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<blockquote data-quote="Walterp" data-source="post: 5200132" data-attributes="member: 321"><p>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.</p><p></p><p>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?</p><p></p><p>With, of course, obvious implications for UK farmland prices.</p><p></p><p>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:</p><p></p><p>1. The average English farm debt is £150,000 per farm;</p><p></p><p>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.</p><p></p><p>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.</p><p></p><p>And now interest rates are rising....</p></blockquote><p></p>
[QUOTE="Walterp, post: 5200132, member: 321"] 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.... [/QUOTE]
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