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Onus on Banks as Interest Rates are Cut

by 5m Editor
5 December 2008, at 4:28am

NORTHERN IRELAND - The Ulster Farmers’ Union (UFU) says the onus is now on the commercial banking sector to pass on the full benefits of Bank of England interest rate cut to farmer customers.

UFU President Graham Furey said the decision to cut interest rates by a further 1 per cent will only be a boost to the farming industry if the banks lower farmers borrowing rates.

Mr Furey said; “The farming industry is very heavily borrowed. In 2006 Bank lending to farmers in Northern Ireland totalled £659 million. That figure has risen significantly in the past two years as producers have borrowed to meet the demands of modern day farming and food production, most notably complying with the EU Nitrates Directive. Today farmers owe the banks £827 million”.

Mr Furey continued, “It is very important that the benefits of this low interest rate environment are not eroded by the margins and fees imposed by commercial banks. Our members are now regularly raising this issue with the UFU and we will be monitoring this closely."

Mr Furey said that the banks have re-assured the union that they are ‘open for business’ with farmers. "We welcome this," he said, "but we will also continue to urge them to pass on the full benefits of these interest rate cuts to their farmer customers.”