Cut in interest rates provides boost to farmers

The quarter-point interest rate cut announced today has been welcomed as good news for UK farm businesses by Peter Sobey, Head of Agriculture, Lloyds TSB.

"This first cut of 2008 - from 5.5% to 5.25% - provides a welcome boost to farmers at the beginning of what will be a challenging year for many in the agriculture sector," said Peter.

"During the last twelve months, farmers have experienced volatile financial conditions, producing both winners and losers. Those in cereals and dairy have profited from high prices of grain and milk, although suffered increasing costs of both fuel and fertiliser. Livestock farmers have been threatened with yet more diseases and difficult market conditions, including high charges for grain and fuel.

"This cut in interest rates, bringing down the cost of running businesses, will help relieve some of the pressures currently facing farmers. However, the combination of a cooling economy and high inflation risks, caused by factors such as increasing oil prices, could mean fewer interest rate cuts in the year ahead than previously expected.

"Our advice to farmers is to take advantage of the low fixed rates which are currently available, as they are likely to rise again in the future. Anyone concerned about the next 12 months should seek advice from their financial advisor or Lloyds TSB Regional Agricultural Manager to discuss the best course of action for the year ahead", he said.