Farmers must be prepared for winter chill

Robert McCullough, Danske Bank Head of Agribusiness, outlines the financial support options available to farmers preparing for winter.

In the past few weeks the clocks have gone back, it’s noticeable that the days are drawing in and the weather has taken a turn for the worse.

They are all sure fire signs that winter is upon us and we know that the farmers and agri-businesses we work with are now looking to get all the necessary measures in place to see them through a period of the year when costs are higher.

Of course, Northern Ireland’s family farms are resilient and used to dealing with tough conditions. But it is their understanding of funding options and their agility that helps farmers to adjust their business to deal with the risks that come from supplying an increasingly volatile commodity market.

Prioritising cash management and cash flow forecasting is an essential part of this planning process – whether that’s an in-depth spreadsheet or some scribbled sums on a sheet of paper will depend on the complexity of the business, but the same principles apply.

In Danske Bank’s experience, many farmers are becoming more proactive in their discussions with their banks at this time of year, outlining the possible need for additional support and ensuring that credit lines are in place before they are actually needed. These conversations can arise as a result of depressed prices and this year has brought that issue into sharp focus.

Smart farmers are supporting their discussions with up to date financial accounts, cash flow forecasts and a strong understanding of cost saving strategies that can be adopted by the farm. 

It’s important to note that cash flow support for farmers can come in a number of forms. Most commonly it will be an increase in overdraft, where the request is modest in terms of the enterprise. Short term loans with monthly or quarterly interest only repayments are another option with timelines suited to the farm’s ability to repay.

With winter almost upon us, it is important for farmers to begin their preparations and start early discussions with their bank if necessary. Reviewing winter cash requirements in the autumn against forecasted milk or other receipts is a first step that many farmers will already have taken.

The increased cost burden posed by winter can be mitigated with good planning and consideration, particularly around efficiency and cost control with structured bank support, helping farmers to stay in control and plan for next year.

The best businesses are those that emerge from downturns leaner, more efficient and better structured to deal with future volatility.


Robert McCullough

Head of Agribusiness, Danske Bank

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