By Anna Burdett

Last updated 05:16, Friday, 28 November 2008

FARM shops and other diversified businesses are expected to be worst hit as the full impact of recession hits agriculture in Cumbria.

Advice: John Robson, managing director of H & H Bowe, said farmers need to take a step back from their businesses in order to assess where savings could be made in order to get through the downturn

John Robson, managing director of Carlisle-based land agents H & H Bowe, issued the warning at a special meeting for farmers last week. The company joined forces with experts from accountants Dodd & Co and solicitors Cartmell Shepherd to give advice on surviving the credit crunch.

During last Thursday’s meeting at the Shepherds’ Inn, Rosehill, Mr Robson said: “Banks are becoming increasingly cautious about non-agricultural income.

“Diversification, which we’ve all been pushing, is the first to go in times like this. The core agricultural business needs to sustain. Farmers need to protect their core farm business. So far, the majority of farmers’ core businesses have not been affected but farm shops, holiday cottages and other diversifications are at the sharp end and will feel it first.”

He said many farmers were already feeling the pinch. Some have sold crop early to pay for seed and winter cultivation. But at Gelt House, near Brampton, Nigel Robson said his farm and tea shops are as popular as ever.

Regular customers are still supporting the business he said, while passing trade has not dropped away. He said: “There’s not much we can do on the farm to protect our business. We’re doing more advertising for the farm shop and tea rooms; that’s the only real difference.”

He added that while some banks were continuing to support the industry, others were increasing costs.

“We’ve heard about letters from banks demanding seemingly random increases in interest rates. All farmers need to talk to their banks and remain in touch with them,” he added. In one case, a farmer north of Carlisle was informed by his bank of a two per cent interest rate rise on an overdraft, which was coupled with an annual review charged at two per cent of the borrowings.

Commercial farmers appear to be fairing better than those producing a prime product as consumers look to make savings where possible.

But merchants are putting pressure on farmers to pay their bills more quickly in response to their suppliers doing the same. Mr Robson added: “Merchant credit is becoming increasingly tight as they’re being asked to pay for their supplies much earlier and they are not willing to be bankers to farmers.”

He said farmers should take a step back from their businesses and assess where they could make savings.