Farmers need to think about the money they are borrowing, following an increase in the amount of taken on by UK farms.
New figures from the Bank of England show that farm borrowing rose to £16.9bn at the end of May 2015 – an increase of £1.3bn on the same period in 2014.
This latest increase in the amount of borrowing by farmers has been put down to two trends; borrowing to ease cashflow problems caused by reduced incomes and investing in new equipment to future-proof their business.
Paul Laird, a Director at The Fish Partnership and an expert in the finances of the farming community, said: “I am not surprised that we have seen an increase in the amount of money being borrowed by farms in the last few years.
“We have seen extremely low interest rates due to the historically low inflation that the UK is experiencing and farmers have used this period to make the most of borrowing to invest.
“However, things look set to change and the Bank of England has already indicated that it might be issuing an increase in its base rate in 2016, so businesses need to be prepared for the effect this could have on any of their outstanding loans.”
He added that those who had concerns should seek professional advice, so that they could manage their cash flow and budgetary requirements around existing and future loan repayments.
