Weather and market conditions can help to
determine exactly how much agricultural equipment is financed. In
the current climate, according to the head of Rural Finance, David
Turner, it could have been better in both cases, but certainly much
worse, too.

New business at Rural Finance, an independent
finance broker that specialises in agricultural finance, has
decreased by between 5 and 10 percent over the past year. Turner
remains optimistic, saying that purchases were “still being made”,
in part because fertiliser and fuel costs have gone down.

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According to Turner, agricultural financing –
which involves anything from tractors, self-propelled wheeled
machinery and trailer equipment to feeding systems and milking
parlours – remains “very much a niche market”. As a consequence,
while it feels some pressure from the current credit crisis, even
in a downturn it is “reasonably well-established to withstand this
financial pressure”.

Despite some bank-owned finance companies
having pulled out of the market, Turner said that Rural Finance’s
main funders – Northridge Finance, ING Lease, Hitachi Capital and
BNP Paribas Lease Group – are still providing adequate finance.

But while farmers look with understandable
concern at the effects of the financial turmoil on their
businesses, in the long term their main concerns are weather
conditions, and the cycle of bad and good seasons, which at regular
intervals reduce or increase their demand for finance.
Consequently, agricultural finance – like the rest of farming –
tends to be very seasonal.

Turner explained that although the underlying
amount of business tends to be spread across the year, the main
peaks for buying are the March-May period and the August-November
period, coinciding with the seasons preceding the sowing and
harvesting activities.

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Meanwhile, due to the wet weather last autumn,
the August-September harvesting for 2009 is likely to be more about
quality than quantity. This is likely to lead to lower production
this year than one year ago.