Farmers must have a long term strategy
Farmers must have a long term strategy
By James Garner
FARMERS need to discover ways to make their asset base work harder for them, according to one of farmings main banks.
Grant Phillips, head of Barclays Agricultural Banking, told the Meat and Livestock Commissions Outlook 2002 conference in London that low incomes, reform of the CAP and adopting recommendations proposed by the commission on the future of farming and food, thrust massive upheaval upon farmers.
"The way they manage this requires detailed thinking about how their businesses should look in the future. Farmers will need to sit down with their banks and work out a medium to long-term strategy on how they can be more profitable.
"There are cases where this transition may mean taking a hard look at a farms asset base. Can this asset be made to work harder to generate more capital?
"A business plan might be good, but require more cash because the bank is not completely happy about its funding. This may require cash from an asset sale."
This could be through machinery sales, buildings, or in some circumstances land, he added. He also had a message to government to be careful not to reform the CAP regime too hastily.
"UK agriculture is making £2bn, which is supporting £8bn borrowings. Currently, it can service this debt, because interest rates are low."
He added this would be a tougher proposition if interest rates were to rise, or if measures were introduced that compromised the CAP income stream.
"It is time for a reality sandwich – CAP makes up 30-35% of income for British farmers – it is a truly critical component of farm income."
He called for cool heads and patience, and not fast and radical change of the support regime.
Farmers need to discover ways to make their assets work harder – this could mean stripping some to finance long-term business plans, says Grant Phillips.