Plan Ahead To Mitigate The After Effects Of Our Wet Weather
CKD Galbraith’s Robert Taylor, an approved AMC (Agricultural Mortgage Corporation) agent, has warned that problems caused by the current wet weather with the threat of more to come and the links to climate change could have a knock-on effect on farm businesses.
During last summer the country’s dairy and livestock producers were badly affected by the wet weather and the prolonged wet winter conditions will only further exacerbate the situation. Careful budgeting will be needed to plan for the impact of reduced productivity from land that was flooded, replacement feed costs and the reinstatement of land and buildings
With livestock and in particular cows in many parts of the country forced inside during more of the last year , and buffer feeding a necessity, winter forage stocks on many farms have already been significantly depleted. The effects of the weather on established winter crops is likely to cause significant additional costs such as reseeding and possibly draining land.
For those farms worst affected by the recent devastating 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 or the impact of winter crop damage, farmers must plan well in order to manage and mitigate any financial impact.
Cash flows are 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 the winter, will help to keep borrowing costs in check. Historically low interest rates and the ability to fund long term such as those currently available through AMC will help with the longer term financial impacts of what has been a challenging year, and could offer a useful safety net to see businesses through the after-effects of the recent torrents.