Tenant farmers urged to expose farm finance barriers

Tenant farmers who lack land and property to offer as security may be struggling to access the finance needed to invest in and operate their businesses, prompting Defra to seek evidence of the problem.

The Tenant Farmers Association (TFA) has launched a nationwide survey after raising concerns with Defra Secretary Dame Angela Eagle over access to borrowing for the tenanted sector.

The organisation says smaller tenant businesses, and those with fewer assets available as security, are among those reporting difficulties accessing meaningful borrowing facilities.

Unlike owner-occupiers, tenant farmers do not own the land they farm and can therefore have fewer property assets available to use as collateral when seeking finance.

That can become particularly significant when businesses need working capital to buy livestock, machinery and inputs, invest in infrastructure or manage periods of weaker cashflow.

The TFA raised the issue during a recent meeting with the Defra Secretary, telling the government that members' experiences suggested access to finance remained a problem for some businesses.

Dame Angela subsequently asked the association to gather further evidence so the concerns could be raised directly with banking contacts, according to the TFA.

The association launched its survey on Tuesday 22 September and is now asking tenant farmers to report their experiences of seeking finance, including where a lack of security has restricted their borrowing options.

The TFA stressed that banks have indicated they remain willing to support agriculture, but said experiences reported by its members suggest some smaller or less well-secured tenant businesses are nevertheless struggling to obtain suitable facilities.

The survey is intended to establish how widespread those problems are and provide a firmer evidence base for discussions between the organisation, Defra and the banking sector.

Responses will be treated confidentially and the TFA says the questionnaire should take around two minutes to complete.

The finance concerns come during a difficult period for farm cashflow, with parts of the industry dealing with the effects of drought, higher input costs, livestock disease and weaker harvest prospects.

Last month, the TFA backed proposals for a Farming Crisis Loan Scheme which would provide interest-free loans to viable agricultural businesses facing exceptional pressures.

The association said such finance could provide a temporary bridge for businesses struggling with working capital, while arguing that longer-term structural issues affecting farming would still need to be addressed.

The latest survey, however, raises a separate and potentially longer-term issue over whether the structure of a tenant farming business can itself make obtaining commercial finance more difficult.

Government guidance has previously acknowledged that a lack of collateral can limit tenant farmers' access to capital, particularly when businesses are seeking to diversify.

More recently, the government's response to the Farming Profitability Review recognised the need for additional measures to support a profitable tenant farming sector and highlighted access to finance through schemes such as the British Business Bank's Growth Guarantee Scheme for viable but underserved businesses.

However, the TFA's latest exercise is intended to establish what is happening on the ground when tenant farmers approach commercial lenders.

The association has not yet published figures showing how many farmers have been refused borrowing, had facilities reduced or faced requests for additional security.

Those are among the gaps the new evidence-gathering exercise could help address.

Tenant farmers who have experienced problems obtaining finance are now being encouraged to submit their experiences to the TFA, with the findings expected to feed into further discussions with government and banking representatives.