Cut in interest rates is good news for farmers

The recent announcement by the Bank of England that interest rates are to be cut by 0.5%, to 4.5%, will be welcomed by many sectors, not least for our customers in agriculture says Paul Spencer, Agriculture Director for Lloyds TSB Bank plc and AMC. The Bank of England’s Monetary Policy Committee decision was due to be announced tomorrow but was brought forward in a coordinated move with other major central banks.

"This drop in the cost of borrowing is a real boon to farmers who have seen input costs rise dramatically during the past year. Paying for fertiliser in August 08 rather than June 09, and at a cost of up to three times higher than this time last year, has made 2008 an exceptionally tough year for many.

"Regardless of the sector they operate in, all farmers have had to deal with increasingly high costs for essential commodities. And with many also facing the prospect of substantial tax bills in the New Year, today’s cut in interest rates will provide some welcome relief.

"Looking to the future, we believe that further interest rate reductions can be expected which will help to restore consumer and business confidence and further reduce some of the financial burden currently facing the UK’s agriculture sector.

"Another item of welcome news was announced recently when the Single Farm Payments were set. The value of the pound against the Euro has meant an increase of approximately 13% compared to the previous year.

"Markets remain volatile for all commodity crops produced by farmers. In this challenging market, it’s a good idea to understand the exact cost of production so that you know when to sell. Any farmers concerned about their finances should seek advice from their financial advisor or Lloyds TSB Regional Agricultural Manager to discuss the best course of action for the year ahead", said Mr Spencer.