Tenant farmers warn viable businesses could fail without crisis loans

Tenant farmers could lose otherwise viable businesses without urgent access to working capital, the Tenant Farmers Association has warned as it backs plans for an interest-free crisis loan scheme.

The proposed Farming Crisis Loan Scheme would provide interest-free finance to viable farm businesses hit by exceptional pressures, helping them continue operating, restock and establish crops for 2027.

The proposal was discussed by farming organisations taking part in a roundtable coordinated by the National Farmers’ Union.

Severe drought, depleted forage and water supplies, poor harvest prospects, higher input costs and the impact of bluetongue are combining to create acute cashflow pressures across the sector.

TFA Chief Executive George Dunn said: “The farming industry is facing an exceptional set of pressures. This is not just about absorbing the issues of a difficult year.”

He warned that tenant farmers in particular could see fundamentally sound businesses disappear because they cannot secure the cash needed to keep trading and prepare for future production.

“For many tenant farmers in particular, the risk is that we see otherwise fundamentally sound farm businesses lost due to their inability to secure the cash and working capital needed to keep operating, restock, establish crops and plan for 2027 and beyond,” he said.

The TFA wants any loan scheme targeted at viable businesses whose finances have been damaged by circumstances beyond their reasonable control.

Mr Dunn said: “This is not about propping up businesses that were already unviable. It is about preventing temporary but extreme cash-flow shocks from destroying productive farm businesses, livelihoods and food-producing capacity”.

Rather than creating a new administrative system, the association believes farmers’ existing banking relationships could be used to get finance to businesses more quickly.

It has suggested government backing through the British Business Bank could unlock substantial lending while reducing the potential cost to the Exchequer compared with allowing otherwise productive businesses to fail.

However, the TFA stressed that emergency finance should not be treated as a stand-alone solution.

It said a crisis loan could provide a short-term bridge, but wider reforms would still be required to tackle weaknesses affecting farm businesses.

Those reforms include greater fairness within agricultural supply chains, trade policy, proportionate regulation, sustainable payments for public goods, planning changes and the development of secure agricultural tenancies.

Mr Dunn said: “An interest-free crisis loan should be one piece of a much bigger jigsaw.”

He added: “It can keep otherwise viable businesses trading through an emergency, but government must also address the structural weaknesses that leave primary producers carrying a disproportionate share of climate, disease and market risk.”

The TFA wants the proposed scheme to form part of a wider long-term strategy for farming rather than simply providing temporary relief from the current crisis.

Mr Dunn said the loan should act as “a bridge to a credible long-term farming roadmap as part of the Prime Minister’s promised 10-year economic plan”.