Agricultural borrowing reaches record high

Agricultural borrowing has reached and all-time high as lending leapt by more than £700m in the past six months, according to figures released by the Bank of England.

Lending to the farming industry now stands at £9.829bn following a sharp rise in short-term and overdraft borrowing during a difficult year for many farmers.

Paul Spencer, head of the Agricultural Mortgage Corporation, said foot and mouth, bluetongue and higher feed costs had “dramatically affected” prices, and contributed to the more than 4% increase in borrowing over the past year.

‘Increased demand’

“On the positive side dairy farmers are enjoying increased demand with prices going up by a third in less than six months,” he said.

“However, these figures were calculated before any sales were made from the 2007 harvest. Also, not everyone will benefit from the better prices.

“Many farmers will have sold forward, or their harvest was either spoilt or completely destroyed by the appalling summer flooding.”

‘Increase’

Mr Spencer said deposits had increased, but the rate of deposits had slowed.

“At the end of September, UK farmers had cash balances of £4.274 billion, a small increase of £4 million over the June 2007 figure.

“This is however a substantial 15% increase on the same time last year.”