Financial services provider Bank of Scotland, part of Lloyds Banking Group, declared on Monday that it is ready to help farmers with cashflow issues if there is any delay in receiving Basic Payment Scheme (BPS) payments, a European Union farming subsidy which is paid by the Rural Payments Agency to farmers with at least 5 hectares of agricultural land and 5 ‘entitlements’.
Farmers are required to apply for BPS payments once a year, usually in May, with payments beginning in December, however concerns are said to have been raised that there could be delays in these payments. In order to address these concerns, Bank of Scotland has arranged a new multi-million pound fund to help Scottish farmers manage the financial impact of any delay and advises customers who need to make use of the provision to get in contact as soon as possible.
The Scottish Government has confirmed that farmers are to receive their payments in two parts, with the majority receiving their initial payment, reportedly worth a minimum of 70% of the total payment, by the end of January. Initially, the installments are expected to be paid by the end of March with the balance of payments due to be settled in April. The value of the payments varies widely as they are based on various factors such as the size and type of farm in question
Bank of Scotland stated that although the support will be offered on a commercial basis, with interest charged on any sums borrowed, it will not charge arrangement fees for the facilities.
Head of agriculture, Bank of Scotland, Sandy Hay, commented: “Winter is often a challenging time for farmers as cold weather and cashflow issues bite, and we know that many farm businesses rely on a December payment and have it built into their financial plans. We created a contingency fund to ensure that no farmers are financially disadvantaged by this delay and we would encourage any farmers who think they may require support to come and speak to us now.
“The Bank has a proven track record of supporting farmers through challenging periods and we will ensure they continue to get the support they need through this period of uncertainty.”
Agricultural news magazine Farmers Weekly reported that the Rural Payments Agency has confirmed it is on track to start making full Basic Payment Scheme payments in December. It added that the European Commission will apply a financial discipline mechanism (FDM) deduction at 1.393041%. The RPA will use this rate to calculate 2015 BPS payments by applying it to all claims in excess of GBP1,400, which will be used to create a reserve fund to support the farming industry in times of crisis.