Agriculture

Bank for UK farmers to launch amid Brexit turmoil. Oxbury Bank will open as sector grapples with uncertainty over subsidies and food markets

The UK will gain its first lender dedicated to agriculture in almost a century, as the newly licensed Oxbury Bank prepares to launch this autumn. Oxbury’s founders say they already have a pipeline of more than £50m of loans and will initially focus on short-term lending to farmers, replacing trade credit with agricultural suppliers. The Chester-based bank says it is the first to be focused exclusively on farmers since the Agricultural Mortgage Corporation — now part of Lloyds — was created in 1928 under legislation that aimed to revive farming after the first world war. The launch will come during a period of deep uncertainty for farmers, with the post-Brexit future of subsidies and markets for UK food products still unclear. The coronavirus pandemic has also disrupted food supply chains. While medium- and long-term lending to UK farmers — mainly carried out by the established big four high street banks — has grown, overdraft lending shrank from almost £3bn in 2008 to £2.2bn a decade later. At the same time, trade credit expanded from £1.8bn to £2.4bn, according to government data. Oxbury’s co-founders include James Farrar, who will serve as chief executive and was among the founding team of start-up clearing bank ClearBank; Nick Evans, founder of the agricultural technology company Adaptris; and Timothy Coates, a former official at the Financial Conduct Authority, who also runs a family farm. Mr Coates said: “Fundamentally this is a play by the agricultural sector, which is coming together to set up its own bank. The people who are involved at the executive level are people who are from that sector, myself included.” Aiming for a £1bn balance sheet by its fifth year, Oxbury will offer savings accounts to consumers to fund loans. Its flagship lending product will be a revolving credit facility to fund working capital. Many agricultural suppliers would prefer not to lend to farmers from their own balance sheets, said Mr Coates. Oxbury also plans to offer term lending to cater for the seasonal and multi-year cash flow problems experienced by farm businesses, such as the period of time it can take to establish a fruit crop. At first the bank will focus mainly on larger arable and dairy farmers, offering both secured and unsecured lending, with the products marketed through agricultural suppliers such as Devon-based Mole Valley Farmers.   Oxbury won its banking licence in January but is working to fulfil conditions of that licence while it conducts a fresh funding round. With a current staff of about 40 people, it expects to launch in early autumn. Existing backers include crop production specialist Hutchinsons and Frontier Agriculture, a crop production and grain marketing group that is a joint venture between Associated British Foods and the US food multinational Cargill. Oxbury’s foundation echoes the origins of European banks such as France’s Crédit Agricole, founded in the 1800s to support farmers’ co-operatives. Stuart Roberts, deputy president of the National Farmers’ Union, said: “More competition to serve farmers is always really good. The guys behind Oxbury Bank are well known in agricultural circles so there is clearly a good degree of expertise and we look forward to having another financial institution to serve our sector.”