The Farming Investment Fund – All You Need To Know

Today, the farming and agriculture sector is estimated to be worth £120 billion to the UK economy, whilst employing over four million people. This equates to over 149,000 farm businesses across the UK, however due to the pandemic and irregular weather patterns, the industry has taken a huge downturn.

According to the Department For Environment, Food & Rural Affairs (DEFRA), the UK total income from farming in 2020 was £5,121 million, a fall of £133 million (down 2.5%) from 2019. As well as this, agriculture’s contribution to the UK economy was £10,240 million (0.52% of GDP). This constitutes a fall of £67 million (down 0.6%) compared with 2019. The main cause for the downward slope in total income from 2019 was a £990 million (down 9.9%) fall in the value of crop output, largely caused by unfavourable weather. This reduction in crop value was mainly due to an £891 million (down 36.6%) fall in the value of wheat and a £227 million (down 38.8%) fall in the value of oilseed rape.

The Farming Investment Fund is a set of grants which applies to the farming and agricultural sector, announced on the 16th November 2021. The overall aim for the grants was to provide a boost to the farming industry and provide the impetus to re-establish it as a key cog in the UK economy. Here’s all you need to know about the Farming Investment Fund and the Improving Farm Productivity Grant.

What Is The The Farming Investment Fund & How To Apply?

The Farming Investment Fund (FIF) provides grants to improve productivity and bring environmental benefits, and is made up of 2 separate funds:

  • Farming Equipment and Technology Fund (for grants between £2,000 and £25,000)
  • Farming Transformation Fund (for grants between £35,000 and £500,000)

The Farming Equipment and Technology Fund Round 1 closed for applications on the 7th January 2022. This was a grant for farming businesses to invest in new technology and equipment related to their work.

The Farming Transformation Fund provides grants towards large capital items to help businesses improve productivity, profitability, and environmental sustainability. They are:

  • Water Management
  • Improving Farm Productivity
  • Adding Value

The Water Management grant online checker closed on 12 January 2022, however the Improving Farm Productivity grant is open for applications and will close on 16 March 2022. You can apply if:

  • Your project is in England
  • Your estimated project costs are over £87,500

If you are an agricultural contractor, your business address must be registered in England. And you can only use the grant for buying robotics and innovative farming equipment. The grant can pay up to 40% of the costs for:

  • mild acidification equipment (all projects must buy acid storage, dosing equipment, mixing tank and pump)
  • acidification infrastructure (for example, any work to adapt or install pipework, pumps etc to get slurry into the acidification system and then out to storage)

The grant can also pay up to 40% of the costs for:

  • robotic horticulture and arable equipment (for example, robotic weeding, robotic harvesting)
  • robotic animal welfare equipment (for example, robotic milking, robotic feeding)
  • advanced ventilation control systems for existing horticultural and livestock buildings
  • wavelength-specific LED lighting for horticultural crops.

Reducing environmental impacts is a key aim of the scheme. Therefore, robotic equipment utilising an electric or renewable energy source will be prioritised over fossil fuel (for example diesel) powered equipment. Biofuels are considered as renewable energy under this scheme.

The minimum grant you can claim is £35,000 (40% of £87,500). The maximum grant per theme is £500,000 per applicant. You can apply both a slurry project and a robotics project, however you will need to submit two separate applications. The maximum grant amount across both projects is £500,000.

You can apply for the Farming Transformation Fund through the Gov’s dedicated online checker here.


What Does The Future Look Like For The Farming & Agriculture Sector?

The future of the farming and agricultural sector has been highlighted as a huge cause of concern for the government. Caught in a perfect storm of Brexit unpredictability and COVID limitations, similar to many other industries in the UK, farming and agricultural has been shrinking for some time now, particularly with the ever-increasing demands and costs of modernising the sector through new technology and sustainability efforts.

As a result, the government introduced the Sustainable Farming Incentive (SFI) on December 2nd 2021 looking forward to 2022 and beyond. The SFI is the first of three new environmental land management schemes set out by the Department for Environment, Food & Rural Affairs. Through the scheme, DEFRA will pay farmers to produce public goods such as water quality, biodiversity, animal health and welfare, and climate change mitigation, alongside food production. These public goods are essential to meeting the 25 Year Environment Plan, Net Zero and animal health and welfare ambitions set out by DEFRA, alongside ambitions for a productive and competitive agriculture sector.

In addition to the SFI we will be launching the Local Nature Recovery scheme and the Landscape Recovery scheme, as set out in the Agricultural Transition Plan: June 2021 progress update.

The Local Nature Recovery scheme will begin a phased rollout from 2023 and will pay for actions that achieve DEFRA’s environmental priorities in a locally targeted way. Landscape Recovery will begin piloting in 2022, and will support long-term, large-scale, land use change and habitat restoration projects. All three schemes will be accessible to farmers, with more details rolling out later in 2022.

We hope this has outlined to you what the Farming Investment Fund is, whether it applies to your farming business, as well as the future of the agricultural sector. If you require any further information on any specialist government fund packages for your business, or anything accounting related for that matter, please don’t hesitate to get in contact with us at Nordens where one of our trusted advisors would be happy talking you through your query.