The relationship between bankers and farmers: An analysis of Britain and Ireland

The financial sector is playing a more central role in agriculture. This article analyzes the external provision of finance for farmers in Britain and the Irish Republic, drawing principally on interviews with bankers and specialist providers of agricultural finance. The development of farm credit institutions in the two countries and their subsequent commercialization is discussed. Agriculture is commercially attractive to lenders as part of a balanced portfolio because of its stable, low risk character. Credit selectivity is confirmed as a feature of lender behaviour, although its consequences are likely to be more far reaching in Ireland. Lendersʹ perceptions of the financial sophistication of farmers is assessed, the more financially sophisticated farmer being more receptive to the logic of the financial sector and hence a more attractive customer. An emphasis on tax avoidance can lead farmers into irrational borrowing decisions. Larger farmers are better placed to take advantage of lending opportunities and new financial instruments.