Banks across the UK are extending emergency financial support to farmers facing significant crop losses due to a severe and prolonged drought. NatWest announced it is reaching out to its 42,000 agricultural customers, offering options such as loan repayment holidays and emergency overdrafts.
These measures come as nearly three-quarters of England is officially under drought conditions, and the current summer is on track to be the hottest on record. Analysis by the Energy and Climate Intelligence Unit (ECIU) indicates that this year's harvest is expected to be the worst in recorded history. British arable farmers are projected to lose as much as £390 million in revenue, with the cereal and oilseed harvest potentially reduced by 2.5 million tonnes.
The drought is also affecting livestock farmers, who are incurring additional costs for animal feed due to stunted grass growth. Tim O'Malley, chairman of Nationwide Produce, described the situation as "as bad as it's ever been" and warned consumers may face higher prices or smaller produce in supermarkets. He specifically mentioned the likelihood of "shrinkflation," where standard-sized products are replaced by smaller ones at the same price.
NatWest, a major agricultural lender, acknowledged the "significant challenges" farmers are experiencing. Beyond immediate relief, the bank is also offering funding for investments aimed at drought-proofing farms, alongside temporary emergency lending facilities and access to specialized agricultural contacts within the bank. Lloyds Bank, the UK's largest agricultural lender, is also in contact with its farming clients to offer tailored assistance.
Ian Burrow, Head of Agriculture at NatWest Group, highlighted that the challenges extend beyond recovery from single events, emphasizing the need for resilience against increasingly frequent extreme weather swings. "The challenge for many businesses is no longer simply recovering from a single event but building resilience for a future where these conditions are becoming more frequent," Burrow stated. He noted that early harvests in some regions and livestock farmers already depleting winter feed stocks due to poor grass growth point to potential cashflow and feed availability issues.
Farming Minister Stephen Morgan recognized the hardship faced by farmers and commended the banks for their support. "I'd encourage any farmer struggling with the impact of drought to speak to their bank and explore what support is available to them," he advised.
The UK's mean summer temperature so far, from June 1 to mid-August, stands at 16.48C, which is 1.88C above the 1991-2020 average, according to provisional data from the Met Office. For England and Wales, where temperatures have exceeded the average by more than 2C, the likelihood of a record-breaking summer is even higher.
