Farmers Journal CAP meeting: Eamon O'Reilly

Eamonn O’ReillyAgri Advisor, AIB

Allied Irish Banks p.l.c. Supporting Irish Farmers

Outline

– Importance of Direct Payments

– Effect of Reform on Repayment Capacity

– AIB in Agri Market

– Conclusion

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Time of opportunity

Milk Quota Abolition Industry agreed plan – FH2020

CAP REFORM

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Agri banking market

• Positive Outlook

• Strong demand for credit expected– Grant assisted development

– Milk Quota abolition

– Food Harvest 2020

• Incorporate change into plans

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Importance of direct payments

0

5000

10000

15000

20000

25000

30000

2006 2007 2008 2009 2010 2011 2012

Ave

rag

e F

arm

Inco

me

(€)

0%

20%

40%

60%

80%

100%

120%

140%

160%

Dir

ect

Pay

men

ts a

s a

% o

f F

FI

Family Farm Income Direct Payments as % of FFI

(Source: Teagasc National Farm Survey, various years)

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(Source: Teagasc National Farm Survey, 2012)

0

20

40

60

80

100

120

140

All Farms Dairy Cattle Rearing Cattle Other Sheep Tillage

% o

f F

arm

Inco

me

SFP DAP REPS/AEOS Other

Importance of direct payments

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Effect on repayment capacity

• Know there will be winners and losers as part of the

reform

• Bank will be stress testing in advance of 2015

– Applying on a tiered basis over term of loan

– May request Direct Payment Statement from customers

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Case example – effect on repayment capacity

• Beef Farmer - aged 50, farming 40 hectares

(Source: Adapted from Irish Farmers Journal, 2014)

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Agri – Key component of AIB’s Strategy

– Maintained strong focus on Agriculture over many decades

– Banking relationship with 2 in 5 Irish farmers

– (Source: Ipsos MRBI, Agri Financial Services Survey, 2012)

– Key sector in which we seek to grow our business

– Dedicated Agri Advisor Team

– Committed to supporting farmers develop their businesses

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Conclusion

• CAP is of fundamental importance to Irish farmers

• Will impact repayment capacity for some

• AIB will be applying a stress test on a tiered basis

• AIB is committed to supporting farmers develop their

businesses

• AIB’s strategy is to remain the main farming

bank in Ireland

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Important InformationLending criteria, terms and conditions apply. Credit facilities are subject to repayment capacity and financial status and are not available to persons under 18 years of age. Security may be required.

Allied Irish Banks, p.l.c. is regulated by the Central Bank of Ireland.

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Thank you for your

attention