Scottish farmers are being urged to consider AMC (Agricultural Mortgage Corporation) finance to guarantee their financial stability after concerns were raised that this year’s subsidy payments could be delayed by up to five months.
They’re being advised to take action by land and farming agent Bell Ingram, which has voiced concerns that some farms could be left without working capital following a tough year for the sector.
The advice follows cabinet secretary Richard Lochhead’s admission that as many as 21,000 applications have still to be processed before the end of December and that payments could be made in March or April 2016 instead of before the turn of the year.
Malcolm Taylor, Bell Ingram’s head of land management, says the anticipated delays to the new Basic Payment Scheme could leave some farms unable to trade for months.
According to Taylor, who is urging farmers to look at the AMC options available, payment delays coupled with the current pricing and over-supply issues in potato farming, as well as the political uncertainty thrown up by recent UK and upcoming Scottish elections and unrest in world markets, makes it a very worrying time for Scottish farmers.
Taylor says many farmers might see the delays as the final straw, but has urged them to consider AMC financing as an option to bank loans to both safeguard any immediate funding issues and to improve their long-term financial security.
He said: “When it comes to finance everyone likes and needs certainty and that is especially true in the farming world – even before these delays were known.
“The past mild winter has made potato farming in particular very difficult this year with some having to cope with up to £100 losses on a tonne and that is simply unsustainable for those who will not receive their subsidy payments this year, unless they have the luxury of a large amount of capital to call on.
“Then there is the uncertainty over UK and Scottish politics, quantitative easing in Europe, recession in China, oil price uncertainty, unrest in the Ukraine and the European vote – all of which make it a very uncertain world for farmers right now.
“Knowing exactly what a litre of oil will cost and the price of a tonne of fertilizer together with knowing what finance costs are all make budgeting easy. With the high street banks looking to increase facility fees and overdraft fees, now is the time to consider the benefits of borrowing from the AMC.”
Head of AMC for Bell Ingram, Stewart Hamilton, said: “The ability to fix borrowing at under 5% for up to 30 years must be an attractive proposition to farmers. Base rates are likely to rise, all be it slowly over the next few years, but knowing exactly what finance costs will be for customers of the AMC must be seen as giving security in these uncertain times.
“In addition the AMC flexible facility can allow farmers to run this instead of an overdraft or alongside an existing facility.”
“The two AMC products, the Standard Loan for between 5-30 years and the five year Flexible facility are designed specifically to help farmers run their businesses with certainty and without annual renewal meetings. As its name suggests the Flexible Facility is an ideal way to help cash flow issues.”
What is AMC financing?
AMC products are based around farmers’ financial planning and can offer longer term and lower rates than typical high street banks.
The AMC operates via a network of Scottish agents with specialist local knowledge, such as Bell Ingram.
With more than 85 years in the agricultural lending market, the AMC can tailor its provision to the financial requirements of individual farming businesses.
It can look at funding land purchases, the provision of working capital, refinancing existing facilities and funding and refinancing Hydro and wind energy schemes.
Following Lochhead’s admission, it also now been reported that bankers have set aside a half billion pounds to save farmers from destitution.