Banks have refuted claims by some farmers that they have not been sympathetic to cash flow problems caused by late payment of the single farm payment.

Farmers are footing an estimated £13m-a-month interest bill for their borrowing. George Dunn, chief executive of the Tenant Farmers Association, said some members were at their wits’ end.

“Some are having to borrow money where they can from friends and family.

In some cases, banks are willing to extend the overdraft, but are charging dearly for it if you are seen as a risky customer.”

Senior bankers may be sympathetic towards farmers’ plight, but they needed to make sure that branch managers had the support they needed to carry the policy through, Mr Dunn added.

But Jon Rose, senior agricultural manager at Lloyds TSB, said there had been no increase in fees or interest rates in the light of SFP delays.

The bank was working closely with farmers, he added.

“No customers have been declined an overdraft increase purely on the basis of a delay in the single payment.

Each case is viewed on its own merits and we are looking to assist in every case possible.”

The hardship caused by late payments has forced many farmers to sell crops or livestock to boost cash flow, according to Chris Dodds of the Livestock Auctioneers’ Association.

Luckily prices had not been bad, he said, but if farmers were still waiting for payments in late May and June, it could affect sales of breeding stock.

Traders at Glencore said farmers had sold a bigger proportion of this year’s old crop than by April last year, although the reasons were not clear.

Some supply merchants would go out of business as a result of the cash flow squeeze, said David Caffall, chief executive of the Agricultural Industries Confederation.

“Margins in the agricultural supply sector have become very thin, and if cash flow becomes any worse, it could have a very serious impact.

“There will be a loss of jobs – in particular in the merchant trade which doesn’t have the sort of capital to be an alternative lender to the bank.”

Single Farm Payment Scheme special report from FWi

sam.fortescue@rbi.co.uk