Farming in the wake of Covid 19 Arrangements

All of us, in all walks of life, have been inundated with updates and reassurances regarding the impact of Covid 19 over the past week or so.

Farmers may feel that they are relatively unaffected, as an essential and fundamental part of the food chain which is in so much demand and under so much pressure to continue as unscathed as possible in all this.

However, we are already seeing changes to markets which will have an impact on farmers, especially livestock farmers, and on the other industries that are a key part of the supply chain, such as contractors and vets.

Lamb prices have already fallen substantially as the focus has shifted from food service to retail in the domestic market. There have also been issues with reduced export as EU orders are cancelled and rumours of closed borders on the continent abound.

There is the possibility that beef prices will follow suit, as more cuts may be included within mince and the market undergoes the same shift to retail. Following the poor beef price in recent times, this will come hard to farmers already under pressure.

Attempting to source new, local markets may be one way to reduce the impact of the shift to retail. Restaurant-quality meat will have a market amongst those no longer able to eat out, online deliveries and local farm shops may be a useful source of diversification to keep carcass values higher during these times. However, such adaptations come with their own challenges and regulations.

Arable farmers have been less affected so far, but difficulties in obtaining fertiliser and other inputs and in sourcing available contractors to do work on the farm will also be making its mark. Fuel deliveries have also been hard to come by in some areas.

Due to their essential part in the farming supply chain, people such as vets for animal health and TB testing, contractors for silaging and spreading, hauliers and livestock markets for making sales, should all be able to continue in their operations during the current lockdown. However, with their own staffing pressures, materials availability and cash flow issues, life may well not be feeling easy in these industries either.

The announced support for the self-employed is likely to be positive news for many, as well as the grants to those receiving small business rates relief or rural rate relief, but pressure on cash flow will remain high. Funds from the self-employed assistance scheme will not be paid until at least June, and although local authorities are now approaching businesses to make applications for grant funding, the monies are not likely to appear in bank accounts for several weeks to come.

It should be possible to approach your existing banking relationship to discuss whether borrowing under the Coronavirus Business Interruption Loan Scheme (CBILS) is suitable for you. These loans are interest free for the first twelve months and should have minimal or no arrangement fees, as both of these upfront costs are being covered by the government.

The loans themselves are still just that – loans – in as much as the full value of the borrowing remains your liability, this is not covered by the government, and interest will be levied after the first year. You also need to ensure you have a proper proposition for your lender, such as a business plan or management information to demonstrate that you should be able to trade and trade profitably, were it not for the ongoing pandemic.

As long as your proposition appears viable, your bank should lend – either under normal commercial terms (if suitable) or under the CBILS. If you are looking to apply under this scheme and need help with your financials, please do get in touch with us via simpkinsedwards.co.uk.

It appears that we as a nation are only just beginning to see how this virus is touching every facet of our day to day lives, even in an industry that should – as the very definition of essential – be largely protected from its effects.

We can introduce you to ways to help you with VAT returns and delivering business records on line so please contact us if you would like more information.