The UK economy has benefited by around £10 billion as high levels of farm borrowing are ploughed into infrastructure investment, says Andrew Naylor, head of agriculture at Lloyds Bank.
Speaking at the recent Surveyors Recap meeting, Mr Naylor said that farm industry professionals such as lawyers and accountants need to be aware of extreme volatility and should change the way they support their clients.
Mr Naylor commented: “The Bank of England’s figures for net lending to agriculture, forestry and fisheries increased from £292 million to £1,260 million between 2010 and 2014, but at the same time UK farmers’ contribution to the economy grew by £3.1 billion or 45% to almost £10 billion.
“This extended period of low interest rates has definitely fostered investment in the UK. Our food and farming sector is now worth £103 billion, which is 6.8% of the UK’s national income or Gross Value Added. It’s clear that much of the borrowing in recent years has been channelled into investments such as infrastructure, expansion and automation, placing us in a strong position for the future despite current low commodity prices.”
Sounding a note of caution, Mr Naylor went on: “Milk is down 25%, deadweight pigs down 16% and deadweight sheep down 11%. This new, highly volatile world is one which will require banks and other professionals to work more closely and flexibly with farming customers. We all need to adapt.
“However, the good news is that farming remains of huge importance to the economy as a whole. Total farm output has grown by a quarter to £25.8 billion in the past five years and the agri-food sector employs some 3.8 million people or 13.4% of the total UK workforce. That’s a significant contribution.”
“Although times are tough for many at the moment, the underlying industry is strong with rising levels of investment,” added Stephen Locke of Surveyors Recap.