05 July 2015 | Online since 2003

Survey shows farmers are cautiously optimistic about investing



7 March 2014 13:26:50|Finance,News

Survey shows farmers are cautiously optimistic about investing


Despite the recent extreme weather, farmers remain cautiously optimistic about the future according to a recent survey carried out by Lloyds Bank Commercial Finance. Around half (48 per cent) of those surveyed were expecting farm profits to improve slightly in the next 12 months and 65 per cent anticipated their financial requirements to increase a little over the next five years, whether to purchase land or new equipment.

Graeme Allan, HP Sales & Services Director, said there is also an indication that farmers are looking more carefully into finance options for machinery – potentially because they are aware that the current low interest rates might offer a wider range of alternatives.

“Low-rate or interest-free deals may appear attractive at face value but costs can often be hidden in the purchase price of the asset – or in interest charges elsewhere if a deposit is paid from the farm business overdraft or loan,” said Mr Allan.

“This may explain why Lloyds Bank has seen the uptake of hire purchase – or HP – grow by 46 per cent in agriculture over the past two years. While manufacturers’ finance schemes dominate certain sectors with subsidised or low-rate funding, this does not always suit the cash-flow or repayment structure of the farm business – and paying for fixed assets such as machinery from day-to-day cash-flow is not necessarily the best solution.”

He added that the source of any cash deposits for finance deals also needed to be considered. “Ask yourself whether you are taking the deposit from savings, or funding it from the existing overdraft or loan,” he advised. “And with the exceptional weather seen this season, is there a danger of using working capital you might need later on?

“By comparison, specialist lending options such as HP are particularly helpful when replacing equipment as they enable the term of the finance to be matched to the life of the asset. The asset is taken as security, which means existing credit lines are left alone – something which is important in this current financial landscape.”

Mr Allan said a further incentive to invest in machinery at the moment included the ‘Funding for Lending Scheme’ from the Government, through which Lloyds Bank offers discounted borrowing.

“There are also potential tax benefits from the temporary increase in the Annual Investment Allowances threshold from £25,000 to £250,000, which has been confirmed for the rest of the year. This means that while we may have a legal tie to the asset, it appears on the farmer’s balance sheet so they can claim the allowances.”


Download




Comments


No comments posted yet. Be the first to post a comment

To post comment without approval login or register

Display name

Please enter your name

Email (optional)
Comment

Please enter your comment

Post Comment

Your comment submitted successfully.Please wait for admin approval.

Some error on your process.Please try one more time.



Jobs


Start Date: 20 June 2015
Demonstration combine driver, SAME Deutz-Fahr. Harvest job travelling round the UK

SAME Deutz-Fahr has an exciting opportunity for an experienced combine driver to join its UK team to demonstrate one of its c...


Start Date: 27 June 2015
Job for  Harvest worker required July - October

2000 acre North Essex arable farm requires harvest worker for grain carting,relief combine driving and autumn cultivation wor...


Start Date: 2 July 2015
Kennel hand / cattle person: job in Sweden

We are situated in the north of Sweden , we have 70 pedigree Angus and a kennel of 45 Siberian Huskys.

We normally employ...


Start Date: 18 June 2015
Job for Tractor driver and general farm worker

500 acre arable farm requires general farm worker for summer work 

 

 


Start Date: 23 June 2015
Job for General farm worker - dairy farm in mid Wales

We are looking for an additional team member for our 200 cow pedigree high input housed herd.

We are looking for someone ...





Top stories you may have missed
5 June 2015 | Cattle

A strong pound and increased red meat imports coupled with a plentiful dome...


5 June 2015 | Arable

Depression is affecting Wales' farming industry and there is a need to use ...


5 June 2015 | Arable

With just one week to go before the final judging and announcement of the w...


5 June 2015 | Finance

A rural law expert has highlighted the importance of good succession planni...


5 June 2015 | Farmshops

A south Yorkshire dairy farming family is pulling out all the stops to prom...


4 June 2015 | Finance

Predicting what is going to happen to wheat prices is a challenge, but in s...


4 June 2015 | Agri Safety

A Lancashire based livestock theft prevention scheme is aiming to go nation...


4 June 2015 | News

A female farmer has been recognised by the farming and conservation industr...


4 June 2015 | Finance

The new Conservative government appears to be preparing to implement cuts f...


4 June 2015 | Arable

The Rural Payments Agency (RPA) will have mobile support units at the follo...