The shock Brexit vote earlier this year has plummeted the future into uncertainty – and perhaps no industry more so than the farming sector. The EU supplements farmers through its Common Agriculture Policy, so without EU funding, the agriculture sector could face a blow. The Minister for Agriculture Michael Creed has said that the UK’s exit from the European Union is likely to have a significant negative impact on the CAP, particularly from 2021 onwards.
Funding for farmers is not the only problem brought about by Brexit. Without the single market which allows free trade between member states, the future of trading produce is also at risk. There could be additional costs for farmers who wish to trade abroad, and there will now be different standards for EU and UK produce.
Regardless of whether you wanted to stay or to leave, the effects of Brexit on agriculture will be far ranging. We advise farmers to get their finances prepared ahead of Article 50 being invoked – and Genie Lending is here to help.
Farm Finance Options
Currently, EU subsidies currently make up between 50%-60% of incomes on UK farms. It is not yet clear what support will be made available by the government beyond 2020, so the future of farm funding is very unstable. This instability is heightened by the fact that farmers may have to pay additional trade costs, and don’t know who they will be selling to in the future so can’t estimate their long term income.
High street banks are unwilling to lend to businesses which ae facing uncertainty. It is difficult to get approved for a business loan without years of trading history and accounts, and some banks also ask for a minimum monthly turnover. Many agricultural businesses will not be able to guarantee an allocated turnover for the next few years.
Luckily, there are now a variety of alternative financing options which are designed with farmers in mind. Rural businesses can apply for agricultural finance, peer to peer lending or asset finance to keep things turning over. Here at Genie Lending, we understand the modern challenges faced by farmers, and can recommend the best solution. Whether you need a cash injection to aid cash flow, invest in new machinery or repair outbuildings, we have the right alternative finance solution for you.
We are proud to support farmer finances, and want to help as many agricultural businesses as possible through this difficult time. Talk to our experts if you would like more information.