Tighter economic conditions and higher cash-flow requirements mean farmers must carefully plan their financial needs for the coming months, experts have advised.

Many businesses face a large tax bill due for payment on 31 January and have paid for expensive fertiliser several months earlier than usual. Also, the costly wet harvest coincided with lower grain prices.

Although most banks were still happy to extend overdrafts, borrowers looking for a same-day decision could face higher margins and fees, said Peter Walker of consultant Wilson Wraight. Planning cash-flow and being able to give a month’s notice of a change in requirements would secure a better deal, he said.

Some banks had raised the margin at which they lent to farmers. For some businesses, an extra 0.25-0.5% over base was being imposed at the annual review, and for others it was happening mid-term, he said. There were also reports of higher fees from these arrangements, although policy varied between banks. Individual managers often had a great deal of discretion as to how much customers were charged.

The situation was different from the low rates many farm businesses had grown used to after years of competitive market conditions, said Mark Ashbridge of Savills Private Finance. “We have had 10 years of margins getting finer and finer, to the point where some with a large borrowing requirement, say for £1m, were getting deals at 1 point and 0.75 points over base up to about a year ago.”