FARMERS IN England will have to pay interest charges of more than £20m if their single farm payment cheques are not paid until Feb 2006, DEFRA has been warned.

The Rural Payments Agency announced last week that Feb 2006 was the earliest date payments were likely to start, even though the payment window opens on Dec 1, 2005.

The farming industry is concerned that this will leave farmers with massive cash flow problems and producers will have to extend borrowings.

Jonathan Armitage, consultant with Strutt & Parker, said producers were expecting over 2bn in support so the cost to industry would be about 7m a month in interest payments.

NFU president Tim Bennett said for some individuals a three-month delay in payments could threaten the future of their businesses.

England’s producers would also be at a competitive disadvantage if countries like France got payments out in December, he warned. “If the rest of Europe gets systems in place so they can get cash flow into farming, then it will be bad for British agriculture,” he said.

“If the trade knows that people need to sell wheat or animals because they need cash it could also affect price.” Mr Bennett said he was seeking assurances from DEFRA that payments would not slip beyond February. The union was also pushing hard for farmers to be paid the historic element of their SFP in Dec 2005.

Robert Forster, chief executive of the National Beef Association, said an interim payment must be made and he claimed that senior DEFRA officials had said that it could be done.

A three-month delay would have a huge impact on prime cattle prices and this could undermine the structure of the national herd, he said. “I”m worried people will be persuaded to give up breeding cattle in order to ease cash flow,” he said.

A DEFRA spokeswoman confirmed the RPA would be asked to look into whether it was possible to make interim payments. Officials also wished to talk to the financial institutions.