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SAOS acknowledges the support of Scottish Food & Drink in association with Scottish Enterprise and The Royal Bank of Scotland in sponsoring the publication of “Success In Co-operation”.
For more information on Scottish Food & Drink contact the web site:
Scottish Food and Drink
SAOS is pleased to include the following statement from Jimmy McLean, Head of Agricultural Services at The Royal Bank of Scotland...
Farming continues to remain under considerable financial pressure. In some sectors there have been marginal improvements in prices, while in others the decline has continued.
The relative value of sterling compared to the euro, remains a key factor determining current and future farm profitability. However the current foot and mouth crisis will also have a major impact on the livestock sector.
The structure of farming continues to change with greater specialisation and increasing interest in developments such as contract and share farming, machinery rings, other co-operative ventures and new landlord/tenant relationships. The financial pressure on the sector is likely to accelerate this change.
Looking to the medium and long term, it is difficult to say in any detail what is likely to happen. Recent health scares, fluctuations in the value of sterling and adverse weather, remind us how quickly things can change. The Common Agricultural Policy seems to be continually under review, driven by both economic and political pressures. Over the next few years, the drive to expand the union eastwards and the outcome of World Trade Organisation talks are likely to have a major influence on policy. The changes which this creates at a farm level will, inevitably lead to uncertainty. Yet, farming as an industry has shown its resilience and ability to adjust in the past – and it will continue to do so.
In the past such survival has usually been achieved by increased technical efficiency, by enlarging the scale of operation if this is possible, by better marketing to improve product prices and by ensuring borrowings are at a level which can be serviced if interest rates rise or margins contract. The importance of these has not changed.
However, with the changes in method of support and with ‘intervention’ now a much less attractive and much more restricted market, it is increasingly important to recognise the real market – to meet product specification, supply requirements and price.
It is for its ability to adjust that The Royal Bank of Scotland has supported farming for almost 300 years. We recognise from experience that farming is a long-term business. At the same time, we recognise the need to adapt our services to meet the needs of business – introducing the first overdraft back in 1728 to recent developments such as fixed rate loans, the possibility of ‘capping’ as an alternative to take advantage of possible interest rate cuts or for the borrower to carry some of the risks to reduce costs.
The Bank has every confidence the industry will survive – albeit with structural changes – and we shall continue to support businesses going through a difficult period, as well as providing additional facilities to farmers who are not too heavily borrowed and who wish to expand. Whatever your needs, your local Royal Bank of Scotland manager will be pleased to discuss these with you, or you may wish to contact me direct at the address below.
Jimmy McLean, Head of Agricultural Services, The Royal Bank of Scotland,
Younger Building, 3 Redheughs Avenue, Edinburgh EH12 9RB
Tel: 0131 523 2340
Scottish Enterprise, 120 Bothwell Street, Glasgow G2 7JP
Tel: 0141 248 2700