The agricultural sector contributes billions in revenue to the UK economy each year, and with plans to significantly increase investment in agri-tech, there is huge potential for further innovation and growth, writes Jon Maycock, managing director of asset finance at Hampshire Trust Bank.
In order to fund grass-root growth and the new technologies being used in farming, including assets such as drones and 3D printing, specialist lenders and brokers have an important role to play.
According to the National Farmers’ Union (NFU), agriculture contributed around £24bn (€27.6bn) of revenue and around £8.5bn of gross value added (GVA) to the UK economy in 2015, as well as around 500,000 jobs directly and indirectly.
The sector also provides the majority of the raw materials used by the wider agri-food industry, which contributes around £108bn of GVA to the economy and provides over 3.7 million jobs.
This is a hugely important sector which we all rely on, and with the population continuing to swell, new ways must be found to increase food production.
In February, Business Secretary Greg Clark announced £90m worth of funding for agri-tech in a keynote speech to the NFU Conference, highlighting the sector’s exciting future potential and heralding a “technological revolution”.
Clark heralded Ordnance Survey’s use of cutting-edge satellite imagery and digital data collection to map England’s farmland and technological innovations that are helping farmers protect crops from pests, weeds and diseases. Improving farming and food production are helping to ensure the future growth of the sector.
At Hampshire Trust Bank we are experiencing this growth first hand, with our asset finance team seeing a 19% increase in funding to the agricultural sector last year, compared to 2016. In order to ensure that this growth continues, it is crucial that the government secures the best deal it can for the sector as we negotiate our exit from the EU. In addition, the financial services industry must continue to provide support, and this is where specialist banks and brokers that truly understand farming and agricultural sector can help.
Let’s face it, farming is an expensive business, both in terms of time and money, and with agricultural vehicles, machinery and technology being relatively expensive, it can be hard for agricultural businesses to invest in the future.
However, while there are a host of financing solutions available to farming and agricultural businesses, HP and leasing can be appropriate in certain circumstances as it enables businesses to spread the cost of an asset through regular payments, freeing up working capital and in some cases being more tax efficient.
We believe more must be done to inform agricultural businesses about the range of finance options and providers out there. The emergence of specialist lenders, such as Hampshire Trust Bank, has increased the funding choices available to agricultural businesses, and brokers are key in giving customers access to these providers, many of which, like ourselves, choose to work exclusively through introducers.
At this promising point for the agriculture industry, it is more important than ever that businesses in the sector are aware of the choices available to them. Working with specialist banks and brokers that truly understand the industry will help small businesses in the sector to thrive and grow.
We are looking forward to the opportunities that lie ahead, and in continuing to work with our brokers to plant the seeds that help the sector to flourish.