The cost of business banking has risen rapidly over the past couple of years, in many cases wiping out the benefit of lower interest rates.


Results from the NFU’s banking survey conducted in April showed that a farm turning over £250,000 in 2009-10 paid 13% more in bank charges than in 2008-09.

Those with a turnover lower than £100,000 typically paid 4% more; those under £500,000 had an increase of 21% while turnovers of more than £1m faced an increase of more than 29%.

Horticultural businesses pay the largest charges, which include all payments apart from interest. Less Favoured Area grazing businesses pay least. Demand for services varies between sectors, affecting the level of charges. For example, horticultural businesses tend to have more employees and need to make large numbers of regular payments.

“As farms grow in size so do their bank charges; however the percentage of farm turnover spent on charges diminishes. In 2009-10 a farm business with a turnover of £75,000 spent £759 or 1% of turnover on bank charges while a farm business with a turnover of £750,000 spent £3,907 or 0.5% of turnover on bank charges,” said NFU economic advisor James Edwards.

Further findings:

• Almost 60% of farmers and growers have an overdraft, 19.9% have a loan and 7.6% have a mortgage with main current account provider

• 5.9% switched current accounts over past two years

• Those who haven’t switched think it will be harder than it actually is

• More than 70% think branches very important for their businesses, including 58% of those banking online