Impact on cash flow could affect ability to pay bills in December
With Scottish farmers facing delayed and reduced direct support payments, NFU Scotland has written to the agricultural supply trade urging it to make its members aware of the impending cash flow concerns for Scottish farms.
Despite Scottish Government statements to the contrary, NFU Scotland does not believe that CAP support payments under the new Basic Payment Scheme will be delivered in the normal December window. It has made Agricultural Industries Confederation (AIC) Scotland – whose membership trades in products like animal feed, plant protection products, fertiliser, cereals, oilseeds and seed – aware of the situation.
While the Union has called for Cabinet Secretary Richard Lochhead to come clean on when farmers will receive their payments, and what the value of those payments will be, any significant delay could have ramifications for the many companies supplying the farming sector.
The Scottish Government’s previously good track record in delivering support payments in December has seen many farm businesses structure their bill payments for inputs such as feed, fuel, fertiliser, seed etc. around support payments arriving in bank accounts in good time. The likelihood that those payments will now be delayed may mean cash flow disruption and bills being settled later in the New Year.
In recognition of support payment delays being inevitable, the Union has also requested a meeting with the main clearing banks to discuss the matter.
The Union also plans to contact the Agricultural Engineers Association, whose members include tractor and machinery manufacturers and dealers as well as the Institute of Auctioneers and Appraisers in Scotland, whose members are responsible for Scottish livestock markets, with regards to the support payment delay.
NFU Scotland President Allan Bowie said:
“We’re all too aware that financial support to Scottish agriculture very rapidly filters through all those businesses that supply vital inputs and services to farmers and crofters.
“In that sense, the ‘multiplier’ value of direct support is huge for the upstream and downstream businesses that also underpin Scotland’s rural economy.
“At NFU Scotland, we do not believe there is any likelihood of Scottish Government delivering the new CAP basic payment in December. We have asked Cabinet Secretary Richard Lochhead to come clean and, with a degree of urgency, let farm businesses know what the value of their support payments will be, and when they can reasonably expect those payments to arrive in their accounts. We have also called for Scottish Government to use European flexibility and consider making part payment later this year.
“This is all about letting farmers and crofters plan and manage their businesses and, in turn, they can work with their suppliers to ensure cash flow disruptions can be accounted for and dealt with in a sensible manner.
“The membership of AIC Scotland provide a hugely valuable service to the industry, worth hundreds of millions in turnover each year. Those who supply all sorts of agricultural inputs, machinery and services will know the importance to their businesses around farmers receiving their direct support in December in the past.
“The reality is that non-delivery of support in December has serious ramifications for many ancillary businesses that are major employers and are integral to the prosperity of rural areas and the wider Scottish economy.
“A clear and unambiguous steer from Scottish Government on support payment values and delivery is in the best interests of all connected to the agricultural industry and not just farm businesses.”