By FWi staff
BORROWINGS by arable farmers have increased nearly three times as much as the average of all farming types over the past year, claims a leading banker.
“In western England and Wales in particular, arable farmers are now more heavily financially stretched than their dairy farming neighbours,” said John Page from Barclays Bank, speaking at the HGCAs annual marketing conference last Wednesday (04 October).
“This is true even in traditionally strong cereal growing areas such as Shropshire, the Cotswolds, Wiltshire and Dorset.
“As a result we have already seen borrowing by arable farmers up 17% year-on-year, compared with an average of 6.2% across all types of farming.”
Mr Page said that unless cereal growers can learn to accept wheat at 60/t, they would be better off looking elsewhere to make a living.
He believes that the current situation will only change if area payments are increased and market support improves, there is a world wheat shortage or more favourable currency movements.
“Most of these factors are unlikely, with the exception of a lowering of the Pound – the Pound has lost 15% of its value against the US Dollar this year, and it could fall against the Euro next,” he explains.
“All the economic indicators are right, with growth in Britain slowing, while it grows apace in the Eurozone.
But any strengthening in the Euro is unlikely to be modest, unless the market gains more confidence – “perhaps a move up to 65p over the next year”.
This could raise cereal prices by 5/t, he said.
“If you decide to take up the challenge of growing 60 wheat the achievement will be doubly rewarding.
“Just as you get there, the price will increase and the opportunities will really start to show – just as it has for the dairymen.”