Each year around 100,000 farmers in the UK receive around £2billion in EU funding, which until last year, mainly came in the form of the Single Payment Scheme, but has now been replaced by the Basic Payment Scheme. Many farmers rely on this funding for various aspects of running their businesses – for example, to manage cashflow, invest in machinery, or purchase livestock.
Following the move to the new scheme, there is concern across the UK farming community about payments being made later than usual. The payments are normally made at the start of December, but the ‘payment window’ remains open until June 2016 and this year many farmers are worried that they may receive their funding later than usual.
The Rural Payments Agency, which manages the Basic Payments Scheme in the UK is working hard to pay on claims as soon as possible within the payment window however the bank has moved to put in place this contingency fund, to help farmers who may need access to finance before their payment arrives.
Any of the Group’s farming customers, who are recipients of the Basic Payment, will be entitled to request support from the fund and will be able to speak to a dedicated Agriculture Manager to discuss their needs. Farmers will be offered the support in anticipation of their Basic Payment – the value of which varies widely based on a range of factors including the size and type of farm in question.
All facilities set up for farmers to access the fund will be free of any arrangement fees, offered on a commercial basis, with interest charged on any sums borrowed.
The bank will also be helping customers, who have elected to receive their payment in Euros, by extending the window during which they can protect – or hedge – the foreign exchange rate used to calculate the amount of Sterling they will receive for their Basic Payment. This extension means customers will have up to six months, rather than the usual three months, to convert the Euros to Sterling at the rate they had agreed at the outset. Customers who have elected to receive Sterling will not be affected by any delay in the Basic Payment.
Andrew Naylor, Head of Agriculture, Lloyds Banking Group said: “UK farmers face all sorts of pressures and we want to ensure they do not have to worry if they do not receive their payment in December.
“By establishing this contingency fund we hope to help farmers get access to the finance they need to keep their business moving, whether they are looking to buy livestock, invest in crops or simply manage their cash flow.
“We have a long heritage of supporting farmers in difficult times, and through our network of specialist agriculture managers across the UK, we will be able to help look at each customer’s situation and give them the help that they need.”
NFU President Meurig Raymond said: “We welcome this announcement from Lloyds Bank that it recognises the potential delays farmers may face in receiving their farm support payments.
“The NFU has worked closely with the banking industry to make them aware of the risks, but at the same time we are also committed to working with the RPA and Government so our members can receive their payments on time.”