Dont take overdraft risk

17 October 1997

Dont take overdraft risk

CEREAL growers facing cash flow difficulties are advised to sit down with their bank managers at an early stage rather than risk moving into "expensive, unauthorised excesses".

That is the advice of Douglas Young, chairman of the UK 200 group of chartered accountants in East Anglia, commenting on the results of a recent farmer survey.

The survey shows that only 35% of wheat harvested this summer has left the farm, fetching an average £84/t. That is better than for barley which, on average, has so far made £75/t for feed and £81/t for malting.

"Farmers spoken to were concerned about the effects both on profitability and cash flow, as many hold on to stocks of grain in expectation of higher prices," said Mr Young. "We are expecting to see results reflecting a drop of over £100/acre gross margin.

"Those who are holding on to stocks are now having to consider the effects on borrowing requirements, with many having overdrafts staying at peak levels for much longer than anticipated.

"As a group, we are encouraging farmers to sit down and consider the effects now and, if necessary, involve the bank manager at an early stage, particularly with relatively high tax bills due on Jan 31, 1998." &#42

See more