Dairy farmers can now access flexible finance to ease cashflow at challenging times of year, following the launch of Oxbury’s Flexi-Credit Milk Cheque.
Operating in a similar way to an overdraft, but easier to set up and on more competitive terms, Flexi-Credit allows farmers to borrow up to 70% of their average quarterly milk payments per year. They can then pay in or withdraw money according to cashflow, with a minimum repayment of 5% per month plus interest.
“Cashflow can be extremely challenging at different times of year,” explains dairy farmer and consultant Grant Hartman. “We have a year-round calving, housed herd, and in the spring we have to pay for rent, fertiliser, fuel, seeds and sprays on top of our ongoing feed costs. We can’t balance that with increased milk sales as we’re on a year-round supply with seasonality deductions for additional volume in the spring, so cashflow at that time is particularly difficult.”
Mr Hartman milks 650 pedigree Holstein cows at Trebersed Farm, Carmarthen, and in his dairy consultant capacity he helped Oxbury to tailor the Milk Cheque offering. “It has to be easy to apply and competitively priced, and the level of credit must be balanced with the business,” he says. “For me, it’s an ideal bridge through difficult months.”
Borrowers can simply pay the money into their current account – which can be with any bank – and then repay when they want. “So I could pay £10,000 for fertiliser while waiting for my milk cheque, and then repay it when my cash comes in,” says Mr Hartman. Block calving herds may need to borrow at different times of year, for example to cover low milk sales over the winter.
Producers can manage their accounts online, and speak to agricultural specialists within the bank if they have any queries. “I tested the online dashboard in April and it’s really user friendly – I can see how much I’ve borrowed, how much more I can take, and link my current account,” he explains. “The senior and junior relationship managers all have a very good understand of farming, which is major strength.”
Part of Mr Hartman’s job is to keep the bank’s staff appraised on sector news. “If a processor’s milk price changes or input costs move sharply then I’ll update them so that they have all of the information they need.”
Nick Evans, co-founder of Oxbury, explains: “As a bank which is 100% focused on agriculture, we truly understand farming and know the challenges that producers face. Everything we do is aimed at helping farmers to achieve maximum stability and productivity year-on-year.”