After the latest inflation results were published recently, there were a flurry of articles written about what this means to interest rates. The general consensus was that interest rates aren’t coming down anytime soon.

There was one well known economist – who has an excellent track record – suggesting there may be three more interest rate rises. This means 0.75 per cent higher rates than current.

If this were to come to pass, it would add a material amount of interest that finds its way into the profit and loss of many farming businesses.

For those of a certain age – including myself – we remember interest rates that were in the high teens and low 20s. The obvious caveat is the quantum of debt for most farmers was much lower than it is now.

I remember a meeting with a large corporate agri-investor a few years ago, where the first thing he showed me was an Esanda debenture for 19pc. I knew exactly what it was, as those with money to invest were receiving high rates of return at the time.

Some people thrive during high interest rate environments.

The lesson is to keep informed about what is happening in the market, and factoring interest rate rises into your budget, regardless of whether they come to fruition or not. The good operators would be doing this already.

Banks by default do this, and they always stress test any farming budgets that come across their desk. Often, banks will add a couple of percent to the probable rate to ensure the business can service any loans.

Just the speculation of there being an interest rate rise, may make the banks look more closely at the ability to service loans, and therefore could reduce a farming business’s ability to borrow funds even more.

This all sounds like doom and gloom, but it’s not meant to be.

The take home lesson is to be on top of your numbers and the key drivers in your business that add to the profitability of your business overall.

Getting on the front foot with your bank and communicating effectively is more important than ever. This will help both parties.

The agri-bankers I know are now dealing with more clients, and extra layers of compliance compared to times past.

Often, they are doing more with less resources. Having your ducks in a row and presenting timely information is always best practice.

Sending information to the banks whether that be directly or via your broker is key to getting outcomes more quickly.

Another area that is sometimes neglected is finalising accountant-prepared financials early in the new financial year.

If you don’t have your financials completed within six months after the end of financial year, then you should.

There are lots of things we can’t control in farming, but the old saying “forewarned is forearmed” rings true in relation to financing your farm.