FARMERS who were involved in the controversial renewable heat incentive (RHI) green energy scheme which ultimately led to the collapse of the Stormont Executive in January 2017 are now asking their banks to fund them to instal gas heaters, it's been claimed.
And many in the sector won't be able to sustain the new levels of debt and could go out of business, a leading banker has cautioned.
Ulster Bank's senior agriculture manager Cormac McKervey was speaking at a stakeholder breakfast reaffirming the bank's sponsorship of the Balmoral Show.
His comments come just a week after revised tariffs for the most common type of boiler under the controversial RHI scheme dropped from around £13,000 to £2,000 a year.
"As a bank were were relatively conservative on what we originally allowed on income based on RHI, but we didn't envisage tariffs would fall to the level they have, and internally we've done an exercise just to see how it impacts on farmers," Mr McKervey said.
"When you strip out the servicing and running costs from the new figure of £2,000, the tariff is virtually zero for them, and some farmers are now coming back looking for funding to instal gas heaters as they're going to switch off their biomass boilers.
"So they've debt over something that's not generating any income, and potentially new debt for more boilers.
"It's a difficult place to be. We'll do what we can for our customers. Some will be fine while some in the middle will come under pressure. But others will certainly have difficulties."
That aside, he said farming in Northern Ireland has enjoyed a relatively positive past 18 months, with the strong recovery in the dairy sector having a big effect on overall performance.
“The atmosphere in the sector also remains generally optimistic, despite some clear uncertainty related to Brexit. Rural land prices rose by 4.4 per cent in the past year, and deposits have increased, partly as farmers are holding off on planned capital expenditure until Brexit outcomes become clearer,” Mr McKervey said.
During the briefing in Ulster Bank's Entrepreneur Accelerator in Belfast, the bank's chief economist Richard Ramsey gave an update on the performance of the farming and food sectors and related economic issues, and presented his annual 'Ulster Fry Index', which showed that the price of a number of items making up a cooked breakfast actually fell in the year to the end of February.
Bacon was the biggest faller (down 5.1 per cent) tea fell by 3.9 per cent and the cost of eggs dropped 2.5 per cent, while a number of other items rose at rates well below the headline inflation rate, including sausages (1.6 per cent), and tomatoes (1.4 per cent). Margarine (up 21.7 per cent) and butter (up 6.9 per cent) saw the biggest rises in the last year.
“Food makes up a significant proportion of household spending. Food and drink is also a key sector of the Northern Ireland economy. So, understanding how the price of food items is changing gives us some insight into both the current state of consumer finances, and also some of the challenges facing the agri-food industry,” Mr Ramsey said.
