12 April 1996

Bankers block credit scheme for beef men

CALLS by Liberal Democrat leader Paddy Ashdown for the government to launch a credit guarantee scheme to help farmers affected by the BSE scare have been rejected by leading agricultural bankers.

Mr Ashdown argued government intervention was necessary to stabilise cash flow problems within the industry, even though he acknowledged banks and other lenders were sympathetic to the agricultural community.

He claimed a credit guarantee scheme was essential to underpin greater flexibility and tolerance from banks, while UK politicians fought to remove the worldwide ban on British beef exports.

However, bankers claimed the policy – which they believed would be similar in nature to the former Agricultural Credit Corporation scheme – would take too long to implement.

Martin Taylor, Barclays chief agricultural finance manager, said: "The idea of having something like the ACC is fine in theory, but unless it is set up very quickly, I cant see how it will solve individual problems."

Pat Oakley, Lloyds Bank chief agricultural finance manager, said ancillary traders such as hauliers, abattoirs and auction markets, who depend on day-to-day throughput to keep profits up, had been most affected by the latest BSE scare so far.

Moderate effect

"In broad terms, farms are well capitalised at present, and so far there has been a more moderate effect on farmers," added Mr Oakley.

Barry Saint, Agricultural Mortgage Corporation managing director, said any credit guarantee scheme would undoubtedly be very bureaucratic and would take some time to set up.

"I am confident the relationship between the banks and beef/dairy farmers is secure enough to overcome difficulties,"said Mr Saint.

"While it is true that relationships were strained in the mid-1980s, there has been a tremendous amount of repair work done to over the past two to three years and incomes and profits have been high."

Ironically, it will be the extensive grass-based beef producers, who finish their stock later than 30 months, who will be most affected.