Farming debts fall in real terms for first time since 2009

Farming debts fall in real terms for first time since 2009

Concerns about future interest rate rises could be behind the first real terms fall in borrowing by Scottish farms for almost a decade.

Farms owed a total of £2.34 billion to banks and other lenders in 2017-18, official figures show.

While that marked an overall rise of £22 million on the previous year, when inflation was accounted for lending to agriculture fell by £13 million.

  • Total lending to Scottish agriculture from banks and mortgage companies amounted to £2.34 billion in 2017-18

This 1% drop was the first time since 2009 that outstanding borrowing had not risen in real terms.

The Scottish Government report noted: “The slow-down in the amount of lending may be a sign of uncertainty in the future prospects of agriculture.

“Factors that could affect the slow-down might include overall weak growth in the economy, or concerns that interest rates may rise in the future.”

Borrowing by the sector is estimated to be worth about 10% of farms’ total assets, with the report adding this was “relatively low since agriculture has a number of high value assets, for example land”.

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