THE RELATIONSHIP BETWEEN BANKERS AND FARMERS - AN ANALYSIS OF BRITAINAND IRELAND

The financial sector is playing a more central role in agriculture. Th is article analyzes the external provision of finance for farmers in B ritain and the Irish Republic, drawing principally on interviews with bankers and specialist providers of agricultural finance. The developm ent of farm credit institutions in the two countries and their subsequ ent commercialization is discussed. Agriculture is commercially attrac tive to lenders as part of a balanced portfolio because of its stable, low risk character. Credit selectivity is confirmed as a feature of l ender behaviour, although its consequences are likely to be more far r eaching in Ireland. Lenders' perceptions of the financial sophisticati on of farmers is assessed, the more financially sophisticated farmer b eing more receptive to the logic of the financial sector and hence a m ore 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 instrume nts. Copyright (C) 1996 Elsevier Science Ltd