Uk agricultural total borrowing remains static

The UK agricultural industry's total borrowing has remained largely static, according to the latest Bank of England figures, released.

At the end of June 2004 farming debt stood at £8.289 billion, a 0.4% increase on the previous year and a 1% increase since March 2004.

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

"Good product prices at the end of last season helped slow a rising trend in lending to agricultural businesses. However, with the prices down again this season we would question if the position will still be the same in twelve months time," he said.

"While the figures across the industry have remained the same, a look at some individual business types will still give areas for concern. Many businesses have been able to stabilise over the past 12 months and many arable farmers have certainly had a better year from June 2003 to June 2004. Dairy farmers, however, are still having a tough time from modest milk prices and rising feed and quota prices.

"There is continuing uncertainty about the future of product prices reflecting the fact that UK farmers are now operating in a global market. This coupled with the uncertain impact of the Mid-term Review (MTR) of the Common Agricultural Policy (CAP) and future interest rate rises make it more important for farmers to manage their business risk. Part of this business management process should include a renewed focus on the impact of realistic budgeting and cash flow management," he said.