Lloyds TSB Agriculture responds to Bank of England lending

The UK agricultural industry's total borrowing has climbed by a further £862 million in the past 12 months. The national figure now stands at an all-time high of £9.321 billion, according to the latest Bank of England figures, released today (10 May 2006).

Commenting on the growth in farming debt, Tim Porter, Director of Agriculture, Lloyds TSB Business Banking said:

"It has been a long, hard winter and it is regrettable but not surprising that, as at end of March, we have seen a further increase in farmers net debt levels. This arises, principally, from an increase in overdraft borrowing due in no small part to the delayed Single Farm Payment," he said.

At the end of March 2006 farming debt stood at £9.321 billion, compared with £8.459 billion at the same time in 2005, an increase of just over 9%. This figure also represents an increase of £103 million or 1% over the December 2005 figures.

Mr Porter added: "Trading conditions have remained difficult with a little optimism now beginning to creep into some grain prices. Livestock farmers are also looking towards the opening up of European markets for beef and a stronger demand for lamb.

"There is undoubtedly continuing focus on developing alternative sources of income with substantial investment being made on some farms in order to reduce the risks involved in producing food crops. Whilst there still remains a mood of caution in farmers, opportunities for profitable alternatives are still being actively sought," he said.