Turmoil in the UK’s financial system, led by the collapse of American investment bank Lehman Brothers this week, could have a “dramatic impact” on UK food production.
Writing on his blog, Mouth of the Wash, Farmers Weekly columnist Matthew Naylor said the unstable economy could mean banks would be less willing to lend money to farmers who rely on overdrafts to buy inputs for the coming year.
While owner occupier farmers should benefit from strong land values, tenant farmers looking to extend their overdrafts could struggle, he said.
“This year’s disastrous harvest will leave quite a few farmers with a cash shortage.
“The rising input costs (diesel, gas and fertiliser particularly) mean that they need to find more money next year to grow the same amount.
“I’m not sure that banks will be particularly willing to, and probably not even capable of, providing the money. What will farmers do?”
- Read more on the possible impact of the banking situation on UK farming on Matthew’s blog.
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