How farmers are going green with sustainability-linked loans
Recognising the distinctive challenges farmers face, Bank of Ireland developed Enviroflex, a sustainability-linked loan that supports and rewards farmers who implement sustainable actions on their farms through discounted interest rates.
Byrnes explained how Bank of Ireland partners with local dairy co-ops and their sustainability programmes.
He said the Enviroflex loan rewards farmers via discounted interest rates when they adopt measures on their farms that reduce their environmental footprint – i.e., reducing greenhouse gas emissions, improving biodiversity, water quality, and animal welfare.
Financing sustainability efforts
Byrnes outlined that there has been significant interest in the loan product, with over €40 million-worth of applications received to date.
He said that while the average size loan is €55,000, the loans range in size from €10,000 to €500,000.
Farmers are using the loans for a range of purposes, from installing solar panels to adding additional slurry storage, with many taking advantage of the current Targeted Agricultural Modernisation Scheme (TAMS).
Source: Bank of Ireland
Byrnes said: 'For example, last year we supported a dairy farmer in Co. Limerick who was looking to upgrade his milking parlour,
'The farmer had expanded from 60 to 120 cows and the parlour was 30-years-old. He was a member of Kerry Evolve, was milk recording, and using protected urea along with multi species swards.
'We provided a €100,000 facility under Enviroflex over a seven-year term to this farmer.
'The farmer was delighted as the rate was very competitive. The farmer was already getting an additional sustainability payment from Kerry,' Byrnes said.
By taking part in the Evolve scheme, the farmer reduced the carbon footprint of the farm over the past number of years.
He is delighted to get an additional benefit from the Kerry Evolve scheme by availing of lower cost finance from Bank of Ireland.
Source: Bank of Ireland
Another example was where a dairy farmer supplying Kerry Dairy Ireland with land at both sides of a public road decided to build an underpass under the road.
He was approved for a €60,000 loan through Enviroflex over a five-year period to help fund the underpass.
According to Byrnes, the farmer is delighted he built the underpass, as his cows have benefitted by having to spend an hour less each day standing in the yard after milking .
The farmer himself also has more peace of mind from a safety perspective, as the cows are no longer on the road and he has saved an hour each day herding the cows across the road.
Byrnes also noted that he is seeing a lot of interest in farmers investing in solar panels.
For example, a dairy farmer in Clare who had high electricity bills decided to install solar panels on his shed this year. He availed of a €20,000 loan over three years under Enviroflex through Kerry Dairy Ireland.
'He told me recently his electricity bills have reduced significantly this spring and he has hot water at all times which is vital for parlour hygiene. He reckons the solar panels will pay for themselves in less than three years,' Byrnes said.
Benefits for farmers
The agricultural development manager outlines that water quality and nutrient management are top of mind with many of the farmers in his area.
He said a farmer in north Co. Cork built an additional slatted cubicle shed last year, had borrowed €120,000 over seven years from Bank of Ireland under Enviroflex, as a supplier to North Cork Creameries.
'This farmer is now making much better use of slurry by spreading it at appropriate times and given that slurry is an important nutrient, he needs to spread less artificial fertiliser which is saving him money' Byrne added.
Byrnes explains that the risk of water pollution is also reduced for this farmer, who no longer has to worry about having to spread slurry because tanks are full, especially when weather conditions are not suitable.
For farmers who are interested in availing of Enviroflex, Byrnes outlines that they must first talk to their co-op to ensure they are eligible.
They can then apply online or enquire in their local Bank of Ireland branch.
Currently, Enviroflex is available to over 95% of dairy farmers who participate in a co-op sustainability scheme, with 12 co-ops now supporting the rollout across the dairy sector.
The loans have also recently been made available to tillage farmers via Irish Distillers.
Lending criteria, terms and conditions apply. Over 18s only.
Warning: The cost of your repayments may increase.
Warning: If you do not meet the repayments on your credit facility agreement, your account will go into arrears. This may affect your credit rating which may limit your ability to access credit in the future.
Bank of Ireland is regulated by the Central Bank of Ireland.
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