Farmers must put plans in place

RISING fuel and fertiliser prices combined with additional feed costs as a result of the harsh winter mean many farming businesses are suffering cashflow pressures.

Although commodity prices are currently at a more satisfactory level, an approximate 20 per cent rise in fixed costs, late SPS payments and changes to Natural England payment dates mean many farmers are stretched and need to monitor their cashflows very carefully, says the Strutt & Parker Farming Department.

Farming expert Ali Gray, based in Strutt & Parker’s Morpeth office, said: “Many farmers are feeling the pinch at the moment and need to be very rigorous in planning and monitoring their cashflows over the coming months.

“Commodity prices have been better this year but generally costs have gone up between 15 and 20 per cent. Some early lamb sales have commenced, but at the current time of year before the grain is harvested, there are few sales from May to August and farmers still face significant ongoing costs to their businesses in terms of fertiliser, fuel, machinery repairs as well as rent for tenant farmers. It will be even tougher this year because of the knock-on effect of the harsh winter and the subsequent extra forage and feed costs many incurred.

“Additionally, following an EU audit, Natural England are changing the timing of their payments to two annual payments sometime between January and March and sometime between October and December. On top of that, some farmers who were undergoing entitlement correction did not receive their SPS 2010 payments until last month which will have caused havoc with their cashflows.”

He added: “In a year like this we would urge farmers to get a good grasp of their cash position and likely requirements going forward.

“Detailed financial plans are essential to a modern farming business.”