Farm debt on the rise

The UK agricultural industry's total borrowing has risen by £374 million in the past 12 months, according to the latest Bank of England figures, released today (10 August 2005).

At the end of June 2005 farming debt stood at £8.656 billion compared with £8.282 billion for the same period in 2004, an increase of 4.52%. The figure also represents an increase of £197 million or 2.33% since March 2005.

Commenting on the latest figures, Tim Porter, Agriculture Director, Lloyds TSB Group, said: "The relatively sharp increase in borrowing reflects the poor commodity prices currently prevailing in the UK markets for cereals, milk and red meat.

"It is of some concern that we see this sharp increase in farm borrowings this year, particularly as farmers are already expecting to meet cash flow problems in the coming winter because of the expected delay in receiving the Single Payment under the reformed CAP. The payment is not expected until March.

"It makes it even more important for farmers anticipating any change in their borrowing requirements to discuss the situation with their bank manager at the earliest opportunity."