Finance and Banking for Farming

It is important to state that banks remains strong. This is clearly emphasized by the government’s endorsement of our current capital strength and of our plans to meet the new, higher requirements. Some banks have not asked the UK government to provide us with capital. Since the start of the year, lenders have continued to attract new deposits as customers and clients have turned to us as a safe haven in turbulent times. In addition, banks raised significant capital in the summer. Lenders plan to further increase our capital base by £6.5 billion and when their fund-raising is complete, UK banks will be one of the most strongly capitalised banks anywhere in the world.

This makes them very well placed to continue supporting our farming customers and there is no change in our appetite to lend to the sector. The current financial climate has meant that banks have had to review our overdraft pricing in some instances, with some customers facing higher margins. Others will see no change and some will see their margins decreased. There are no changes to existing arrangements for loans and mortgages and if, as we expect, the Bank of England continues to cut base rates, most farmers’ finance costs will continue to reduce over coming months.

As the UK and global economy undoubtedly faces difficult times ahead, we should remember that whilst the agricultural economy cannot be totally insulated from the impact of a general economic slowdown the fortunes of farming businesses are rarely in step with the wider economy and the gloom that pervades some other sectors should not cloud a brighter farming sector.