Moneymen will never understand our volatile world

It seems that we are living in a completely different world. Who would have thought, this time last year, that we would leave the EU and Donald Trump would be the next US president?
While the former has, seemingly, helped to turn around our fortunes as pig producers, it has led us into a period of uncertainty.

It feels as if anything is possible now, no matter how ridiculous and unlikely it seems. I’m not sure that, for us, is a good thing.
Profits are falling at major banks and there’s uncertainty in the stock markets – I could go on.
In truth, I don’t understand the nitty-gritty of it, but I do understand how it affects us.

Banks are under significant pressure and have become extremely jittery about lending to sectors that make marginal profits.
Although anyone with a reasonable arable acreage has significant assets against which to borrow, the banks have become uncomfortable lending money beyond a level that can be easily repaid in a short amount of time.

More than once, recently, I have heard of arable farmers asking for, say £30,000, and being told to sell a field instead. The frustrating part is that when you ask the bankers what the solution to a lack of profitability is, they ask if they can lend you the money to turn it around!
Part of the problem is the demise of agricultural banking teams who can make their own credit decisions. Now, credit teams are not agricultural specialists and just do not understand the volatility we are dealing with.

“The frustrating part is that when you ask the bankers what the solution to a lack of profitability is, they ask if they can lend you the money to turn it around!”

I recently had to explain to a pair of bankers that the difference between profit predictions in March and October was entirely down to pig price.
As pig producers, we are fortunate in some ways. Although we can lose a lot of money quickly, we can also recoup it, if fortunes turn in our favour.

Logically, anyone who sits on a credit team, with a limited pot of money to invest, is more likely to favour industries with predictable and reliable profits.
Furthermore, memories are short, and although you might have made significant improvements in profitability and cost of production, they are meaningless in the context of a current poor set of results.

We have made significant improvements to our pig unit and invested heavily, and we’re not finished yet. I find it frustrating that we have had to do it all with borrowed money. As an industry, we need to get to the point where we can make money every year and add to the bottom line by re-investing that profit.
It won’t be easy. But I am determined that we are going to get there. It’s tempting to finish a project and then rest on your laurels. Our tasks do not go away though, and need to be addressed at some time.

Once all of that is in hand, we need to focus on our unit performance and relentlessly drive improvement.
Sometimes, I do wish we produced something that couldn’t get a disease, or die partway through the production process!

Get Our E-Newsletter - Pig World's best stories in your in-box twice a week
Will be used in accordance with our Privacy Policy

About The Author