Unveiling the future of agribanking: AIB
In a new interview series focusing on agricultural banking, Qorus explores how financial institutions are playing a pivotal role in supporting farmers and driving sustainable growth in the agri sector. Donal Whelton, Head of Agri, Food and Fisheries Sector at AIB, tells us about the challenges faced by farmers in Ireland and how AIB is supporting a number of inititiatives promoting sustainable agriculture and agtech innovation, in this first interview in the series.
In a new interview series focusing on agricultural banking, Qorus explores how financial institutions are playing a pivotal role in supporting farmers and driving sustainable growth in the agri sector. Donal Whelton, Head of Agri, Food & Fisheries at AIB, tells us about the challenges faced by farmers in Ireland and how AIB is supporting a number of inititiatives promoting sustainable agriculture and agtech innovation, in this first interview in the series.
Could you briefly provide insights into the agricultural banking landscape in your region, highlighting any unique challenges the industry has to cope with?
Agriculture in Ireland is based around family farms, with approximately 135,000 farming families. We have a grass-based production system, which is a cheap source of feed, and animals remain outdoors for 280 to 300 days per year. The sector is very much export orientated, with approximately 90% of Irish beef, sheep meat and dairy products exported to over 180 markets worldwide.
Teagasc, the national body providing integrated research, advisory and training services to farmers in Ireland, estimates that approximately 39% of farms have farm-related debt – and this is higher among dairy farmers. The sector went through a period of expansion after the abolition of dairy quotas in 2015 and has consolidated since. Overall at a national level, farm-related debt has been decreasing in recent years, as farmers pay down debt at a faster rate than taking out new borrowings.
How does your bank support the adoption of sustainable and environmentally friendly practices among farmers through financial incentives, guidance or education?
As Ireland’s largest financial services provider, AIB seeks to be a driving force for the sustainability agenda in Ireland, supporting customers and communities to make the transition to a low-carbon economy. Agriculture is a significant part of our business and in the agri sector we have partnered with a number of organizations to advance the collective efforts to transition to a low-carbon economy. These include the sponsorship of the Teagasc Moorepark Open Day in July of this year, the theme of which was ‘Securing a Sustainable Future’, attended by close to 10,000 dairy farmers.
Our Agri Advisor Team members are having conversations on farms every day of the week with our customers about sustainability, both from a financial perspective and with regard to environmental and social issues. We produce our Agri Matters publication for our farming customers twice a year and we feature a number of articles in each edition on sustainability. We also engage with agricultural students in agricultural colleges and third-level education on financial sustainability and have collaborations with two leading universities on this.
Does your bank establish or build partnerships with agricultural associations and government agencies to foster sustainable growth in the agri sector? If so, can you specify?
We have a number of collaborations through which AIB supports the sustainable development of the sector. One such collaboration is the Teagasc Signpost Programme. The Signpost Programme is a multi-annual campaign to lead climate action by all Irish farmers. The programme is an industry-wide initiative which aims to achieve early progress in reducing gaseous emissions from Irish agriculture and also improve water quality, maintain and in some cases improve biodiversity, and reduce costs and create more profitable and sustainable farming enterprises. There are two elements to the programme. The first is a network of Signpost Farms, which will act as demonstration farms for the programme and sites for carbon sequestration measurements. These will point the way forward towards climate smart farming, and are central to the second element: the Signpost Advisory campaign, which will engage with all farmers and support them to move towards more sustainable farming systems.
In addition, we support a number of other industry initiatives including the Grass 10 Programme, the focus of which is to promote profitable and sustainable milk and meat production from grass on Irish farms.
In addition to supporting farmers, how does your bank approach and support the broader digital agriculture ecosystem, including food and agri supply chain companies and agtech firms?
We are very keen to support the broader digital agriculture ecosystem and AIB is a programme supporter of University College Dublin’s AgTechUCD Innovation Centre. AgTechUCD promotes and accelerates early-stage startups and SMEs in Ireland and Europe in the agtech, agrifood, veterinary and equine sectors, as they build their innovative businesses into leading enterprises. Based at the UCD Lyons Farm, AgTechUCD offers the only on-farm workspace hub to promote and accelerate agri-businesses and startups. Startups have access to Venture Capital & Business Angels networks, mentoring, corporate partners, office and lab spaces, and much more. As part of the programme, AIB awards a €10,000 prize in conjunction with Yield Lab to the ‘AIB & Yield Lab AgTech Start-Up’ winner each year.
In 2019, AIB supported the launch of Yield Lab Europe Fund 1 LP, a European agtech venture capital fund which invests in innovative early-stage businesses in the area of agrifood technologies that have the potential to scale up internationally. The first €21 million round of funding was backed by a €4m investment from AIB. In 2021, AIB increased its shareholding as part of a further €50 million round. By 2021, the fund had backed seven companies under its accelerator programme.
Could you share examples of successful innovative projects or initiatives implemented by your bank? Feel free to highlight the ones that leverage technological advancements such as digitization, AI, and data analytics in agricultural banking. Were these developed in-house or through external partnerships/JV's?
In June of this year, AIB became the exclusive financial institution partner to the Farm Zero C project, based in Shinagh Farm, outside Bandon, West Cork. The farm milks 250 cows on a 250-acre platform. Farm Zero C is a joint project between Carbery, the West Cork based international food ingredients company, and BiOrbic, Ireland's National Bioeconomy Research Centre, which aims to create an economically viable, climate neutral model for Irish dairy farming. The project takes a holistic approach, combining a range of technologies and practices to reduce greenhouse gas emissions and increase the productivity and resilience of the farm. In becoming the exclusive financial institution partner, AIB will provide financial support towards the research, promotion and public advocacy of the work underway at Shinagh Farm.
What are your bank’s key priorities in the agricultural sector for the next 2-3 years, particularly in terms of sustainable agriculture, digitalization, and addressing the challenges faced by smaller farmers?
In Ireland we have an emissions reduction target for the agri sector of 25% by 2030 under our Climate Action Plan. Given the importance of the sector to AIB and indeed the wider economy, our focus over the next 2-3 years will be on supporting the sector transition to a low-carbon economy and support our individual farming customers as they take actions on their own farms to make them more sustainable.
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