CKD Galbraith's Robert Taylor, an approved AMC (Agricultural Mortgage Corporation) agent, has warned that problems caused by the summer's wet weather and loss of grazing could have a knock-on effect on farm businesses for the next nine to 12 months, and in particular, for the country's dairy and livestock producers where careful budgeting will be needed to plan for replacement feed costs.
With cows in many parts of the country forced inside during the summer, and buffer feeding a necessity, winter forage stocks on many farms have already been significantly depleted. The effects of the weather on grain harvest is likely to signal a sharp increase in concentrate feed costs, while continued unsettled weather puts the quality of late silage cuts in doubt. The cost of replacing forage, together with generally increased input costs over a potentially longer winter housing period will demand careful budgeting by farmers sooner rather than later.
Robert said: "For those farms worst affected by this year's 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 wet 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 or the impact of 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 this winter 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 the winter, 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 what has been a challenging summer, and could offer a useful safety net to see businesses through the after-effects of the summer's torrents."
To contact Robert Taylor to discuss your financing options then call 0800 389 9448.