More farmers under pressure from recession

Jun 25 2009 By Karen Dent, The Journal

INCREASING numbers of farmers say they are starting to feel the pinch of the recession, even though the major banks are continuing to support agricultural customers.

One in four now say they feel at significant risk and expect to be affected by the economic climate, compared with one in six last December, according to a banking survey carried out by the NFU.

However, the big four high-street banks are continuing to lend to farm businesses and are taking on the same amounts of new agricultural business as they did before the economic crisis.

But a good proportion of those farmers surveyed admitted they had underestimated how significant credit problems would be for their business last year and that they did not realise the interest rates and the terms and conditions of their borrowing would become stiffer this year.

Just over one third had approached lenders for an overdraft facility and nearly eight out of 10 accepted the terms they were offered. Interest rates for new credit agreements averaged at less than 5%, but one in seven said they were being charged more than 8% for credit.