Banks roll out emergency loans for farmers as severe drought threatens to savage crop yields

By PATRICK HARRINGTON, UK NEWS REPORTER Published: 21:36, 11 August 2026 | Updated: 21:53, 11 August 2026 Banks are rolling out emergency loans to help farmers whose crops are set to be decimated by the drought. NatWest said it was reaching out to its 42,000 farming customers to offer loan repayment holidays and emergency overdrafts. The crisis measures come as almost three quarters of England is officially in drought, and this summer is on course to be the hottest ever. This year's harvest is consequently set to be the worst on record, according to analysis by the Energy and Climate Intelligence Unit (ECIU). British arable farmers are expected to lose up to £390million in revenue, with as much as 2.5 million tonnes knocked off the cereal and oilseed harvest. Stunted grass growth also means livestock farmers must spend more on feed for their animals. Tim O'Malley, the chairman of Nationwide produce, said it was 'as bad as it's ever been' and that shoppers will likely see higher prices or smaller vegetables in supermarkets. NatWest, one of the biggest agricultural lenders in the country, recognised the 'significant challenges' farmers are facing nationwide. Farmer John Pawsey shows the dryness of the soil in a field at Shimpling park farm in Bury St Edmunds Growth of sweetcorn plants at a farm near London has been stunted by the drought conditions Your browser does not support iframes. It also warned the impacts would outlast the drought itself, with an increased risk of disease and lower livestock productivity going forward. The bank said it had not yet noticed an increase in demand for support from farmers, but anticipated this would come later in the season as these financial pressures come to a head. The list of measures available to farmers also includes funding support for investments to drought proof farms, temporary emergency lending facilities and specialised agriculture contacts within the bank. Lloyds Bank, the UK's largest agricultural lender, said it was also speaking to its farming customers to provide tailored support that could help them through. Ian Burrow, Head of Agriculture at NatWest Group, said farmers were struggling under the weight not just of the current drought, but of the increasingly severe swings between weather extremes. He said: 'The challenge for many businesses is no longer simply recovering from a single event but building resilience for a future where these conditions are becoming more frequent. 'With harvests progressing earlier than usual in some areas and livestock farmers already relying on winter feed stocks due to poor grass growth, cashflow and feed availability could become increasingly challenging.' Farming Minister Stephen Morgan also recognised the hardship that this summer has brought for farmers, and praised the bank for 'stepping up support for their agricultural customers at this critical time'.  A combine harvester works dried-out land at a combine harvester at Shimpling Park Farm Livestock farmers are needing to spend more on feed in light of reduced grass growth He added: 'I'd encourage any farmer struggling with the impact of drought to speak to their bank and explore what support is available to them.' Mr O'Malley said consumers could feel the impact in the vegetable aisle too, where grocers are likely to swap in smaller produce at the same price, which is known as shrinkflation. 'I think we're going to see shrinkflation,' he told Radio 5 Live's Wake Up to Money.  He said: 'The problem we're going to have this year is a massive reduction in yield and major quality issues.' This will mean smaller sizes for fresh produce, he added. The UK is on course for its hottest summer ever – with only average temperatures needed for the rest of August to beat the record, the Met Office revealed on Tuesday. The mean temperature for the summer so far, from June 1 to yesterday, stands at 16.48C – which is 1.88C above the 1991 to 2020 average, provisional data shows. To equal the 16.12C seen only last year – the UK's warmest summer on record – the rest of August would need to be just 0.21C below the long-term average, and any warmer than this would establish a new record for the country, meteorologists confirmed. For England and Wales, which have seen temperatures more than 2C above average so far this summer, it is even more likely that this summer will be record-breaking.