The latest statistics from the Bank of England show a record £17.7billion borrowed by British farms in the year to the end of October 2015 – a 10 per cent increase year-on-year.
The recent flooding, BPS payment delays, falls in commodity prices and the introduction of a National Living Wage were all highlighted as factors affecting farmers’ finances in a NFU meeting with six major banks.
Today’s NFU banking survey results show over a third (38 per cent) of farmers have borrowed from a bank and three quarters (76 per cent) of farmers feel that banks would be supportive of future borrowing.
What are the banks saying? Read some of the comments we have received here.
NFU President Meurig Raymond said: “Cash flow problems are arguably the biggest threat for farm businesses at present. And the NFU has been working directly with the banks to ensure a positive dialogue continues in the face of external factors, outside of our control, which are having an impact on farmers’ bottom lines.
“Farmgate prices for key commodities are in a markedly different place than they were two years ago, leading to lower margins and profitability across the sector.
“The financial cost of the floods in the North West is not yet known but will run into millions of pounds. BPS payment delays will unfortunately mean many farmers will be kept waiting for the money to hit their accounts. The National Living Wage policy will increase labour costs and have a huge impact on horticultural businesses, where labour costs can be as much a 70 per cent of costs.
“The survey results show that a quarter of farmers do not feel their banks would be supportive of future borrowing. The NFU will continue to press the banks to ensure all farmers are confident the banks will be supportive in times of financial difficulties.
“The banks and the NFU are in agreement that future investment in farm infrastructure is of grea timportance and believe that future prospects for the sector look positive.”
HSBC, Lloyds, Barclays, RBS, Natwest and Clysedale were all in attendance to the NFU meeting on Monday December 14 2015.