The tricky relationship between farming and money

AMONG the baubles the now-jailed businessman Asil Nadir acquired during his colourful spell as head of the Polly Peck business was the 2,000 acre Baggrave Estate near Leicester.

There, as befits a seemingly successful businessman, he decided to move into pedigree livestock. His breed of choice was Charolais cattle and, as is generally the case when anyone with pots of cash comes into the arena for the first time, he bought at the top end.
I do not think Nadir ever actually came to the Perth Bull Sales, sending instead his finance director who was, I recall, always surrounded by a posse of breeders keen to offload some old bull to her and pocket a lot of cash.
There was nothing unusual in that type of behaviour, it goes on to the present day. There is nothing a breed society likes better than someone with loads of cash and little knowledge except a belief that they can buy success.
It would be wrong to name the current cash-rich incomers, but at the pedigree sales these plump pigeons about to be plucked are easily identified as they generally have just acquired some slightly loud, generally immaculate country gentleman’s clothing which makes them stand out from the general run of work-worn dungarees.
Some breed societies have more than their share of these nouveau monied enthusiasts. They seem to be attracted to Aberdeen Angus, Highland Cattle and Charolais in particular, although I have noticed one or two around the Limousin ring recently.
There is another factor that identifies them, even if it does not emerge for at least another couple of years – they never seem to succeed in bringing out any future winners.
How many good cattle have been bought to form successful pedigree herds and then been badly managed is difficult to tell, but let us not regret that. The important part is these people bring cash into agriculture.
The only sad part of this tale is that the aforementioned finance director for Polly Peck ended up in jail as she was using someone else’s money to finance the cattle breeding.
You can tell that money has been on my mind this week – and it has been on mind of almost every farmer. Cereal growers are looking at a late harvest which will cause cashflow problems. Grain cheques normally received in September will run at least a month later and that is causing a few twitches in the financial world.
I am glad the National Farmers’ Union is carrying out a survey into how banks are dealing with their customers at this time, as I have heard quite a few tales of pain and woe.
In this recessionary spell, the problem is not interest rates – which as one commentator observed last week are but a fraction of what they were a quarter of a century ago when we had our last truly miserable late summer.
The problem nowadays comes with banks’ “arrangement fees”. In terms of the actual time involved, one farmer reckoned that his fee worked out at several hundred pounds per hour.
At this point he went on a rant about bankers, their bonuses and the fact that they were bailed out by people like himself as a taxpayer.
I do hope if the NFU finds extortionate rates being charged then they will immediately name and shame the culprits. Gone are the days when banks and bankers were beyond criticism. If the NFU can target the largest retailers in the land when they mistreat the farming industry, then they should do the same with any errant banks.
My other concern with the current borrowing figures in Scottish agriculture is that it continues to increase. The latest statistics show some £1,670 million in advances to farmers.
I admit that when that sum of money is spread evenly over the farmland of Scotland, it will not amount to any great sum per acre but as everyone knows, the borrowing is far from even. As a rough guide, one-third of those farming have no borrowing, one-third have seasonal requirements and the balance have long-term debt.
I know that Mark Twain said to invest in land because “they are not making it anymore” and estate agents selling farms say it is “as safe as houses”. But consider the comparison: The investment in houses idea has been blown out of the water with reductions in property values and negative equity.
By all means take cash from naïve businessmen, but remember that money borrowed has to be repaid at some point.


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