Dairy volatility tops the agenda as Minister meets banks

Agriculture Minister Michelle O'Neill met with the Ulster Farmers�" Union (UFU) and six local banks to discuss the cash flow challenges facing the dairy sector, where she impressed the need to work together to drive up profitability for dairy farmers at this tough time. Front row (left-right): William Thompson, Bank of Ireland, Clarke Black, Chief Executive UFU, Agriculture Minister Michelle O'Neill MLA, Barclay Bell, Deputy President UFU and Wesley Aston, Policy Director UFU. Back row (left-right): Nigel Young, HSBC Bank, Kieran Mailey, First Trust Bank, Simon George, HSBC Bank, Brian Gillan, First Trust Bank, Cormac McKervy, Ulster Bank and John Henning, Danske Bank.

Agriculture Minister Michelle O'Neill met with the Ulster Farmers�" Union (UFU) and six local banks to discuss the cash flow challenges facing the dairy sector, where she impressed the need to work together to drive up profitability for dairy farmers at this tough time. Front row (left-right): William Thompson, Bank of Ireland, Clarke Black, Chief Executive UFU, Agriculture Minister Michelle O'Neill MLA, Barclay Bell, Deputy President UFU and Wesley Aston, Policy Director UFU. Back row (left-right): Nigel Young, HSBC Bank, Kieran Mailey, First Trust Bank, Simon George, HSBC Bank, Brian Gillan, First Trust Bank, Cormac McKervy, Ulster Bank and John Henning, Danske Bank.

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Agriculture Minister Michelle O’Neill met with representatives of the banks and the UFU on Thursday of this week to discuss the challenge of volatility within the dairy sector.

Speaking afterwards, she confirmed a positive outcome to the discussions, adding: “We must work together to drive up profitability for our dairy farmers at this tough time.

“The dairy sector makes an important contribution to our economy and those of us at today’s meeting are concerned about the recent sharp fall in milk prices and its impact on the industry. Due to this decrease and the need to pay their tax bills soon, a number of dairy farmers are worried about their cash flow and their ability to repay borrowings over the winter.

“We agreed that each of us hold a key role in helping our farmers manage their businesses at this difficult time.”

During the meeting, the banks offered reassurance that they remain determined to support the dairy industry through this challenging period.

They also made a commitment to early and pro-active engagement with their customers individually to ensure they received the appropriate assistance. And they said they remained committed to the long-term development of the industry.

UFU Director General Clarke Black also characterised the outcome of the meeting as positive.

“I was encouraged with the stance taken by all of the banks in attendance,” he explained. “We had asked them to utilise all of the tools that are available to minimise the impact of volatility. These include the restructuring of overdrafts and the introduction of capital payments for an agreed period of time, where loans are concerned. It is also crucially important for all the banks to look at their fees structures over the coming months with the specific aim of minimising the impact these will have within the dairy sector.”

Danske Bank’s John Henning welcomed the opportunity to engage with Minister O’Neill, the Ulster Farmers’ Union and representatives of the other banks.   

“This continues our ongoing engagement with the industry particularly over recent months where we have met with many stakeholders in the dairy sector including farming bodies, processors, CAFRE and Dairy UK,” he said.

“Our dedicated team of agribusiness managers and advisors is in daily contact with farmers and proactively engage with our farming customers to identify cash flow difficulties. Indeed our relationship banking approach encourages early conversations when cash flow difficulties are encountered. 

“In such cases we will work with our customers, on a case by case basis, to provide solutions using a range of products and specialists, for example, extending overdrafts, providing additional funding, restructuring borrowing, encouraging bench marking etc. 

“We recognise that volatility is now a feature of global dairy markets and are committed to supporting our customers, and others, through these challenging times as we have done in the past.”

Ulster Bank Agricultural Manager Cormac McKervey, who also attended this week’s meeting, told Farming Life that the decision by Minister O’Neill to have the highest ever percentage of Single Farm Payments paid out in December of this year was extremely positive.

“This has helped to boost cash flows on all farms,” he commented.

“But we also recognise that every dairy farm income will come under pressure over the coming months. Our aim is to work with clients on an individual basis so as to get them through the period ahead in the most feasible way possible. With this in mind we will be contacting our farmer customers directly. But it is important for farmers to be proactive in their own right and come to us if they foresee problems ahead. And the earlier this is done the better.”

The Ulster Bank representative also confirmed that plans are in place for CAFRE to host a series of advisory meetings for milk producers, providing advice on how best to manage cash flows during a period of volatility.

“It is my understanding that all of the banks will participate in these meetings,” he said.

Commenting on the significance of the meeting with Michelle O’Neill, First Trust Bank’s Brian Gillan said: “First Trust Bank appreciates the important role that it needs to play in supporting the agrifood sector and recently launched a new £50m support package including a range of funding initiatives designed to assist progressive farmers and agri-businesses across Northern Ireland to expand and modernise their operations. 

“We have worked hard to deliver products and support services which recognise the unique needs of farmers and which have a higher level of flexibility built in. We would encourage any customer who may be experiencing difficulties as a result of the recent fall in milk prices to make contact with us as soon as possible, so that we can work together to deliver the best solution to suit their individual circumstances.”

David Williams, Senior Agricultural Manager from Barclays in Northern Ireland, has also made it clear that his staff members remain totally committed to working as closely as possible with local milk producers

“Barclays Agricultural Managers work closely with farmers impacted by the volatility in milk price and we would encourage Northern Ireland based farmers that are experiencing difficulty from the price fluctuations to contact their own Barclays Agricultural Manager directly,” he said.

“We can offer support to businesses which have demonstrated viability over the last few years and who are currently suffering short term cash flow issues due to milk price. Depending upon individual circumstances, a range of support is available including capital repayment holidays on mortgages and loans and extension/increase in existing overdraft facilities, where appropriate.

“Where price movement results in financial difficulty for farmers, our support team is well versed in the issues facing the industry and will work alongside our customers and Barclays Agricultural Managers to provide further assistance.”