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Unusually heavy rainfall has left rural businesses struggling to clean up practically and recover costs materially. But there are financial solutions that can help in the immediate aftermath and protect in the longer term against the consequences of climate change.
Last updated: 21 Jul 2020 6 min read
Once again, severe flooding across parts of the UK has caused devastation to farmers and rural businesses.
Thousands of acres of farmland were hit at a critical time when farmers would normally be lifting potatoes and harvesting maize, but they’ve been unable to do so due to the deluge. According to the BBC, in Lincolnshire alone, 90% of the winter cereals would normally have been drilled at this time of year but only 10% have been done.
The cost of this disruption to the farming industry is huge, and includes advance purchases of seed fertiliser and sprays that can’t be returned; the cash-flow costs of the purchases; the write-down costs due to potential deterioration of seed; reductions in yield; and the high price of spring seed, which is in short supply.
Angus Bell, director at agricultural consultancy Active Business Partnerships, says: “There is a knock-on effect to next year’s drilling and rotations due to delayed harvested spring crops. Fallow is an option to create an opportunity for 2021, but this will result in a year of no income, and the businesses still have their core fixed costs to carry. The cash-flow impact of this will hit farms hard this time next year.”
The costs of the post-flood clean-up – repairing fences, clearing stone from fields and replacing flood-damaged equipment – will also be significant.
In the aftermath of the floods, the government announced that relief funding would be made available. Under the measures, for at least the next three months, households and businesses that have been intensely affected by the flooding will be eligible for 100% relief on their council tax and business rates.
The Department for Environment, Food & Rural Affairs (Defra) will provide additional support to farmers through the Farming Recovery Fund, with opportunities to apply for grants of between £500 and £25,000 to help cover repair costs.
“Flooding is the biggest threat the UK faces as a result of climate change. Farms will be hit hard, and we need to do more to act on climate change to avoid calamity”Simon Crowther, founder, Flood Protection Solutions
In response to the crisis, NatWest has mobilised its agricultural team to help customers affected in the short, medium and long term. Roddy McLean, director of agriculture at the bank, says: “Short-term solutions include increasing overdraft limits to help farmers if they need to buy extra materials to see them through. With cropping patterns likely to be impacted, possibly for a couple of years, for farmers who have loans with structured repayments in place, and whose income will be impacted for a period of time, we can put in place capital-repayment holidays, where they pay only the interest in that interim period.
“Over the longer term, we could look at providing more funding, or restructuring any existing loans, potentially by increasing the term.”
Having dealt with the immediate aftermath, McLean’s advice to farmers is to engage with their bank’s relationship manager as soon as possible to discuss the issues they are facing and the options available to them.
“There are potentially more solutions that can be considered by anticipating issues rather than waiting until you are in a major cash crisis with payment deadline looming,” adds McLean.
Rural insurer NFU Mutual has offered advice on preparing farms against flooding. This includes drawing up a farm flood plan so that, if the worst does happen, everyone knows what action to take and who is responsible for what. The plan should include identifying higher ground that livestock can be moved to, relocating machinery stock and veterinary resupplies if flooding is forecast, and implementing flood-resilience measures for buildings that are vulnerable to flooding, such as siting electrical sockets and wiring higher up on walls. Farm owners planning to invest in new buildings are advised to speak to their insurer first to ensure flood cover can be provided at that specific location.
Flooding has always played a part in rural life, but experts say climate change is worsening the situation. Research by the National Farmers’ Union has revealed that almost 60% of England’s most productive agricultural land is situated on floodplains.
Simon Crowther, founder of Flood Protection Solutions, says: “Flooding is the biggest threat the UK faces as a result of climate change. Farms will be hit hard, and we need to do more to act on climate change to avoid calamity. Some landowners will be unaware of where the flood risks are in their area, so there should be funds available for professionals to visit farm sites and identify the areas at risk and to provide solutions to alleviate them.”
With this in mind, farmers are advised to seek out appropriate measures, including capital or infrastructure projects, that can mitigate the flood risk.
McLean says: “It’s about being as prepared as you can be. We know how a business has been performing and know that if there is a season or two of interruption, we can tailor solutions to that, rather than basing them on the worst case that they are in at this moment in time.”
According to Andre Laperrière, executive director at Global Open Data for Agriculture and Nutrition (GODAN), increased access to open data will empower farmers by helping them understand when floods are most likely to occur. That way, they can re-engineer their fields and plant crops at the right time to maximise yield and profit potential.
Laperrière also wants to see more emphasis on sustainable farming, enforced by the government, to reduce the UK’s carbon footprint and help minimise the damage caused by climate change.
He says: “These floods should act as a warning as to what the future of farming could be facing, and it’s vital that all parties act now to ensure a more secure and sustainable future.”
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