Borrowing rises to all-time high

Aug 7 2007

by Anna Lognonne, The Journal

THE UK agricultural industry’s total borrowing has risen by £319m in the quarter to June 2007. The national figure now stands at £9.441 billion, an all-time high, according to the latest Bank of England figures. Paul Spencer, head of The Agricultural Mortgage Corporation (AMC), said: “There has been an increase in short-term borrowing and overdraft borrowing during the second quarter of the year. “At the end of June 2007 farming debt stood at its highest ever level of £9.441 billion, compared with £9.161 billion at the same time in 2006, an increase of just over 3%. “Undoubtedly delayed marketing of grain and potatoes in anticipation of stronger late season prices will have impacted, coupled with the continued pressure on cash flow for the dairy, beef and sheep sectors. Equally deposits have also been going up. UK farmers at the end of June had deposits of £4.270 billion, an increase of £29m over the March 2007 figure. This compares with £3.824 billion at the same time last year, a substantial increase of just under 12%.” Story continues ADVERTISEMENT Mr Spencer continued: “Confidence within the agricultural community was finally emerging with stronger grain and milk prices, but increasing costs coupled with the appalling weather conditions we have endured in recent weeks have inevitably knocked that confidence. “The Bank of England Monetary Policy Committee has maintained interest rates this month, which comes as some relief to British agriculture. Our view is that we are at, or close to, a likely peak in base rates.” Mr Spencer added: “We recommend that farmers speak to their local professional advisers to consider how best to manage their own financial risk.”

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