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August 19, 2010updated 12 Apr 2017 4:20pm

Scots farmers opt for leasing

Leasing and hire purchase in Scottish agriculture showed marked popularity in 2009, as bank borrowing became less attractive, a report has shown. These forms of financing were part of a £930 million (1.13 billion) total, which also included family loans and various other types of finance, or 40% of all liabilities in the industry

By Claire Mundle

Leasing and hire purchase in Scottish agriculture showed marked popularity in 2009, as bank borrowing became less attractive.

Such financing represented part of £930m (€1.13bn), including family loans and other types of finance, or 40% of all liabilities in Scottish agriculture. The other 60% came from bank borrowing.

Lessors have put the reason for this popularity down to banks’ liquidity problems as a result of the economic crisis, meaning increases in arrangement fees and rising margins over base, therefore making bank borrowing less attractive.

However, figures published in the 2010 Economic Report on Scottish Agriculture also showed that the level of bank advances made to the Scottish farming sector saw its largest annual increase in a decade. Bank advances reached £1.5bn at the end of May this year, £121m higher than 2009.

The greater proportion of bank advances was made to owner-occupier farmers, reflecting the fact that 74% of Scotland’s farmland is owner occupied.

The figures were published by the Scottish government on 12 August.

claire.hack@vrlfinancialnews.com

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