Farmers and businesses in the local agriculture sector are facing inflation of over 30% [i] and price hikes in the region of 200% for fertiliser, gas and fuel, and a raft of other cost pressures as a result of the combined impacts of inflation, Brexit, and the war on Ukraine on supply costs to the industry.
Analysis carried out by Ulster Bank’s parent, the NatWest Group, has found that costs on fertiliser have increased three-fold, with the cost per tonne now sitting at around £850 [ii], up from £280 in May 2021, due to much of the manufacturing taking place in Russia and Ukraine. Energy costs are also continuing to affect the market with gas up 200% on 2021, and electricity up 40%. These combined input cost pressures are squeezing the farming industry’s margins tighter.
In resonse to these pressures, Ulster Bank is introducing a package to help support customers in the agriculture sector with individual financial support available for those hit by increased farm running costs.
Ulster Bank will offer capital repayment holidays – where the business only needs to pay the interest on a loan for an agreed period, reducing the amount due each month – as well as increases to overdrafts.
Earlier this year, Ulster Bank launched a new Green Loan and Green Asset finance product, allowing businesses to borrow with no fees to invest in eligible clean energy, clean buildings, clean transport, and agriculture. These loans can help future proof their business by investing in assets such as solar panels, electric vehicles, or heat pumps. The products are one of the ways the NatWest Group is delivering on a commitment to lend £100bn of Climate and Sustainable Funding and Financing by 2025.
Cormac McKervey, Senior Agriculture Manager at Ulster Bank said: “We know this is a challenging period for many of our customers in the farming sector so felt it necessary to introduce further assistance. Our team of Relationship Managers have in-depth knowledge of the sector, including being able to offer individual financial support, where needed, to help our customers navigate high energy, feed and fertiliser prices.
“As always, we are here to support our customers through these difficulties and in the longer-term. So, we are encouraging customers to take the time to discuss the impact on their own individual business with a relationship manager so we can put the right measures in place to mitigate some of these pressures.”
Cormac continued, “One opportunity which does exist for the agri-food sector here is that there are significant commercial opportunities for those who transition to lower-carbon, nature positive methods of food production. Those with green business practices in place are already seeing a reduction in input costs and have the potential to unlock price premiums from food retailers.
“We want to encourage more of our customers to take advantage of such opportunities and access the benefits of green finance, not just for their own growth, but for the wellbeing of society and protection of our planet.
To get in touch with a local business manager visit www.ulsterbank.co.uk/business where you will find information about who can provide assistance in your local area. Business customers can also access Business Banking services by calling 03457 114 477.