Slurry Storage Investment
UK - With fewer than 15 months to the full implementation of Nitrate Vulnerable Zone (NVZ) regulations on 1 January 2012, investment in slurry storage and handling facilities was a key discussion point amongst dairy farmers at the Bath and West Dairy Show this week.
7 October 2010
2 minute read
According to The Agricultural Mortgage Corporation (AMC), farmers in NVZ affected areas in the South West are beginning to plan to ensure full compliance with the regulations and avoid any financial penalties. With the requirement to have up to six months of slurry storage a key feature of the regulations, many farmers will need to extend their existing capacity.
“As the deadline approaches, the Dairy Show offered farmers the opportunity to enquire about how AMC can help farmers finance developments such as slurry store expansion, better slurry management systems or new cattle housing, ” says John O’Meara, AMC’s Regional Agricultural Manager for the South West.
“A key question at the Show was whether to fund the investment on fixed or variable rates,” says Mr O’Meara. “At the currently low Bank of England bank rate of 0.5 per cent, variable rate loans may seem very attractive. But economists predict that rates will begin to rise, albeit slowly, in 2011. So before you finance an investment this way, it is essential to check that it is still affordable at the higher interest rates that have been more typical over the last decade.”
He continues, “For some a fixed rate loan may be a better option especially if it is over a long period. A fixed rate loan may offer you peace of mind by allowing you to budget your costs more accurately. However, you may have to accept that, at some times throughout the term of your loan agreements, your fixed rate might be higher than the prevailing variable rate.
“It is important that anyone considering fixed rates should take independent financial advice from their accountant or professional advisers,” adds Mr O’Meara.
As well as a focus on NVZs, AMC’s team also discussed a wide range of farm business development plans with visitors to their stand at the Show. “With improving prospects for the livestock sector and continuing low interest rates, we are seeing a strong demand for borrowing from farmers looking to invest in new production and milking systems,” says Mr O’Meara. “We are also seeing demand for financing other aspects such as land purchase and poultry diversification.”
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