RBS highlights ‘cyclical’ nature of farm finances

RBS boss Ross McEwan, right, at Scotsheep. Picture: Lenny Warren
RBS boss Ross McEwan, right, at Scotsheep. Picture: Lenny Warren
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While some of the 7 per cent increase in Royal Bank of Scotland’s advances to Scottish farmers in the first quarter of this year might have gone towards business expansion, much of this increase was to cover cash flow issues caused by the falls in global farm commodity prices and the delays in farm support payments.

However, representatives of the bank – major sponsor at yesterday’s Scotsheep event – said that such cyclical calls on finance were not unusual in the industry.

“There was probably a smaller than usual investment in capital areas as farmers tightened their belts and required funds to tide them through,” said Jimmy McLean, chairman of agriculture with RBS.

“However, rather than being a reflection of the performance of individual businesses, this is more likely to be due to the cyclical down-turn in farmgate prices.”

READ MORE: Scotsheep host says sector ‘must react to the market’

Also attending the event, RBS chief executive Ross McEwan said that while there had always been ebbs and flows in the financial returns in the agricultural sector, even at the bottom of the cycle some farmers could see the opportunity to expand their businesses.

He also said that there was a requirement for increased productivity in the agricultural sector – not just in Scotland but on a global basis: “Getting the most out of every acre is the best way for agriculture to improve its returns- and producers should be looking to doing this as quickly as possible.”

He said that the operation run by the Campbells who were hosting the event was an excellent example of how efficiency could improve returns.