Agricultural Business Funding

If you are farmer looking to diversify in order to boost your farming or agricultural business, you may want to look at the assistance available in the form of grants or loans that can help you achieve your ambition. Farm diversification can add a significant amount of value to your business. On average, those who diversify their agriculture or farming business in the UK can expect approximately £10,400 extra additional income per year; more than £850 per month, with half of all UK farms choosing to pursue farm diversification to some extent.

The main types of funding available for farm diversification as well as the options available to invest in a farming business, such as agricultural finance are specific, so understanding the key differences between them and the ways in which diversified activity can help increase revenues for your business is important.

Diversifying your Farm Business

Prior to considering diversification and applying for loans or grants, you need to make sure that this is indeed the right option for you. Extra income is an attractive prospect, but it is also no guarantee for farmers who are considering expanding their business.

To help you make the right decision, and so that you will be prepared to answer questions by professional advisers providing loans or grants on the subject, there are numerous topics you should consider before making applications, including:

  • How profitable will your business be?
  • What will be the set-up costs?
  • How will you market the business?
  • Can you clearly explain how it will benefit the rural economy?
  • Is the business project good value for money?
  • What are the main reasons leading you to want to diversity?
  • How will expansion affect cash flow and staffing?
  • Are there any legal implications, such as insurance or tax requirements?
  • Have you researched thoroughly the circumstances in which other local farmers have diversified? What led to their success or failure?

You will need to be able to demonstrate that there is a genuine demand for what you want to do with your business, facilitated by the loan or grant in question, so being able to address all areas of concern is more likely to give a broker or provider of the grant or loan, better peace of mind that you are indeed a sound investment who will be able to improve business and repay the loan if necessary.

Ultimately, securing funding in agriculture is similar to the likes of bridging and auction finance; the more appealing a borrower appears to a lender, the more likely they are to be accepted and their loan funded.

RDPE Funding for Agriculture

The Rural Development Programme for England (RDPE) provides support and funding to businesses in rural areas in England. This constitutes around 26% of all registered businesses in the UK, and according to 2013 statistics, contributed to over £210 billion annually.

You can apply for funding if you:

  • Manage land or woodland
  • Are a business owner in a rural part of the country
  • A farmer, forester or grower

The rural development programmes do however differ for Wales, Scotland and Northern Ireland and further information and clarification can be found on the GOV.UK website.

Available RDPE Programmes

As with other allowances and grants, there are several potential strands and opportunities within the RDPE programme, with each having its own merits and being suitable for a different prospective client. These include:

RDPE Growth Programme - These pertain to grants available for rural tourism infrastructure, and business development in order to bring more money to the rural economy.

RDPE Programme for England: LEADER funding - If you are looking to diversify your rural business and need funding for projects that can help boost the economy, you can apply for LEADER funding through your Local Action Group (LAG). Each LAG decides the projects that will be funding, but all projects must relate in some way to farm diversification or boosting rural tourism.

The programme involves a rigorous two-stage application process. You will first be assessed by the Rural Payments Agency (RPA) through an ‘expression of interest’ application. If the RPA believes that funding could benefit your business, you will then be requested to submit a full application which will then be considered for approval or rejection for funding.

If considering making an application for the RPDE Programmes and wondering how to make a successful application, the GOV UK website offers some tips and important reminders for applicants to give them the very best chance of getting accepted on the programme.

Countryside Stewardship Scheme - Open to all eligible farmers and other land managers, this scheme provides financial support to make environmental improvements through one’s farm or agricultural business.

Wildlife Offers: Countryside Stewardship

There are different types of countryside stewardships and applications processes under these forms of grant that are available to farmers and which can help the wildlife flourish on your farmland. Each offer has a specific benefit, whether it be improved habitats, providing nectar sources for insects, or providing winter food for birds.

There are four ‘offers’ available as part of this stewardship depending on your circumstances, and each has its own minimum requirements. However, all require that you have a Single Business Identifier (SBI) reference number in order to apply. The options are:

  • Lowland grazing offer
  • Upland offer
  • Mixed farming offer
  • Arable offer

If you are accepted under one of the stewardships, you will receive an annual payment for 5 years. The payment rate differs depending on which offer you receive.