Farming representatives warn that otherwise viable businesses could be put at risk without access to working capital
The government is facing growing calls to provide interest-free emergency finance as farmers struggle with severe cash flow pressures caused by drought, bluetongue, high input costs and weak commodity prices.
Agricultural advisers and tenant farming representatives warn that otherwise viable businesses could be put at risk without access to working capital.
The Central Association for Agricultural Valuers (CAAV), which represents professionals advising agricultural and rural businesses, has backed calls for financial support to protect production capacity and help farms prepare for next year.
The Tenant Farmers Association (TFA) has also warned that fundamentally sound tenant farming businesses could disappear if they cannot secure enough cash to continue trading.
Jeremy Moody, secretary and adviser to the CAAV, said: “Many parts of farming face serious problems of cash flow and liquidity as they look into the autumn.”
He pointed to the NFU’s proposed Keep Britain Growing Loan as a potential starting point for tackling the immediate financial pressures.
“The NFU proposal for a Keep Britain Growing Loan offers a positive opening to the necessary debate for ways forward that are sufficient and effective,” he said.
However, Mr Moody warned that emergency finance would need to be accompanied by more substantial reforms.
“But a much larger package of reforms is required to answer the long-term problems that farmers are facing. The challenges we face are moving faster than policy is responding.”
Separately, the TFA has backed plans for a Farming Crisis Loan Scheme, which would provide interest-free finance to viable agricultural businesses hit by exceptional pressures.
The proposal has been discussed by farming organisations taking part in a roundtable coordinated by the National Farmers’ Union.
The finance would be aimed at helping farms remain operational, restock and establish crops for 2027 rather than allowing short-term cash shortages to undermine otherwise viable businesses.
TFA chief executive George Dunn said: “The farming industry is facing an exceptional set of pressures. This is not just about absorbing the issues of a difficult year.”
The association said tenant farmers were particularly exposed because drought, depleted forage and water supplies, poor harvest prospects, higher costs and bluetongue were combining to place significant strain on working capital.
Mr Dunn warned that some tenant farmers could lose fundamentally sound businesses simply because they cannot access the cash needed to keep trading and prepare for future production.
While industry organisations are pushing for measures to tackle the immediate cash flow crisis, the CAAV argues that farming also needs longer-term reforms to improve resilience.
Livestock businesses continue to face pressure from bluetongue, while arable farms have endured four years of high input costs, difficult weather and low commodity values.
The CAAV said the combined impact on arable businesses had not been seen on this scale since at least the late 1980s.
Mr Moody said farms will need to find business models that can generate worthwhile returns while remaining resilient during difficult trading periods.
“The challenge is finding a financial margin worth having and the resilience for the business confronted with hard times,” he said.
The CAAV believes that could involve farmers experimenting with different crops and varieties, reducing costly inputs and operations and developing additional routes to market.
It argues that government policy should give farm businesses greater freedom to make those changes rather than attempting to dictate how they operate.
“It is also for government policies to create the supportive policy framework for farm businesses to manage this process; not guiding but enabling, removing problems,” Mr Moody said.
“This needs straightforward actions and language that can support and not hinder the average family farm.”
The organisation also believes lessons could be drawn from Australia, where free-market farming operates alongside policies aimed at supporting investment, innovation and resilience.
Improving soil health and expanding water collection and storage should form part of the UK response, according to the CAAV, particularly as farms contend with increasingly extreme weather.
Mr Moody also wants Defra to work more closely with other government departments on planning and capital allowances to make it easier for agricultural businesses to invest and adapt.
“With the breadth of our challenges, we need realism and clarity,” he said.
“Defra should enable farmers to find roads to the future by proactively working with other departments on planning and capital allowances, giving freedom to act and invest.”
The CAAV has also raised concerns over current discussions with the EU, arguing that future regulatory arrangements should preserve farmers’ ability to innovate and respond to changing conditions.
Mr Moody warned that, in the CAAV’s view, farmers’ ability to adapt could be restricted if greater control of the food chain passed to Brussels regulations.
He said the industry needs to be “innovative and flexible, not bound in red tape not written for us.”