HROC (agency) - Kubota
Farminguk
28 May 2016 | Online since 2003
Auto Trader Ltd


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





0 Comment


loginuserlogo
Name

Please enter your name


Email

Comment

Please enter your comment


Post Comment

Your comment submitted successfully.Please wait for admin approval.


Comments

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

World News

Canada | 27 May 2016
Southern Ontario farmers launch their own weather network

Southern Ontario farmers are building their own weather network to more accurately record how conditions will affect their crops. The AG Grower Daily Dashboard project is designed to give farmers h...


Australia | 27 May 2016
National Australia sees farmers seeking loans to weather crisis

National Australia Bank Ltd., the nation’s largest lender to farmers, is expecting its dairy clients to seek short-term credit to assist them as slumping milk prices have thrown the industry into a cr...


USA | 27 May 2016
Central Indiana county approves livestock farm restrictions

A central Indiana county has approved new restrictions on big livestock farms limiting where those farms with hundreds or thousands of animals can be built. The ordinance approved this week by the ...


Ireland | 27 May 2016
Dairy farmers' income plight in spotlight

IFA president Joe Healy, who met with EU Agriculture Commissioner Phil Hogan in Brussels, said the majority of dairy farms will be in the red this month. He urged the Commissioner to act without de...


Canada | 27 May 2016
The changing face of Canada's farm industry

Mapping the evolution of Canada's farm industry is not as simple as just examining the numbers. Every five years, Canada's federal government asks us to provide details on who lives in our househol...



Trending Now

Viewed
Discussed

Farms and Land for sale

PropertyLocation
PropertyAgent
PropertyMinimumPrice
PropertyMaximumPrice
PropertyCategory

Holiday Rentals search

AccommodationKeyword
AccommodationType
AccommodationCounty
AccommodationStarRating


Top stories you may have missed
closeicon
Username
Password