Increasingly volatile markets may mean farming businesses that are highly seasonal or have long profit cycles will need to think differently about their cash-flow in the future, says Robert Taylor at property consultants CKD Galbraith.

"This greater level of volatility in agricultural markets is going to be normal," he predicts, "So farm businesses whose profits come in on a seasonal, annual or even longer-term basis are facing a greater risk of hitting markets at sub-optimal times. While better market "highs" could well balance out profits in the longer term, some businesses may end up waiting two to three cycles to see returns come through."

Mr Taylor explained that this could affect farms operating in many sectors, but especially those with seasonal produce such as beef, lamb and cereals.

Mr Taylor went on: "Many of these could end up funding increasing amounts of their working capital through 12-month annual overdrafts, which simply can't provide the longer term certainty and financial "buffer" needed.

"Instead, shorter term cash-flow needs would be better covered via a flexible loan spanning several years rather than an annual overdraft, which could find markets largely unrecovered in a 12-month period."

Another measure to ease cash-flow could be to take out longer term or interest only loans said Mr Taylor. "We find our clients can be inclined to pay off term loan borrowing as quickly as possible - but at current interest rates, taking a longer term loan with lower monthly charges could be a very practical step to take to reduce the cash-flow cost. Equally, a number of lenders offer interest-only loans where you pay back the capital when funds allow.

"So borrowing £250,000 over 30 years rather than 20, or even borrowing on an interest-only basis would keep monthly repayments low - especially with the rates you can fix now."

Market round-up

Messrs Craig Wilson Ltd sold 229 store heifers at Ayr on Thursday to a top of £1100 per head and 248.9p per kg to average £776.05 and 205.2p (-0.2p on the week), while 383 store, beef-bred bullocks peaked at £1190 and 291.3p to level at £868.88 and 215.3p (-10.1p). Thirty-nine store, B&W bullocks sold to £735 and 169p to average £572.16 and 130.8p (-2.7p).

C&D Auction Marts Ltd sold 3581 prime hoggs in Longtown on Thursday to a top of £108 per head and 239p per kg to average 170.5p (-15.5p).

There were also 2828 cast sheep forward when heavy ewes sold to £138 for Texels and averaged £81.87 (-£2.46), while light ewes peaked at £84 for Cheviots and levelled at £52.06 (-£1.98).