The Prince’s Countryside Fund commissioned The Andersons Centre in March 2016 to complete snapshot research to gain a greater understanding of the cashflow pressures at farm level and their impact on the wider agricultural sector.

Analysis of recent data and a series of telephone interviews with 21 agricultural businesses has given the Fund an overview of the current situation resulting from the cashflow challenges in farming and its knock-on effect on wider rural economy.

Some of the key findings of the report are that:

1. The UK agricultural industry is experiencing its third year of declining farmgate prices.

2. The decline in prices is likely to continue for most commodities in 2016 and potentially beyond. The worst affected sectors are cereals, milk and pigs, where incomes are dropping sharply.

3. Half of farms are no longer making a living from farming itself, and 20% generated a loss even before accounting for family labour and capital.

4. Nearly all the agricultural businesses surveyed stated that low farmgate prices (especially milk), and their drop from the high 2013/'14 levels, are the main driver of cashflow challenges at farm level.

5. Levels of borrowing have almost doubled in the past 10 years. A large proportion of farms across most sectors will see a widening gap between required and actual profit in 2015/'16 and most likely in 2016/'17.

The report then makes a series of recommendations based on these findings.

These include:

1. Improved communication and collaboration between suppliers, banks and farm businesses focusing on the immediate needs to help with budgeting and managing repayments.

2. Cross-sector commitment to encourage businesses to engage with the farming help charities and the array of business tools and advice available. Support staff to increase their understanding of the range of practical and emotional support available to farmers through presentations and briefings.

3. Timely distribution of payments to farm businesses with clear communication of projected timescales. This will not only help to ease cashflow difficulties but also boost morale in the sector.

4. The financial pressures now being experienced require farmers to have a higher level of business skills than has been necessary in the past. Encourage more farm businesses to take advantage of opportunities to improve their skills in business planning and financial management.

A full analysis of this report will be published in the Irish Farmers Journal print edition this coming Thursday, 12 May.