Lloyds TSB responds to record high farm debt figures for first quarter 2005

The UK agricultural industry's total borrowing has risen to just under £8.5 billion, the highest ever recorded figure for quarter one, according to the latest Bank of England figures, released today (11 May 2005).

At the end of March 2005 farming debt stood at £8.459 billion compared with £8.197 billion for the same period in 2004, an increase of 3.2%. The figure also represents a 3.4% increase since December 2004.

Commenting on the latest figures, Tim Porter, Agriculture Director, Lloyds TSB Group, said:

"Borrowing in the first quarter of the year has continued to show a rising trend. This is mainly due to the impact of lower commodity prices and is reflected in the reduced amounts of deposits held on the trading side of our customers businesses.

"This applies to all types of business enterprises which continue to be under downward pressure on price, but for dairy farmers at least there are signs of improving short term price trends.

"This trend underlines the need for farmers to talk to their banks about any requirements they might have to meet cash flow shortages later in the year which might result from delayed receipt of the first Single Farm Payment.

"To help cashflow, it is more important than ever to develop whatever income sources are available and ensure that applications for the Single Payment System (SPS) are in on time. The next step is to assess the farm for registration under at least the Entry Level Environment Scheme (ELS).

" The ELS will be one of the topics discussed at a series of meetings entitled 'Developing Income and Profit' to be organised by Lloyds TSB Agriculture later in the year," he said.