It’s always good to hear a good news story. And never more so than now.
‘Cultivate’ is a new brand in the field of farm finance. Operated by 26 credit unions across Ireland, it offers short to medium-term loan finance built specifically around the growing needs of Irish farmers.
Bantry Credit Union’s Manager Finbarr O’Shea is Chairperson of the National Cultivate Marketing Group. West Cork People speaks to Finbarr to find out more about this new kind of farm finance.
Local and personal. Credit unions have long been an established feature of communities throughout Ireland. Their friendly, local service sets them apart from larger financial institutions. Until recent years, their focus was on personal lending, and they excelled at it.
Finbarr says that Cultivate is about bringing this people-centred, community-based focus to agri-lending. “You’re dealing with one person, whether it’s on the phone or in the office,” he explains.
“That person is from your locality. They talk your talk. You probably know them, and if you don’t know them, you know their father or mother! Immediately, you’re talking to somebody. You’re not being interviewed. You’re not being assessed. You’re just talking to someone.”
What is Cultivate?
Cultivate began three years ago in Galway, when four credit unions came together. Word spread quickly among credit unions and Cultivate grew down the Western seaboard and into the Midlands. Bantry joined the group in early 2019, and there are now 26 credit unions nationally offering the product. Combined, they have over 70 offices and €2.75 billion in assets.
Finbarr explains that engagement with key agri stakeholders was crucial in the set-up phase. Before it can offer Cultivate, every credit union has to go through an onboarding process. This includes market research, stakeholder meetings, business-case development and training. The recurring theme in every credit unions’ engagement with their agri stakeholders is the desire of farmers for a personal relationship with a lender when they are arranging finance.
“Farmers can call into their local credit union, have face-to-face interactions, or give them a call and talk directly with a local person if they have a query. It’s a personal, community-based service.
“Also, from that farmer’s point of view, the decision is made locally. The decision is made in Bantry for a Bantry farmer. It’s made in Kanturk for a Kanturk farmer. It’s made in Killarney for a Killarney farmer. That’s our key advantage and our key differentiator.”
Another benefit is the flexibility around repayments. “Credit unions have always prided themselves on being flexible and responding to their members’ changing circumstances”, says Finbarr. “So say a farmer takes a €30,000 stocking loan. There’s a payment structure underlying it, but the farmer has total flexibility around how fast he wants to pay it off. As long as he meets his minimum repayment, he can do it as slow or as fast as he likes. And there are never any penalties.”
A different kind of farm finance
With Cultivate, the farmer is a borrower but they are also a member of the credit union, so the credit union has their best interests at heart.
“Credit unions are co-ops. My duty as the manager of a financial co-op is to do the right thing by our members, by the members of Bantry Credit Union. Full stop.
“With Cultivate, our job is to do the right thing for the farmer. Therefore, if he needs finance, we make it available. If he has surplus cash and he can make extra payments to bring down the loan and as a result reduce his interest costs, then we’re going to encourage him to do that. That is who we are.
“You can do a lot with €50,000”
To put some flesh on the bone, we asked Finbarr to give some information on the kinds of loans that Cultivate provide.
Last year, the average Cultivate loan amount nationally was €23,554 with a duration of 5.5 years. The most popular purposes were stocking and working capital (26pc), farm machinery/equipment (25pc) and farm buildings (19pc). Beef farmers made up 64 per cent of those who accessed Cultivate finance, with dairy farmers making up 26 per cent. Finbarr says that the picture in Bantry generally reflects these national statistics, but with a somewhat higher percentage of beef as would be expected.
“The market we’re in is unsecured lending up to €50,000 and it covers the whole range of purposes, such as farm improvement works, farm buildings, stocking loans, machinery, tractors. Whether you’re in beef, dairy or sheep, you can do a lot with €50,000.”
When asked about the effects of Covid-19 on Cultivate, Finbarr has another positive story to tell. During the past three months, when most of the country has sadly been in lockdown, farmers have been as busy as ever. And this has been reflected in the take-up of Cultivate farm loans.
“Cultivate has been probably the best-performing part of our loan book during Covid-19”, Finbarr comments. Loan demand has been buoyant, as farmers seek to improve their farms or to find new ways to adapt to the changing business landscape. Like farmers, credit unions are resilient. It is often said that credit unions are at their best in adversity. “Like farmers, credit unions are here for the long haul.”