After an exceptionally wet 2024, farmers have faced multiple challenges, from soil erosion issues to crop damage and delays to farming timetables.

In a bid to combat losses due to the wet weather, many have chosen to diversify to keep their businesses afloat.

We spoke to to NatWest’s Jo Wingfield (Relationship Director, agriculture) and Andy Woodthorpe (Director of Business Banking) all about how NatWest are helping the farming community in the South West of England and Wales after this heavy rainfall.

Andy shared his views on the challenges farmers have faced this year. He said: “I think most farmers would agree that the wet weather has been the biggest challenge. The weather has been unprecedented.

"Farmers are concerned about autumn planted crops and whether the yields will stand up. Some farmers have not been able to put the animals out on grass when they normally would, so they have had to provide extra feed.

"The phasing out of the BPS scheme and the introduction of more environmental schemes can be challenging for farmers and require a change in mindset.”

NatWest has agricultural sector specific managers to help farmers decide what they need, and Jo believes this face to face contact can be incredibly important when trying to understand their situation.

“We have agricultural sector specific managers on the ground and agricultural credit teams who understand issues and challenges within the sector,” Jo said.

“If a farmer’s livestock is affected by TB for example, then they understand how this affects working capital.

“Our managers are accredited through a training programme and we have regular meetings to update and educate our agricultural team on everything from milk processes to crop cycles.

“Each region has its own unique opportunities and challenges. To help make sure we can help customers in the South West achieve their goals for their sector, we have a South West and Wales agricultural team focus group.

“Staff members who work with farmers from SME scale right up to corporate have a monthly meeting, where we share examples of best practice, keep abreast of issues affecting the region and importantly, guest speakers and customers in attendance to make sure everyone can benefit from our networks and our expertise.

“No year is the same for farmers, so we look on a three-year average basis. We are a key business partner; we will visit farms to have meetings and work together with our customers, their accountants and farm consultants.”

Andy added: “We stay as close as we can to our customers to stay abreast of the issues and opportunities that the sector creates and provides.  We’re also fortunate to have a large team of agricultural managers – many of whom work face to face with our customers.”

This proximity to the customers and the customers’ agriculture managers often leads to a satisfying outcome.

Andy said: “In terms of opportunities, Jo and I set up a training session for our agricultural team in the South West where we visited a farm who was experimenting with regenerative practices. When we spoke to the farmer who traditionally would have had a focus on yield, now this farmer is talking about the margin per acre or per field instead. Again, it is often a tweak of approach that can help overcome a challenge.

“We also organise calls where we talk to customers about what issues they are facing. We are really keen to educate our relationship managers so they have knowledge that they can share with their farmers.

“We are lucky to have specialist lenders under our wider NatWest Group. We have specialist agricultural people in Lombard (asset finance lenders), as sometimes agricultural transitions involve new kit that sometimes requires asset finance to fund.  They understand - like we do - that farm finances don’t always run in a straight line.

“When it comes to providing financial support, we look at what the customer is wanting to do and help them realise that vision. We will work with professionals to determine what their projections look like . Quite often, we will get advice from a farming consultant and decide what finance is required or what approach is best. The changes might take a year or longer to positively impact profit, so we can look at the projections to look to provide some assistance on that basis.

“As Jo stresses, no year is the same in agriculture so it is crucial that we stay close to the customer and offer the fluidity they need to stay on course.”

Diversification has been extremely important for farmers who are struggling after a difficult year. If you are thinking about a project, then NatWest are keen to help.

Jo explained: “I think farmers’ confidence has really been affected by the unpredictable weather - but a key thing the sector and the operators have is resilience.

“A real positive that I see within the sector is the new ideas that the younger entrants to the market are bringing with them. Their openness to new technology, thoughts around diversification and consideration of adaptability makes me really optimistic.

“Diversification is hugely important. Quite a few of my customers have started to repurpose some of their farm towards energy production, hospitality and even storage containers/workspace units. One customer recently converted a space into a wedding venue.

“These approaches are brilliant for family run businesses. I believe this helps with succession in large farming families, as it provides an extra income source but also allows some family members to take charge of that side of the business. We are very supportive and we do lend money to a lot of diversification projects.”

Andy added: “I’d agree, we are very supportive of farm diversification - but it is about the selecting the right diversification for the farm that is crucial.

“You have to look at things like the lay of the land and the weather. If a farmer can diversify then they aren’t reliant on one source of income. But it’s advisable to still concentrate on what you’re good at as the core business, because too many diversifications can dilute focus.

“It isn’t flippant but shows like Clarkson’s Farm has actually driven more queries around diversification and led to farmers asking us questions around using outbuildings as holiday lets, or realising that if their farm is isolated then a farm shop might not be their best approach to reach a casual shopper. It is important to look at each farm and see what is the right thing to do.”

Regarding the support available, Jo and Andy have noticed a difference in the type of advice that customers are looking for this year – particularly key is regenerative opportunities and technology.

Jo added: “This year, with the wet winter and spring, there have more discussions about farmers’ working capital. Milk prices have been low and we are getting approached more about grant funding for technology.

“There is a lot of capital grant funding around, but this involves farmers incurring the cost before being able to reclaim back the grant funding. There are farmers looking to explore regenerative opportunities. That doesn’t happen overnight so we can help them take it further and build it into their long term planning.”

Andy said: “We have definitely noticed an increase in finance to address the challenge of wet weather, and to make the most of the opportunities offered through diversification and technology, which is often part grant funding and part conventional funding.

“I think the key thing is that we have agricultural managers who can offer face to face contact to talk farming and banking. It is invaluable, it really helps customers and ourselves create a mental picture of what is needed, what can be achieved and how we can help them achieve their goals.”

NatWest is helping farmers manage these challenges in many ways.

Andy explained: “At NatWest, we are enablers for many farms who supply large operators and supermarket chains. To allow them to work for some larger operators, they have to meet their stakeholders’ objectives so we often  help them tap into slightly improved financing terms for things that help them reach that criteria. Regeneration and carbon footprint targets are challenges many of them face.

“I think it is in these situations that the real value in face to face meetings with our relationship managers become so important. It doesn’t just assist with signposting but there is a huge psychological boost.

“I see us as enablers. Moreso when facing challenges like regeneration where solutions often require finance and that is why we are here.

“It is also important that we are seen to be here for the duration and our relationship is for the long-term. The payback on a lot of business investment is not short-term –the working capital cycle in farming is much longer, so having trained agricultural mangers who realise this, does make a difference.”

Technology is key when it comes to thinking about the future of farming, but Jo notes that many farmers are keen to check the technology works well before they invest.

“Farming is an exciting space for technology,” Jo added.

I think anything farmers can be doing to automate some of their systems or processes is really helpful and allow farmers to divert their labour and time elsewhere. There are a lot of farming funds available to support tech initiatives -we’re always working with our customers to make them aware of what is available and how it can achieve positive outcomes.

 “There is so much smart technology that is coming with regards to animal welfare.  However, in most cases, the technology has to be proven before it is something a farmer will invest in.”

Another key consideration for the farming community is sustainability, but Jo says this can require a ‘big change’ when it comes to working capital.

“The appetite for making a shift to more sustainable approaches to farming is there,” Jo explained.

“Farmers want to explore their sustainability options but it requires a big change in their working capital position.

“Profits fluctuate in farming and the farmers know the yield won’t be as much,  so when they start their sustainability journey we as bank agriculture managers have to help bridge the gap to help them regain that level of profitability. Working capital plays an enormous role here.

“The support is there but for many it is knowing where to look. As a bank, being able to signpost these customers to that support is important. We aren’t farm consultants but we will always signpost, be that sounding board and be an enabler for our customers in terms of finance.”