In fact, he says, there was a period where he didn't work at all for more than eight years simply because he couldn't find the money to do so.

"It was very dispiriting," the 70-year-old says in a polished voice with just a hint of Lancastrian lurking at the edges. "I had to remortgage my house three times to keep going."

Davies is in Australia as a guest of the Melbourne International Film Festival, with his 2015 film Sunset Song, which screens on Friday and Monday. He first started work on it 18 years ago, but despite his reputation and the esteem in which his films – especially his 1988 feature debut Distant Voices, Still Lives – are held, he found it impossible to raise finance.

"It was a very bleak period," he says. The UK Film Council was in charge of funding, and "all they wanted to do was make films that would be successful in America. Now thank God it's gone back to the BFI, where people are concerned about making films, not whether the Americans will like them or not."

It's hard to imagine Sunset Song packing out the multiplex in Boise, Idaho; with its languorous pace, intimation in place of action, and dense Scottish brogue, middle America was never going to warm to the tale of Chris Guthrie's journey from girl to woman in the harsh but beautiful Scottish countryside of the 1910s, with World War One nibbling at the edges of the story before moving to centre stage.

Chris is played by Agyness Deyn, the 33-year-old former model and favourite of the English social pages. She's an undeniably beautiful, calm and soulful presence at the heart of the film, but casting her might have struck some as a risk. She had barely acted before Davies picked her.

But for Davies, there was not a moment's hesitation, nor a skerrick of preconception to be overcome.

"I don't know anything about modern culture, so I didn't know she was a model and all that," he says. "She just came in to the audition, she was the first one we saw on the first Monday morning, she gave a wonderful audition, and I said to the producers 'We've found her'. It was as simple as that."

That she hadn't done much acting before "doesn't matter", Davies says. "Actually, it's not a question of acting. I say to all my actors, 'I don't want you to act. I want you to be', which is much more difficult. You know when someone is right. It's as vague as that – you can't articulate it, you just know."

Acting on instinct, and sticking to his guns, seem to be key Davies traits. He first encountered Sunset Song when he saw the 1971 mini-series on television. He was so struck by it he immediately went out and bought a copy of the book by Lewis Grassic Gibson on which it was based.

"It's quite difficult to read because it's written in the Doric accent, the Aberdeenshire accent, but if you persevere it is a great novel, the greatest Scottish novel that's been written," he says. "Most Scots people have read it because they studied it at school, but it's not that well known beyond Scotland.

"Chrissie is only about 14 at the beginning of the book and she's only 21 at the end and yet she's gone on this huge journey in those seven years. I just thought, 'Yes, it's got to be told'."

The landscape is a crucial player in this story, so it's a strange fact that much of the exterior photography was done not in Scotland but in New Zealand.

"That was down to two practical reasons, really. We had to have some sunshine, and you can't rely on that in Scotland, and it was the tax breaks, which were very attractive."

Essentially, anything with sun or fields of golden wheat is New Zealand. Anything with rain or snow, that's Scotland. And the interiors were all shot in Luxembourg – again, because of tax incentives.

"I don't know anything about the financial side," says Davies. "I just make every film for the money that can be raised. That's what I've always done because it's what I've had to do."

But things may have turned the corner for Davies. His next film, A Quiet Passion – about the American poet Emily Dickinson, played by Sex and the City's Cynthia Nixon – has already been completed. He is hard at work on two more projects, too: an adaptation of the gay coming-of-age novel Mother of Sorrows by American writer Richard McCann; and a film about the English First World War poet Siegfried Sassoon, its release hopefully timed to coincide with the 2018 centenary of the end of the Great War.

No one can guarantee either project will come to fruition, of course, but one thing's for certain – if they're as difficult to get off the ground as Sunset Song was, they simply won't happen.

"At the end of each day of shooting I had to go through the script thinking, 'Do we need this shot, do we need this scene?' Sometimes we were cutting things and thinking, 'Well, if we need this scene in the final cut there's no chance of us getting it'.

"I'd never do that again," Davies vows. "I'd say, 'We've got to find this amount of money, and if we can't find it it's best not to make it'. It's too great a strain."

The Age is a media partner of the Melbourne International Film Festival. Stephanie Bunbury will host a Q&A with Terence Davies at the screening on Friday July 29. Details at miff.com.au

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