Discussion in 'Agricultural Matters' started by Walterp, Jun 15, 2018.

  1. Walterp

    Walterp Member

    Few farmers appear to grasp the link between the increase in agricultural lending and the increase in the value of UK farmland, though it is concomitant. Human nature, I guess: all enjoy seeing their assets increase by value, fewer enjoy exploring the underlying mechanism that makes this possible.

    But it gets worse: more and more, we see farmers complaining that their banks 'don't understand farmers' when, to my mind, banks understand farmers all too well - what is the reduction of specialist agricultural managers, and the cherry-picking of only the most 'profitable' (aka the most indebted) farming customers, but a gradual retreat from the agricultural market?

    With, of course, obvious implications for UK farmland prices.

    I reckon banks understand English farmers better than they understand themselves. Here are a few facts and figures from DEFRA which suggest their own conclusions:

    1. The average English farm debt is £150,000 per farm;

    2. Ten percent of all farms have liabilities of £400,000 or more and therefore would require consistent income flows to ensure that interest on borrowing can be paid.

    3. Back in the day fewer than half of all farms carried any debt, now just over a quarter of farms have liabilities of less than £10,000.

    And now interest rates are rising....
    fgc325j and 7610 super q like this.
  2. chipchap

    chipchap Member

    South Shropshire
    When are interest rates rising? It has been predicted as imminent for quite some time, but fails to materialise.
    It is a certainty that rates will rise, as they cannot fall any more, but the world economy is addicted to low rates and any substantial rise would cause economic mayhem worldwide.
    Nearly and Grassman like this.
  3. Walterp

    Walterp Member

    They already have, and are still.

    That you appear unaware of this is truly disconcerting.

    And, of course, may neatly prove my point.

    (I accept the alternative possibility, that we are not in a 'frog-boiling' process at all - but the proposition that countries do not plump for economically-damaging outcomes is being severely tested at the moment. The evidence is against it, I think.)
    Courier and chipchap like this.
  4. chipchap

    chipchap Member

    South Shropshire
    But when will the BOE make any significant move.
    All we have seen is the return to 0.5% haven't we?
    My mortgage, like, I suspect, many others, is based at a margin over base rate. I do not use an overdraft.
    Will we see rates at 10%+ ever again? It would ruin most businesses.
    Hampton and Walterp like this.
  5. Forage Trader

    Forage Trader Member

    Bank have one intention in life , to extract as much money off you as they can, keep that in mind when having any dealings with them
    Hilly, DrWazzock, Tarw Coch and 14 others like this.
  6. Courier

    Courier Member

    And without healthy borrowers banks have no income...
  7. joe soapy

    joe soapy Member

    eu centrel bank stopped printing money, announced last night
    lazy farmer, Courier and Walterp like this.
  8. Canada Farmer

    Canada Farmer Member

    If English farm debt per farm is 150k, what is it for Scotland and Wales?
  9. Just about old enough to remember the kerfuffle in the mid 80's when one particular bank decided to call in overdrafts. It's still in my memory. Whenever I bring up the subject on here, or question the wisdom of 2000 cow herds, or £100k tractors, or £10k / acre + land, Or the fact we receive 1970's prices. I get pooh-poohed.
    Or worse someone turns up to call it " progress ".
    Or worse still " rose tinted glasses ".
    Or worse than worse " jealousy ".:ROFLMAO:
  10. silverfox

    silverfox Member

    Walter always conveniently forgets Wales.
    It’s the English he likes to get stuck into .
    Personally I’d love interest rates to rise, as I’ve no debt and getting bugger all from savings. It seems like in today’s world your penalised for actually saving money and paying off debt.
    My father had to deal with 16% interest rates, so @Forage Trader implication that the banks are now fleecing everyone is wide of the mark . They have been virtually giving the stuff away for a number of years.
  11. PaulNix

    PaulNix Member

    I went to Prembroke once, apart from Stratford it was probably the most English place I've ever been, it must be something of an internal battle with him struggling to hate the English yet looking in the mirror and feeling more English than those he seems to despise the most.

    As for the topic would it be a fair assumption that more English farmers being younger on average are investing in the future than their Welsh cousins ( in walts case brothers ) so carrying more debt ?
  12. Henarar

    Henarar Member

    ZumerZet Somerset
    be good if interest rates go up and I don't give a dam if land prices fall
    Hilly, R J, Kiwi Pete and 2 others like this.
  13. Forage Trader

    Forage Trader Member

    That explains why they forced so many lenders to take out life policies
  14. Goweresque

    Goweresque Member

    North Wilts
    Farming's debt is a tick on the elephant:

    This is why rates won't rise, the State can't let them, there's too much debt out there. If rates rise significantly there will be carnage in the wider economy, people couldn't afford to service their mortgages and unsecured debts. The economy would tank, and sterling would fall through the floor.

    Which ironically is good for farming........
  15. you say that ^ then you 'like' groweresks comment :scratchhead: thinks you dont know wither you want a sh!t or a haircut ;)
  16. Henarar

    Henarar Member

    ZumerZet Somerset
    no idea what you are on about
  17. nails

    nails Member

    East Dorset
    Cant he do both?:LOL:
    Thick Farmer and pellow like this.
  18. FFS , who uses finance on car purchases?:banghead::banghead::banghead: No I'm not f@cking joking either!
  19. At the same time ? well yeah i spose so, not sure if the barber would be comfortable with it tho....:yuck::ROFLMAO:
    former farmer and M-J-G like this.
  20. Kiwi Pete

    Kiwi Pete Member

    Owaka, New Zealand
    What about Honda finance - Have Once, Never Did Again?

    It is usually simply keeping up appearances, I would venture....?

    Sure, debt can be viewed as just another farm input, but the best inputs are free IMO

    Banks do not, and never have, run on love.

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