FOOT-AND-MOUTH compensation payments have helped farmers trim bank borrowings by almost £100m in the last quarter.
Latest Bank of England figures show producers owed £7.64bn in June, 1.2% less than in March.
Borrowings have fallen by 1.5% since June 2000, helped by better milk prices and reduced spending on winter cereal inputs due to the smaller area sown, says John Colley, senior agriculture manager at HSBC.
"These are the first figures that begin to show the real impact of F&M on farm borrowing. To date, there has been little restocking, so much of this money remains on deposit." Bank of England figures show deposits increased by £523m over the quarter and by £728m in the past 12 months.
But figures could dip again over the next few months. "The borrowing requirements of many beef and sheep producers through the autumn will depend on the extent to which autumn sales are permitted," says Mr Colley.
Arable returns are also likely to vary and Mr Colley expects growers hit by poor weather last autumn and winter will need to borrow more cash towards the end of the year. *