Increase in Farm Lending

It was announced recently that the number of people borrowing for agricultural purposes increased during the first three months of 2009. For example, at the end of 2008 total lending accounted for £10.71 billion, and the increase by the end of March 2009 was £281 million or 2.6 per cent. If we compare current figures with that for the same period of the last year we can see that the rise constituted 9 per cent or £905 million. According to agricultural specialists, this increase in lending at the beginning of the year had been predicted and corresponds to seasonal cash flow trends. It means that when a new year starts, people tend to spend more money than they receive as they purchase inputs on arable and livestock farms. The seasonal rise is a bit bigger this year because many farmers in England received their Single Payments earlier last year. At Barclays, agricultural lending company, figures fell slightly for the month of January but during next two months the amount of borrowing rose in all sectors of the industry. However, data of Bank of England demonstrates a reduction in deposits from agriculture during the last three months, with a decrease of £349m (6.63 per cent) in balances which fell from £5.27bn to £4.92bn. Experts predict stable future for beef and sheep producers as the prices for these products will stay strong during the year, but the prospects for grain and milk producers are not that good because arable and dairy prices are likely to change.