THERE has been little good news on the business front for many weeks, but at least the majority of Scottish farmers will be able to look their bankers straight in the eye on Monday morning.
Yesterday the Scottish Government announced that at least £223 million will be lodged in bank accounts on Monday as the first instalment of the European Union's single farm payment (SFP) subsidy scheme.
The SFP is worth £427m in total million t
o Scottish agriculture.
Scottish farmers have also gained through the depreciation of sterling against the euro with the rate of payment fixed on 30 September.
The reality is that sterling, as of that date, was worth around 13 per cent less than a year previously, giving farmers an advantage of at least £20 million above industry expectations.
The injection of cash will be widely welcomed. Richard Lochhead, the Cabinet secretary for rural affairs, months ago made a commitment to deliver on time, or earlier.
He said: "These payments are always vital, but never more so than in the current economic climate. This is a clear example of the Scottish Government delivering for hard-pressed businesses."
Jim McLaren, the president of NFU Scotland, said: "The collective debt on Scottish farms has grown to £1.4 billion as producers struggle to cover the surge in input costs and the additional burden of higher interest charges to service those borrowings. This money will bring a sense of relief for many of our members."
Scotland will certainly be ahead of the game in comparison with England, where the SFP regime is administered by the Rural Payments Agency. The record of this body has been nothing short of disastrous in the early years of the SFP, with payments delayed and miscalculated for many months.
English farmers are increasingly envious of the manner in which agriculture is considered in Scotland.
A prominent farmer in Essex, who rears a large number of beef cattle, told The Scotsman that neither he nor any of his colleagues had received an indication of when their SFP cheques would be in the bank.
But he did stress that "we could all do with the money as soon as possible to meet the colossal increase in costs".
The news of early payment in Scotland is clearly welcome, but McLaren remains cautious. He said: "Confidence levels on many units is low. Our recent survey on farmer intentions suggests that 40 per cent of Scottish farmers plan to reduce production next year. It is vitally important that the feel-good factor of having the SFP in the bank helps to change that perspective."
The next priority for the Scottish Government will be an early delivery of the £61m due to hill and upland farmers through the aegis of the Less Favoured Area Support Scheme (LFASS).
Lochhead has conceded that this is important. He said: "Prompt payment of the SFP will help to ensure that producers are in a strong position going into the year ahead. Our attention now turns to paying out the £61m LFASS cheques as quickly as possible."
Scottish agriculture plc has a strong asset base, which is largely founded on historically high land values that mostly bear little relation to profits from farming. However, it is clear that farmers are finding relationships with bankers more difficult than for many years.
Arable growers have been faced with a near-trebling of fertiliser prices and a demand for payment on ordering, rather than the usual deferred arrangements that would have seen the bills met in the early months of the following year.
Some farmers have found that the banks, while recognising this new situation, have upped interest charges and arrangement fees. The general view is that farming along with the rest of the business community is increasingly cash-strapped.
The full article contains 640 words and appears in The Scotsman newspaper.
