Farms across the UK are experiencing significant cash strain as a result of rising input costs, falling output prices and upcoming tax deadlines. As fuel and fertiliser prices increase due to global conflict and supply disruption, working capital is set to be stretched further by the approaching 31st July tax payment.
Our rural and agricultural business specialists explain the key factors currently affecting cashflow for farms and how early support can help farmers stay in control.
Fuel price volatility and the impact on operating costs
Fuel costs remain elevated, with red diesel prices continuing to fluctuate significantly. Global supply disruption has pushed prices far beyond historic averages, leaving arable and mixed farms with materially higher operating costs.
Increased fuel spend reduces headroom for harvest operations, autumn drilling and machinery maintenance, which makes cashflow forecasting essential.
Fertiliser market uncertainty
Fertiliser markets remain unpredictable. Prices have stayed high and some growers plan to delay autumn planting decisions because margins no longer stack up.
The upcoming Carbon Border Adjustment Mechanism (CBAM) tariff is expected to increase fertiliser costs again from January 2027. Farmers may face higher upfront spend later this year if they choose to buy ahead of the change.
Commodity prices and their impact on farm income
While input costs have risen, many output prices have moved in the opposite direction. Milk prices have fallen significantly since late 2025 and arable prices remain subdued. This widening gap between costs and returns is a key driver of current cashflow pressure for farms. This is in addition to the ending of some subsidies and delays on replacement ones.
Preparing for the 31st July tax payment
The upcoming 31st July payment on account is a major pressure point. Now is the time to review tax positions, check whether payments on account remain appropriate and assess whether taxable profits have changed.
If circumstances have shifted and lower profits are predicted, businesses may be able to adjust their payment and improve short-term cashflow.
The importance of keeping your bank informed
Banks respond better when they are informed of changes in your financial situation early. Sharing updated cashflow forecasts, cropping plans and input cost expectations helps lenders understand your position and provide appropriate support.
Early communication is particularly important for farms facing liquidity pressure or planning significant autumn expenditure.
Early support for challenges with cashflow
If cashflow issues are already emerging, early intervention is key. If you need support with cashflow modelling or just to talk through your options from a financial perspective please get in touch with us.
