Category: Farmer Insurance Scheme

Starting a Farm – Mortgages and Finance

Do you aspire to live in the country, where your partner will continue to work and you want to run a smallholding or are you starting a farm business?

Richmond Asset Finance often receives enquiries from customers who want to start a farm and we have the ideal farm loan for this type of scenario, whether short or long term Richmond Asset Finance can help.

Obtaining farm finance can be difficult, especially where accounting information may not be good enough for the banks.

You may qualify for finance on a long-term basis through Richmond Asset Finance, but we also have a great farm selection of loan products that fits the bill for a farm start-up.

What is farm finance?

An all embracing term we use to describe all types of farm and agricultural finance we arrange in the rural and country business sectors, which can also be described as agricultural finance, equestrian finance, land finance and horticultural finance, a farm mortgage or farm loan. Farm finance can be provided for farms of any size (with our without a farmhouse), holiday complexes, caravan parks, caravan sites, estates, land, buildings, working farms, non-working farms, nurseries, garden centres, smallholdings, estates, fisheries, farm shops, riding schools and generally all manner of rural properties or in some cases not so rural.

Why Richmond Asset Finance?

  • A well-established and reputable company.
  • A great team that will help you with every query you may have.
  • Hands on and experienced.
  • We work in partnership with our customers to help them achieve their goals.
  • References are readily available.

Using rural lending to diversify…

…into alternative livestock and crops

Rural lending opportunities could help farmers to boost their income by giving them the means to diversify into alternative livestock and crops.

Many farmers are feeling the pinch of increased competition, Brexit uncertainty, and the falling price of milk. In an uncertain economy and a changing industry, diversifying can bring in a valuable source of extra income.

According to Countryfile, over half of the UK’s farmers have now diversified in some form.

Some farmers are choosing to diversify into very different areas like leisure and tourism, which require significant investment to set up.  Diversifying into alternative crops and livestock is less of a jump, uses existing skillsets, and is often more affordable.

Alternative livestock and crop ideas

Here are just a few popular alternative livestock and crop diversification ideas to inspire your new venture.

  • Goat or sheep milk.
  • Quail or duck eggs.
  • Wild boar.
  • Ostriches.
  • Angora rabbit wool.
  • Llama or alpaca wool.
  • Edible flowers or herbs.
  • Pharmaceutical crops.
  • Free-from crops.
  • Pumpkins.
  • Christmas trees.

Rural lending opportunities

For many farmers, diversification is becoming a necessity to stay afloat rather than an option. Whilst diversifying can be daunting, the results can be exciting and rewarding.

For most farmers, taking the plunge and deciding to diversify is aprofitable decision. Some farmers even find that their side-project grows into their main business. However, finding the funds to set it up in the first place can be challenging.

Rural lending opportunities provide farmers with the means to expand and grow their business. Whatever your circumstances, it is worth speaking with a specialist rural lending business like our team here at Richmond Asset Finance to find out more about how our short-term and long-term rural lending services can help you to grow your business and income.

To discuss your vision in more detail, receive free help and advice, or find out what rural finance options are available to you, give our team a call on 0113 288 3277.

What effect could a no-deal Brexit have on the farming economy?

As a leaked cabinet letter warns of the chaos a no-deal Brexit could cause, we’ve looked at how it could affect the farming economy.

Earlier this month a leaked letter from cabinet secretary Sir Mark Sedwill warned that a no-deal Brexit could cause a 10% increase in food prices and a devastating UK-only recession worse than that of 2008.

This news came just days after the EU chief negotiator Michel Barnier warned that a no-deal Brexit is becoming more likely “day after day”.

As parliament currently work to try to stave off a no-deal outcome, we’ve looked at how this result could affect the farming economy.

The affects of a no-deal Brexit on the farming economy

Agriculture employs 3.8 million people and generates £113bn for Britain’s economy according to The UK in a Changing Europe. A no-deal Brexit is likely to throw the whole industry into turmoil, not just negatively affecting the farming economy, but Britain’s wider economy too.

Just a few of the potentially devastating effects a no-deal Brexit could have on UK farming include:

  • A ban on the export of animal products from the UK to the EU until the UK is granted approval.
  • Uncertainty over future import/export tariffs.
  • A ban on exporting organic products as the EU will no longer recognise UK organic certification bodies until approval is granted. Organic exports account for around 20% of the dairy industry’s total organic sales.

The process of applying for approval for export is not a quick one and can take months, during which time many farms would suffer significant losses that could put them out of business.

National Farmer’s Union president Minette Batters has warned that “a no-deal Brexit would be disastrous, not only for our farmers but for the public too” and that it should be “avoided at all costs”.

3 key things to consider when applying for a farm loan

Thinking about applying for a farm loan? Check that you have prepared this key information first.

At Richmond Asset Finance we aim to make applying for a farm loan as simple, quick and pain-free as possible.

Our farm loans have helped numerous farmers to gain the agricultural assets they need to grow and thrive.

Before applying for a farm loan it’s helpful if you can prepare key information about your business and its plans, to increase your chances of securing finance and speed up the process.

The three key things that lenders will look at when deciding whether to grant finance are:

Business plan– Being prepared is key to securing a farm loan. Having a business plan and financial projections all planned out can help to reassure lenders that you’ve thought things through and get them onboard with your vision.

Creditworthiness– Before applying for finance you should find out how your credit rating is looking. Funders are more likely to invest in businesses that they deem to be less risky, but that’s not to say there won’t still be a financing option for you if your credit rating isn’t great, it’s just best to know where you stand from the start.

Financial information– When applying for a farm loan you will be required to give evidence of your current financial situation. This may include copies of your bank statements, balance sheet, cash flow statement, and details about existing assets.

At Richmond Asset Finance we have over 10 years’ experience helping farmers to successfully secure farm loans to grow their business. We can advise you on everything you need to make your farm loan application successful. Just give our team of experts a call on 0113 288 3277 and we’ll be happy to help.

Looking for Alternative Tractor Finance?

Here’s How Farm Finance Can Help

Growing a farm business much like any other business is no easy task if a business lacks the finance to fund growth. For these farms it is almost inevitable that financial help will be required at some point to grow the business.

Tractors are a critical component in the day to day running of a farm and one of its most important pieces of machinery. An unreliable or outdated tractor can impact on productivity and efficiency as well as cost the business money much as the opposite is true if you are purchasing a good, reliable up to date model.

A tractor can cost in excess of £250,000 which is a substantial sum for any business and even standard models can cost in the region of £80,000. So, like any investment decision, buying a tractor will require a careful assessment of the improvements it is likely to bring to the business and how it will impact on the bottom line.

Tractor purchases can be made in the form of lease or HP arrangements that provide farm business with a more flexible way to purchase machinery they need. Even if the business has sufficient finance to purchase these machines outright it, asset finance can still offer flexibility and help protect funds for a rainy day.

Why Is The Machine Finance Market Growing?

Machines are critical to growth in the manufacturing sector but they are often expensive and can eat into business profits without some form of financial help.

Traditionally business owners turn to the bank to provide straightforward business loans to help if there is insufficient cash in the business to purchase machines. Even if there is enough cash to buy a machine, a loan can be a more sensible way to buy equipment particularly if there is risk attached in making large investments as there often is in business. However, business loans from banks also come at a cost and interest rates can be high.

Having multiple loans can also leave a business vulnerable in a downturn and restrict any cash flow available to grow the business. Machine finance is growing in popularity because it unlocks funding when you need it.

So if your business requires a new machine that will cut down the amount of manual labour required to get jobs done such as a CNC machine, machine finance can help you acquire that machinery at a minimum upfront cost.

This means you get the benefit of improved efficiency and profitability while spreading the cost. It can also be tax efficient now that the government has increased the annual investment allowance. So it comes as no surprise that the machine finance sector has grown 9% year on year.

Machine Finance Sector Up 9%

Any thoughts of the manufacturing sector being hit by the uncertainty around Britain leaving the EU Certainly hasn’t been felt in the machinery finance sector where growth has hit 9% compared to the previous year.

Analysts say the UK asset finance market as a whole look set for a record period of growth in 2019 on the back of a broadly stable 2018. Last year saw a mixed pattern of growth in some sectors and declines in others. IT asset finance for example saw a fall of 32% while other sectors such as machinery and business equipment finances saw increases, the latter seeing 8% growth in the same period.

Machinery finance may well see further year on year growth in 2019 if manufacturing receives a boost and more business owners take advantage of the temporary tax benefits that will come as a result of taking advantage of new Annual Investment Allowance limits.

Machine finance can be particularly useful for investing factory machinery such as CNC machines, which can be expensive to purchase outright. Machine finance provides a way of investing in machinery without having to risk huge amounts of money which can be better used in expanding business operations, research end development.

Farmers – Are You Exploiting This Tax Allowance?

It may not be all good news for farmers this year but there is one particular piece of news that every farmer should be aware of and that relates to an opportunity to take advantage of machine purchases with the help of the government.

Farm machinery is often a major purchase with tractors alone costing in excess of £100,000 so if these savings can be offset it has to be good news. Fortunately, the government stepped in to help farmers with a change to the Annual Investment Allowance that will go a long way towards helping farm businesses make some big investments in farm machinery.

The fact that the move isn’t permanent should alert farmers to take advantage before 2021. The AIA threshold was £200,000 in 2018 and this has temporarily risen to £1million for the next 2 years.

With a lot of uncertainty at present and for the future of some farms in the UK this allowance could make a difference. Specialist finance could help ease costs further for farm businesses and enable more investment to improve efficiency and explore new opportunities for farm business development in the future.

If you would like to find out more about farm finance contact one of our advisors today who will be able to help.

Farmer insurance scheme could be an option

A RADICAL new approach to agricultural insurance could provide an alternative to the Single Payment Scheme (SPS) in the UK.

That was the message from George Eustice, Parliamentary Under Secretary for Farming, Food and Marine Environment.

Mr Eustice said the UK could learn from Canada and the USA which have their own successful national agricultural insurance schemes, which are paid for both by farmers and the Government.

“The USA has a flagship agri-insurance scheme,” he said. “If a farmer’s income drops significantly below a certain level, due to crop failure for example, they can call on the insurance fund to top their income up.”

Farmers pay in to the system, explained Mr Eustice, and the American government helps support it by paying some of the administration costs and helping the insurance scheme pay for the gap in farm income.

He said: “Canada also has a similar system, known as agri-stability, whereby if the farmer’s income drops below 70 per cent of their average income for the previous five years, they are eligible for the insurance.

“The Canadian Government has a bigger financial input, contributing between 60 and 80 per cent of the insurance cost, with the industry paying the rest.

“The NFU has previously asked us to consider such a scheme and in 2009 Defra commissioned Prof Berkeley-Hill to look at its potential in the UK.

“He concluded if done correctly a national agri-insurance scheme could provide an alternative exit strategy to the SPS we currently have.

“Prof Berkeley-Hill also said it could be on way of reducing the long-term cost of the CAP.”

However, he also highlighted several big drawbacks to this kind of insurance system.

“Both Canada and the USA do not have a SPS, so the insurance scheme which NFU has previously advocated would have to be in place of a SPS, rather than an addition to it.”

He also said the cost of such schemes, which cost more than the UK currently pays to administer CAP, were also a drawback.