UK agriculture is £1bn better off
UK agriculture is almost £1bn better off in cash terms than it was a year ago, latest Bank of England figures reveal. But it is likely to be a short-lived respite.
Most of the cash has come from foot-and-mouth compensation. This allowed farmers to cut borrowings by £147m, and interest charges by £9.5m, in the year to September. Deposits have grown by almost £800m in the same period.
But this cash will only remain banked until restocking begins in the spring, says John Colley, senior agriculture manager at HSBC. "The majority of farmers will restock, but it is not certain that animal numbers will return to pre-F&M levels. It will not be until the spring that we have a better idea of their intentions."
Figures also show that borrowing rose by £190m in the last quarter. This is mainly in the arable sector, and is in line with seasonal trends. But Mr Colley anticipates it will continue to grow through the winter: "The September figures do not reflect the impact of the lowest wheat harvest since 1987. Early season prices have been better than 2000 but these will not compensate for the 20% reduction in yield.
"This, and higher autumn plantings, increased working capital requirements on many farms." *