Merchants hit by late payments
By Tom Allen-Stevens
INDUSTRIAL action by the Rural Payments Agency could have “terrible” knock on effects, the merchant trade has warned.
“This is a big, big issue that doesnt just affect farmers, but also their ability to pay others,” SCATS Agriproducts fertiliser director Tim Davies told FWi.
“Merchants are expecting huge amounts of money to be paid in over the next month as farmers settle bills for fertiliser delivered in July.
“If farmers cant pay, what will that do to our cashflow and what is our exposure if farmers go out of business?
“For the smaller merchant, the implications are terrible.”
The RPA, the new body responsible for paying all rural subsidies, is currently working a two-day week, which could hold up IACS cheques for two months.
Many merchants now sell around half their July deliveries of fertiliser with payment deferred to December, to coincide with farmers cash injection.
This amounts to around 30 million of debt that the merchant trade is carrying.
“Many merchants cannot carry this sort of exposure,” said Paul Rooke of the UK Agricultural Supply Trade Association.
“Theres no great margin in the trade these days, and they dont carry the liquid assets to cover anything like this.”
The Association estimated that farmers debt to the merchant trade would rise by around 50% as a result of foot-and-mouth alone.
“The industry is stretched to the limit and a strike by civil servants is something you simply cannot foresee. This is going to cause serious problems.”
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