CKD Galbraith's Robert Taylor, an approved AMC (Agricultural Mortgage Corporation) agent, has warned that problems caused by the difficult and extreme weather conditions of the last year are likely to have further knock-on effects on farm businesses in 2013.
Heavy snow in March has caused devastating losses to stocks for sheep farmers in parts of Scotland, but the effects of the recent cold weather are likely to have been felt by all farmers. These come on top of dealing with the wet weather of last year, especially during the summer. Careful budgeting will be needed to plan for up front costs - such as replacement feed bills - but the full financial effects of loss of stock are likely to be felt hardest in autumn and winter 2013.
With cows in many parts of the country forced inside in summer 2012, winter forage stocks on many farms were significantly depleted at an early stage and the effects of the weather on grain harvests have also caused an increase to feed costs. The cost of replacing forage, together with generally increased input costs over a longer winter housing period has demanded careful budgeting by farmers and the continued unsettled weather puts the risk of a late spring - and the additional costs this would entail - to the forefront of farmers' minds.
Robert said: "For those farms worst affected by the cold and wet conditions, the longer-term financial damage has already been done and a careful and honest assessment of how the future farm finances will be affected should become a priority.
"Farmers should ask themselves how much the weather has cost their business to date, what it will cost to rectify the losses already encountered and what will need to be spent to offset future impacts and plan ahead, plan well and plan once to ensure their working capital requirements are properly budgeted for. Whether it's the cost of extra feed at higher prices; the impact of loss of stock or reduced crop sales from a challenging harvest, farmers must plan well in order to manage and mitigate any financial impact."
Robert continued: "Cash flows likely to come under pressure, laying out and securing working capital needs in advance will be an important element of managing farm finances and I would recommend farmers involve their key advisors and professional consultants at an early stage to develop a logistical and financial plan that will keep their business on track, and monitor it carefully over time.
"For farm businesses requiring an additional injection of working capital it is important to seek the most affordable and appropriate methods of borrowing for farm specific circumstances. Borrowing the right amount for your needs once, rather than having to increase it or revisit your finance provider several times over coming months, will help to keep borrowing costs in check. Historically low interest rates and some discounted lending schemes, such as those currently available through AMC's access to EIB funds, will help with the longer term financial impacts of consecutive challenging seasons and could offer a useful safety net to see businesses through the after-effects of the harsh weather."