Arable Input cost rising: how a bank dedicated to British agriculture can help

Input costs have rocketed over the past six months, putting pressure on arable farm cash flows and undermining purchasing strategies, says agricultural bank Oxbury.

Fertiliser prices have more than doubled over the past year, from £260/t to close to £600/t, according to Oxbury’s  relationship manager George Lane. “Likewise red diesel prices are up by 100%, seed has risen sharply and the cost of chemical controls, particularly glyphosate, has soared,” Mr Lane says. “The impact of the price hikes has hit harder because cash reserves were already low after two difficult growing seasons reduced yields.”

Behind the price rises are energy supply chain issues, political change and disruption caused by the Covid-19 pandemic, explains Mr Lane. And the disruption has made the buying process more difficult, with long lead times for products and stop-start availability.

In this market environment growers need to be ready to buy when supply and prices are favourable, he adds. For example, supplies of chemicals or seed may suddenly become available at a distributor at a competitive price.

But producers can only capitalise on these opportunities if the necessary cash is available in their business account, says Mr Lane. “This is where Oxbury’s Farm Credit (OFC) account can support cash flow and allow growers to buy and invest at the optimum time.”

Integrated to a number of well-known, approved buying groups including Frontier, Hutchinsons, Wynnstay and Fram Farmers the revolving credit facility provides funds from £25,001 upwards, which can be spent on inputs like seed, chemicals and fertiliser, it works in the same way as a bank overdraft but customers do not have to move banks to open one “Crucially, the time from application to an approval decision and the funds being made available is about 48 hours – faster than most high street banks,” Mr Lane says.

 Payment to the supplier for whatever item has been purchased are organised via supplier invoices, which go direct to the account and are displayed on the secure online dashboard. Growers can then choose when to pay back the credit when cash flow is good. This process is also very simple, because once approved, the OFC facility is also linked to the farm’s business bank account for collection of monthly Direct Debits and  adhoc payments.

Mr Lane concludes, “Being the only UK bank dedicated to British agriculture, Oxbury understands farmers’ needs, which is why we have created tailored accounts that allow them to be as profitable as possible throughout the year.”