Farming and food to be big beneficiaries of new SME fund

22nd April 2010

Farmers and food processors will benefit from a large share of an important new £300 million lending pot for Northern Ireland.

Ulster Bank's Head of Business Banking, Henry Elvin, says that agri-food is one of the sectors the bank is most strongly targeting with money available through its fund for small to medium sized enterprises.

Mr Elvin was speaking at a special briefing on the agricultural industry at Ulster Bank’s Belfast headquarters today (Thursday April 22, 2010), which also included a talk from the bank’s Head of Agriculture, Cormac McKervey, and the bank’s Chief Economist for Northern Ireland, Richard Ramsey.

Henry Elvin pointed out that Ulster Bank, which is the principal sponsor of the Balmoral Show, had lent in excess of the £250m it had committed to Northern Ireland SMEs in 2009 and that a significant amount of this lending had been to agriculture.

But he said that the bank is determined to further increasing its lending to the SME sector as a whole and to agriculture in particular.

We have a very strong focus on farming and we are pleased with the increase in our lending to the sector in the past year in particular. We see it as one of the sectors where there will be strongest demand in 2010 and we anticipate that a significant proportion of our new £300m SME fund will go towards supporting farmers as well as food processors," Mr Elvin said.

Cormac McKervey, the Head of Agriculture at Ulster Bank, is broadly positive about the prospects for the industry.

"After a very difficult 2009, milk returns are much improved due to lower supplies locally and internationally and by the competitive advantage earned through sterling’s devaluation. The improved prices will help reduce the pressure felt on many dairy farmer accounts through last year," he says.

"With regard to cattle and sheep farming, the poor returns in recent years have resulted in a steady decline in livestock numbers, but for those remaining in the sector, returns this year have improved, driven by strong demand for beef and lamb and weaker sterling. The result is that many livestock farmers will this year see good profit levels.

"In the intensive sector, cheap grain and a weak sterling have boosted returns, with pig farmers enjoying good prices and a period of stability not seen in over a decade. The recession has increased demand for cheap protein and poultry meat consumption continues to increase. Egg producers too are experiencing good returns and very strong demand for their product," he adds.

The bank’s Chief Economist, Richard Ramsey, pointed out that agriculture is a vitally important sector for the Northern Ireland economy.

"Even though 2007 was characterised by a booming property industry, it was the agri sector that recorded the strongest annual rate of growth at 20 per cent in real terms. And whilst Northern Ireland’s private sector output as a whole has been declining, agriculture, alongside the wider agri-food sector, have been amongst the few sectors to record positive growth," he says.

"There are challenges ahead for agriculture, but as a sector, its importance to the Northern Ireland economy, as other sectors suffer, will only grow," Mr Ramsey adds.