Beware of payment gap

FARMERS COULD have a “hungry gap” between the arrival of the last IACS cheque and receiving the first single farm payments.

This will put pressure on cash flows and borrowings, according to Barclays Bank.

Arable farmers are relatively used to receiving support payments in a single lump sum.

But beef producers must co-ordinate their businesses to cope with a yearly cheque, agricultural manager Euryn Jones told FW at Smithfield Show.

“The payment window for the first single farm payments is Dec 1, 2005, to June 2006, but it is not yet known exactly when it will arrive.

“Assuming IACS payments are received at the same time as last year, there could be a period of up to eighteen months when farmers need to ensure they have the facilities in their banks to cope.”

National banks were forecasting that lending could rise by £1bn in autumn 2005, when arable farms would normally receive a cash injection, he said.

“Businesses can use a number of measures to manage cash flow, such as changing sales patterns or borrowing,” said Mr Jones.

“It‘s not just about forecasting what could happen, but about taking action to cope with the threat.”