Intro

Agriculture accounts for 72% of the land use in the UK, but the agricultural industry only contributes 0.6% to the UK’s GDP. The industry is responsible for approximately half a million jobs and generates 65% self-sufficiency for the UK’s food requirements. A changing world presents new requirements for science and technology: recent social, economic, and climate changes have presented new challenges to which the industry must react. Changing seasonal temperatures, increasing concentrations of CO2 and rising flooding risks, require agricultural workers to think differently about the science and technology at their disposal. Through responding to these problems, the industry has developed a number of new, more efficient methods of organic farming, as well as sustainable avenues of biofuel production.

Sector trends

R&D in the agricultural sector has recently focused on crop farming to mass-produce and cultivate plants for food, livestock and commercial purposes. Development of the environmental conditions (e.g. temperature, soil acidity) has shown growth processes can be optimised to enhance the commercial viability of the products with increased yields and longer lifetimes. Whilst crop farming is more efficient and favourable from a social viewpoint, R&D exists within livestock farming with feed trials to adjust the additives to assist growth rate while complying with animal welfare regulations.

Other examples of R&D have involved implementing sensor technology to measure tree growth to analyse the impact of temperature, humidity and soil moisture. These trends in each domain demonstrate a consistent attempt in the UK’s agricultural sector to mitigate the detrimental impact from fossil fuels. Structural reforming is necessary to make UK agriculture more sustainable and self-sufficient as carbon emissions are reduced, and R&D is required to drive greener processes and sustainable farming practices.

Examples of R&D in agriculture

As food demand increases, the agricultural industry must keep pace to satisfy the growing social and economic climate with crop and livestock farming and fisheries. Agricultural technology, or ‘agri-tech’ as you may have heard it called, is used to develop these areas in a cost-effective manner, while further advancement of forestry and logging help utilise natural resources more sustainably and efficiently.

The development of agri-tech, including automated drone technologies, has modernised how farmers monitor their crops, feed and livestock. Robotic harvest instruments have been adapted to collect fruit and vegetables to avoid bruising, while vacuums have been implemented to retrieve apples to mitigate any damage. Computer-vision software has been implemented to reduce pesticide wastage through using weeding robotics to target specific crop areas.

The application of drone technology has assisted agronomists, agricultural engineers, and farmers to provide effective agricultural management. Data analytics of crop health at multiple GPS locations can save on operational costs and time to generate an extensive mapping tool. The activities around the development of the high-resolution imagery to enhance the capability to map smaller areas with unknown terrain would be considered R&D for tax purposes.

What doesn’t count as R&D

Despite the importance of agriculture advertising and marketing in the industry to promote the farmer’s produce, these commercial activities would not be regarded as R&D and therefore any associated costs would not be considered R&D for tax purposes.

The development of agri-tech, including automated drone technologies, has modernised how farmers monitor their crops, feed and livestock. Robotic harvest instruments have been adapted to collect fruit and vegetables to avoid bruising, while vacuums have been implemented to retrieve apples to mitigate any damage.

How can we help?

Ben Conry and Arwyn Evans in the Consulting Team have experience working in the agri-tech sector prior to joining Kene Partners, which enables them to accurately identify R&D related activities undertaken by clients across the Agriculture industry. Book your free consultation to discover qualifying activities in your business.

Ben Conry

R&D Tax Consultant

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