 2023 in a strong state, with solid margins, positive cashflows and strengthened balance sheets. But, he warned it won’t be all smooth as price volatility continues to be a spectre haunting commodities.
Despite the litany of challenges farmers have to deal on a constant basis with from weather events to commodity prices and, most recently, inflation, the reality is farming is a long game and farmers know it. Lowry believes Irish farmers deserve better credit for their planning, especially around climate action.
“Anything that improves their sustainability also improves the financial performance of farms. And that’s the type of business that we want to bank”
“The sector is well-advanced in its planning for addressing climate change. It was the first sector to have a roadmap of how it was going to adapt to a new way of farming, to meet these targets that are now in place for each sector. The sector has to reduce its emissions by 25% over the coming years and that’s not going to be a small ask. It means that everybody, including stakeholders, along with farmers have to put their shoulders to the wheel to reach that target.”
Banking on sustainability
In recent weeks Bank of Ireland joined forces with Kerry Dairy to provide additional funding for farmers implementing sustainable practices. The partnership will result in the development of a sustainability-linked loan with discounted rates and flexible finance options for farmers who are members of the company’s ‘Evolve Dairy Sustainability Programme.’
The sustainability-linked loans will provide an additional funding option for farmers in the implementation of sustainable farming practices aimed at reducing carbon and ammonia emissions, enhancing animal health, welfare and productivity – as well as improving biodiversity and water quality.
In addition to this Bank of Ireland revealed significant uptake of its Agri Assist support scheme in response to the inflation situation.
The sustainability-linked loans will provide an additional funding option for farmers in the implementation of sustainable farming practices aimed at reducing carbon and ammonia emissions, enhancing animal health, welfare and productivity – as well as improving biodiversity and water quality.
The bank revealed that it now accounts for 55% of all new lending to farmers and that 80% of all of its agri loan applications are now made online.
Another loan scheme called Dairyflex is available to milk suppliers of participating co-ops for unsecured borrowings of up to €120,000, while farmers can also avail of longer secured term loans for land purchases (up to 20 years) and large farm development loans of up to 15 years.
On the subject of climate change, Lowry says the Irish farming community is committed to demonstrating progress.
And as the largest lender to farmers, he said Bank of Ireland has been focused on ensuring its loan products match their aspirations.
“In terms of the practical steps we want to back initiatives that are verified by science to move the sector along to the green transition. Initiatives like the Teagasc MACC (marginal abatement cost curve) for greenhouse gas emissions from Irish agriculture and the initiatives that lays out as to what farmers should be doing on their farms to reduce their carbon footprint. Elements include changing the type of fertiliser they may use, enhancing biodiversity practices such as planting trees and hedgerows, looking at multi-species swards, looking at the type of animals they have on their farms. So we are taking that blueprint and guidance and we are building that into the loan journey.
“We are also looking at the Bord Bia sustainability reports and examining how farms are improving in terms of their carbon footprint over time. We want to very clearly support farmers in that journey and reward them and provide finance and continue to support them as they make their farms more sustainable.”
Lowry said that farmers are as aware as anyone of the challenge ahead. “Agriculture accounts for about 37% of the national emissions. So it is a large contribution but it also reflects the importance of agriculture to the economy, particularly in rural Ireland.
“The industry also understands that there is a great opportunity here to move the dial in a positive way by using technologies such as renewable energy, planting trees, maintaining hedgerows and other ways that go beyond emissions. We are going to see a lot of this in the near future.
“When you look at individual farms, anything that improves their sustainability also improves the financial performance of farms. And that’s the type of business that we want to bank.
“Farmers themselves are inherently aware of the environment that they work in. They’re in nature every day and they want to protect that because that is their core asset. That land base that they have and their animals. So anything that enhances that is ingrained in farmers.”
One of the biggest issues of the coming decades will be feeding the planet and Lowry notes that Ireland’s edge in sustainability will serve it well.
Ireland has a brand for quality food and that brand needs to be protected as we also require the sector to step up to the climate action challenge.
“If you look at other countries and the types of farming they have, we are very lucky in this country with the system of farming that we have. If you drive anywhere in Ireland you will see cows grazing for around nine to 10 months of the year or cattle and sheep in fields, particularly in the west of Ireland. It is all organic. What we produce is valued around the world and that’s why we are one of the largest exporters of food in the world.
“From a small island effectively on the periphery of Europe we’ve had to become that globally-based and embedded agricultural sector.”
