Where farming leads, other sectors follow

Lloyds Banking Group set up its specialist agriculture team 11 years ago.
This key market approach has demon-strated the importance of dedicated bank managers who have a close relationship with their customers, an understanding of the sector and their businesses in particular. This allows them to make informed lending decisions quickly and effectively.
The seasonal and often volatile nature of farming means farmers have special requirements and ‘de-risking’ important income streams such as Single Farm Payments through currency hedging can offer significant and important benefits for a farm business.
The model developed for agriculture has been so successful that it is now used by Lloyds Banking Group across four other sectors: healthcare (doctors, dentists, vets etc), legal and professional (solicitors, accountants, etc), schools, plus education and property.
When a key market approach was established with the agricultural team, farming was having a tough time. BSE, food scares and surpluses meant public confidence in farmers had been damaged. Since then, a lot of hard work and investment in farm assurance has resulted in renewed respect for farmers and confidence in the quality and safety of British food, while the more recent and growing concern over food security has helped to confirm the importance of UK food production and the central role played in it by farmers.
In the past three years, the banking industry has gone through an experience similar to that which the farming industry did a decade ago. The banking crisis of 2008 meant confidence in banks was severely damaged and bankers now have to restore that confidence. Banking can learn lessons from farming as it undertakes this task.
The Lloyds Banking Group’s commercial team has a four-point strategy that is working to build future confidence:

• Brilliant basics – delivering top-class service in everyday banking. Customers expect this in the same way that they expect farmers to deliver safe, good quality food.
• The best frontline teams – the agriculture team has proved the value of dedicated, knowledgeable and local banking staff.
• Market growth – the small and medium sized business sector (SME) is a particular area of focus for Lloyds Banking Group and the bank takes its responsibilities, to support SME growth, very seriously.
• A “force for good” – by supporting viable and entrepreneurial businesses. This is similar to the farming industry’s challenge of producing food sustainably and profitably.

Lloyds Banking Group is a leading member of the Business Finance Taskforce which consists of the main UK banks. As such it has committed to lend £11.7 billion to small businesses to help them grow in 2011.
In 2010 the company’s lending to SMEs
rose by 2.1% compared with a contraction in the total banking sector’s lending to small
businesses of 4%.
The agriculture sector in Lloyds Banking Group is leading the way and makes a significant contribution to the bank’s total SME lending figure. Our overall agriculture lending book grew by 10% in 2010 compared with an industry average of just 4%, and so far this year our lending is up by a further 10% year-on-year.
It is important to note that this is almost all ‘positive’ lending to businesses that are growing and investing, rather than a reflection of an industry in difficulty.
Small and medium sized businesses are crucial to the British economy as it recovers from recession. Farming will be at the forefront of that recovery and central to Lloyds Banking Group’s support for business development.

• Tim Porter is commercial banking director for the Lloyds Banking Group.