British farm incomes will take a hit this autumn as one of Britain’s driest spells in history bites the balance sheet.
As the effect of a massively reduced yield kicks in for UK growers, the financial losses will start to hit farmers hard. Last week, Total Produce sales manager Colin Putt told theFPJ that small businesses could capitulate under the pressure.
On Monday the NFU deputy president Guy Smith wrote to all banks asking for their support ahead of their drought summit as farmers struggled to meet contract requirements, and costs of production shot up.
Putt said that farmers were having a harder time finding capital from the banks however.
Accountants Old Mill urged farmers to plan ahead to help ease the effects of the drought, from raising an overdraft to pay for forage to reducing tax payments on account.
“It is a very frustrating and demoralising time for both livestock and arable producers,” said Mike Butler, chairman of the board at Old Mill.
“The drought means arable yields will be down, vegetable producers are looking at significant crop shortages, and livestock producers do not have enough forage to see them through the winter. This will have a dramatic impact on cash flow and profits.
Higher commodity prices will go some way to alleviating this pressure, but the impact will vary from farm to farm. “Try to think about the implications of what’s going on, and have a serious conversation about what might be the right thing to do,” advised Butler.
“Have talks with your bank and accountant to see what the best solution is.”
