The National Farmers’ Union (NFU) has warned against complacency as the credit crunch has yet to present a big risk to many farming businesses who need credit.

According to the results of a recent survey of NFU members’ experiences with banks, less than 40 per cent of farmers have so far experienced any increase in overdraft rates from the main agricultural lending rates and rate increases for those who have been relatively modest.

Speaking about the results, NFU Deputy President Meurig Raymond, said: “It is important for our work with government that we provide an accurate and informed picture about the state of agricultural lending in the credit crunch.

“We hear that many non-farming businesses have seen substantial increases in lending rates and costs charged by banks leading to concerns about further adverse effect on the economy.

“Our survey suggests that farmers have been less badly affected than some sectors of the economy and we hope this bears out our view that farming has a more prosperous future, due to growing world demand for food, in spite of the current tough times in the economy.

“A particular concern for the NFU in the credit crunch is the position of tenant farmers. The survey suggests that tenants have not been singled out by banks for different treatment. I welcome this and hope that banks will continue to view tenants as a vital part of the farming economy with just as much chance as any farming business of making sustainable profit given the right conditions.

“Although we appreciate the positive approach that banks seem to be taking currently, it is important to note that these are very early results. Many farmers are going to require substantial increases in working capital this year to deal with higher input costs and infrastructure investments and I fear we may just be at the tip of the iceberg.

For this reason it is important that farmers are not complacent about the risks that credit might pose to their businesses in 2009. The NFU will continue to keep a watchful eye on banks and seek to ensure that lending continues through the year.”

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