Agricultural borrowings fall after reaching highest ever level

Agricultural borrowings have fallen from last year’s peak by £239m, according to latest figures from the Bank of England.

In the three months to December 2007, the total national lending to the farming industry was £9.59bn.

The figure followed an increase in lending of £388m in the three months to September, when farming debt stood at £9.829bn, it’s highest ever level.

Deposits also improved, with the value of deposits held by UK farmers totalling £4.969bn by the end of December, an increase of £695m on the previous quarter.

Paul Spencer, head of the Agricultural Mortgage Corporation, said the reduction in December was ‘long overdue’ and was a sign of more positive times ahead.

But while increased milk and grain prices would have helped decrease borrowing and led to an improvement in deposits, Mr Spencer warned there were ‘uncertain times’ for many farmers.

“Some farmers, particularly in pig and poultry, are having a tough time in the current economic climate and the volatility of many markets combined with an unsettled world economy may continue to adversely impact these and other sectors,” he said.

“It will be interesting to see what the next quarter brings, as the results from the first quarter of 2008 may provide a much clearer picture of the UK farming industry.”

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