3 min read

Farmers are being encouraged to bring innovation into their farming and agriculture business, as the government commits to extra Research & Development spending.

This R&D budget is broken into two categories – building on strengths and action needed. The impetus is to drive governments and companies to make R&D investments, either to bring up UK standards to better compete in the market, or to retain a global industry lead.

Since April 2020, the government has increased public R&D spending by 15%. Exploring the tax benefits of innovation could be further worth exploring for those in the farming and agriculture sectors. 

Where is the Farming and Agriculture industry currently focusing R&D spend?

The industry is facing problems internationally, as climate change and population growth leads to warmer temperatures, drier ground, and more strain on soils. Agri-tech is a developing field that looks to combat a decidedly bleak future. It looks to advanced technologies to combat the issues facing the industry head-on. 

The government will be offering tax credits of up to 33% to small businesses for investment in R&D. Back in the 2017/2018 tax year, £4.26 billion was claimed in tax credits, but farming and agriculture only accounted for £20 million of this total, down from £25 million in 2016/2017. Last year, only 385 claims were made – 20% less than the year previous. This indicates plenty of scope for farmers to seek R&D funding.

What is R&D investment destined to achieve?

The Government’s plan is to more than double the funding available to all industries for R&D, to £22 billion by 2024-2025. With the announced goal of R&D spending reaching 1.7% of GDP by 2027 and 3% in the longer term, this proposal should bring the UK in line with other developed economies. An ambitious target, this will require public investment as well as business investment.

Back in November 2020, the Government announced transformational plans labelled ‘the most significant change to farming and land management in 50 years.’ This ‘Path to Sustainable Farming’ details a campaign for the next seven years. It intends to assist farmers in their journey into the future. 

As we leave the EU and are no longer bound by the EU’s Common Agricultural Policy, these plans intend to tailor specifically to the needs of British farmers, focusing on incentives to support sustainable farming practices. The intention is to ensure that farmers can sustainably produce healthy food by 2028, without subsidy. As well as this aim, the proposal plans to implement steps to improve animal health and welfare, improve the environment, and minimise carbon emissions.

Ramping up or decreasing R&D in the future?

The Basic Payment Scheme (BPS) has long supported farmers, and this year the government is moving away from this established scheme through the Agricultural Transition Plan

To reach the level of self-subsistence the government is aiming at, Defra is launching two schemes in Autumn 2021 to encourage farmers to maintain and improve productivity. Entitled the Farming Investment Fund, a small and a large grant scheme will provide incentivised support for farmers.

The current annual budget will be retained throughout this Parliament term. From next year, an increased R&D provision will see farmers and agricultural businesses drive for innovation in the sector. New and existing technologies should tackle productivity challenges, and research agricultural innovations for the future. These will particularly focus on reducing greenhouse gas emissions and achieving the government net-zero aims. 

So, the industry’s funding is changing – but the onus is certainly weighted towards de-risking R&D innovation for a sustainable farming future.