Scottish farming on sound financial footing, bank claims
The financial fundamentals of Scottish farming are sound, despite rising costs and the negative effects of poor weather, Clydesdale Bank has said.
Speaking before ANM Group’s calf spectacular, Iain Clark, the managing partner of Agribusiness Development at Clydesdale Bank said that individual agriculture businesses in Scotland had sufficiently strong financial capacity to withstand current output and cost pressure, with the future outlook and market prices in a positive state for most products.
He said: “For many producers, this year’s poor weather has had, and is still having, a major impact on both output and costs. Just about all areas of the farm structure have been affected by the prolonged wet and dull conditions, which have made farming in 2012 a very difficult challenge.
“Many producers enjoyed a period of improved profitability and strong balance sheets, heading into this year. Continued bank support also saw lending to Scottish agriculture increase by 3.5% last year.”
He explained that farming remains a favoured sector for capital allocation, adding: “That won’t change as a result of one difficult season.”
Although strong supply and demand were likely to result in continued strong farmgate prices, Clark acknowledged the inevitability of higher feed costs for the 2012/13 winter season, particularly for beef producers.
He said: “It would be wrong not to recognise that the short-term reality for many farm enterprises this year is disappointing, with lower margins than expected in the spring, and lower than in a ‘more normal’ weather year.
“In such conditions, the challenge is always to seek the best results possible by managing the resources and factors that are within your control. That means trying to counter the adverse weather and less favourable currency, which are outside our control, and focusing on husbandry and management best practices, science and marketing as the building blocks towards a strong and sustainable future for the business.
“Scottish agriculture has made considerable strides in the last few years with new investment, increased output, improved management, and the adoption of new ideas and opportunities such as renewable energy. Most businesses are therefore still very well-placed to capitalise on the sector’s fundamental strengths once the weather, and a few other factors, allow.”