RBS gives Brexit advice ahead of Highland show
The latter half of this week will see thousands of farmers descend on the Highland show outside Edinburgh. While much of the show is a social event, there is a great deal of business also carried out.
Inevitably, given the circumstances where this country could be out of Europe in little more than four months’ time, many of the farming community will be looking for advice on how they should prepare their businesses for such a major step.
Speaking yesterday in Perth, Roddy Mclean, head of agriculture with the Royal Bank of Scotland admitted that while there was a great deal of uncertainty surrounding Brexit he was sure that a ‘no deal’ exit would be “financially very painful.” But he said it was important for farmers not to let the issue paralyse their businesses.
“Take a step back and challenge yourself on how best you can get an economic return from your assets. Deal with things that are in your control,” he advised.
He suggested any review of the parts of a business should not only apply to traditional crops and livestock. Non-food crops could play a bigger role in the future, he suggested as could forestry especially with the latter likely to play a major role in hitting targets on reducing greenhouse gas emissions.
Another area where a fresh look at controlling costs could be worthwhile was in reducing money going off the farm. “Switched on operators are already looking at reducing reliance on labour,” he claimed with investments in more sophisticated machinery being most notable in the vegetable sector.
A less obvious option for improving returns could come from the expanding market for improving mental health through working in the countryside, he suggested.
Mclean revealed that RBS now loaned about £800 million to Scottish farmers. This was considerably up on previous figures but he claimed the bank was very comfortable with that level of borrowing with loads of assets being held by the borrowers.
The increase in loans was down to a number of reasons ranging from land purchases through to support for diversification projects. Mclean refuted claims the bank might be overly dependent on current land values. “If we get a request for land purchase at £10,000 per acre we give it a financial haircut and trim 30 per cent of what we are prepared to loan.”
RBS hold about 40 per cent of Scottish farm businesses in their portfolio. Mclean estimated one third of these customers never had debt, one third had seasonal debt and the final third had what he called “hard core debt.”