Danske Bank’s head of agriculture, Rodney Brown, has confirmed an improvement in farm finances across Northern Ireland.
This welcome trend reflects the continuing improvement in milk, beef, lamb and other farmgate prices.
“The arable sector remains an outlier in this context. Growers experienced a second challenging year in succession.
“Harvest 2024 was disappointing in terms of the crop yields recorded. Meanwhile, international grain markets have been sluggish over recent months.
“I know that some growers put grain into store last autumn, in the hope that grain markets would strengthen. However, there is little sign of this happening in the foreseeable future,” Brown said.
Across other sectors, “farmers are now making positive margins, despite input costs remaining high”, according to the head of agriculture.
“Farmgate milk prices in the region of 45 to 48p per litre are allowing producers to generate positive margins. In turn, this is allowing debt levels to remain at extremely manageable levels,” he added.
Farm finances
While recognising that producer beef prices have increased from £4 to £5/kilo over the past three years, Brown is mindful of the fact that margins within the sector are very much dependent upon the liveweight gains secured by cattle on a daily basis.
“Only animals with the ability to achieve the highest levels of daily performance will generate a positive margin.
“And bought-in cattle should be procured on that basis. Thereafter, it’s a case of measuring every aspect of the performance achieved by these animals on a regular basis: daily live weight gains relative to feed intakes and all relevant input costs,” he explained.
Friday, January 31 is the date on which all farming businesses must submit the first instalment of their 2025 income tax contributions.
“Most farm businesses should be able to use existing cash flows to make this payment, and those that can’t should, for the most part, be able to set up a payment plan with HMRC,” he added.
The last Saturday of January will be marked by farmers protesting at last autumn’s decision by the chancellor of the exchequer to make agricultural land and other farming assets eligible for inheritance tax.
However, according to Brown, this issue is still at an early stage in terms of its development: “Which is why, it would be premature to make any definitive statement on the matter at this stage.
“And this includes making any predictions on future land price trends.”
One very obvious impact of the inheritance tax-related decision taken by the chancellor, has been the significant focus placed on succession planning within all farming businesses.
The Danske Bank representative believes this to be a positive development, adding: “There is now a clear requirement on all farming businesses to put in place effective succession planning arrangements.”
Inheritance wasn’t the only tax-related matter addressed by the chancellor last autumn, “which will have a direct impact on the operation of every farming business in Northern Ireland and the rest of the UK”, Brown said.
“Increases in national insurance contributions and the freezing of all income tax bands will act to considerably increase the cost base of all our farming sectors.
“This point has already been made by all of our food processing businesses. They are saying that food prices must rise in the shops so as to allow farmers recoup these additional costs.
“Consumers should expect that the days of cheap food are over,” he stressed.
