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Financing the future of food

By Naomi Ikeda

- Last updated on GMT

Naomi Ikeda, R&D tax incentives senior manager at Ayming, explores key funding opportunities for British agri-food companies. Credit: Getty/andreswd
Naomi Ikeda, R&D tax incentives senior manager at Ayming, explores key funding opportunities for British agri-food companies. Credit: Getty/andreswd

Related tags Finance Agriculture

The UK relies on its agri-food sector to feed the nation, but the sector is currently choking on a concerning combination of geopolitical and environmental hazards. British businesses must keep close to new and so far, underutilised, opportunities.

Initial difficulties began with the UK’s departure from the EU, which resulted in labour shortages and funding issues – but further vulnerabilities related to extreme climate events, the UK’s position as a net food importer, and the need to balance quality and nutritional value with affordability during a period of record high inflation have compounded the problems. All amidst a time of turbulent change as the sector attempts to increase technological adoption to address productivity issues.

According to Ayming’s UK Agri-Food Innovation Report, published last month, investment in R&D and technology adoption will be critical in enhancing resilience against external pressures. An innovation-first approach enables agri-food businesses to adapt to the shifting landscape and react to changing market dynamics while reducing inefficiencies.

But the process will involve collaboration from across the whole supply chain – from policymakers to farmers, processors and retailers.

Finding the funding

New innovations are rapidly providing much needed solutions to these challenges. But to maintain this pace and focus, the sector needs to be able to fund the ongoing innovation.

The UK's R&D tax credit scheme is a fundamental vehicle to increasing innovation output in the agri-food sector, addressing challenges such as the need for increased food production with fewer resources, environmental sustainability and shifting consumer preferences.

Significant areas of R&D within the agri-food sector include crop enhancement through novel farming techniques, the development of healthier and more sustainable food products, optimisation of supply chain processes to minimise waste and emissions, the utilisation of advanced technologies for precision agriculture, and the creation of more sustainable packaging solutions.

For example, vertical farming innovations have revolutionised agricultural practices by enabling year-round, climate-controlled crop cultivation with reduced water and pesticide usage. Similarly, R&D in plant-based protein development has produced innovative meat substitutes and dairy alternatives, meeting the growing demand for sustainable and nutritious food options. Smart farming solutions, supported by tax credits, have empowered farmers to better monitor and manage their operations, enhancing productivity while conserving resources.

Amidst current geopolitical instability, British agri-food businesses should be mindful of key funding opportunities designed to support the resilience and sustainability of the sector.

Five funding routes for British agri-food businesses

  1. R&D tax credits:​ The UK’s scheme incentivises companies in the agri-food sector to pursue innovative projects. The scheme can significantly reduce tax bills or provide cash payments for businesses investing in R&D, helping to offset the financial risks associated.
  2. The Farming Innovation Programme:​ Run by the Department for Environment, Food & Rural Affairs (Defra) in partnership with UK Research and Innovation (UKRI), this programme supports projects that aim to enhance productivity, sustainability and resilience in the agriculture sector. Funding competitions under this programme are designed to address specific challenges in farming, from improving agricultural productivity to reducing environmental impacts.
  3.  The Agriculture Transition Plan:​ As part of the UK's post-Brexit agricultural policy, this plan outlines a range of financial support measures to help farmers and land managers transition to a more sustainable future. This includes grants and payments for adopting environmentally friendly practices, improving animal health and welfare, and increasing access to innovation and technology.
  4.  The Agri-tech Catalyst Programme:​ Jointly funded by UKRI and the Department for International Development (DFID), this programme aims to boost the commercialisation of new technologies in agriculture. It focuses on projects that can demonstrate economic and social benefits, encouraging agri-food businesses to develop solutions that can address global food security challenges.
  5. Innovate UK Smart Grants:​ Available to businesses working on groundbreaking projects in any area of technology or industry sector, including agri-food, these grants can support innovation projects at various stages from feasibility studies to prototype development.

Then when it comes to Europe, although the UK's association with Horizon Europe has been precarious since Brexit, businesses are encouraged to engage with this EU funding programme for collaborative projects in areas including, food security, sustainable agriculture and the bioeconomy. Similarly, whilst EU funding of the LEADER Programme has ended, its legacy continues through local action groups that may still offer support to rural businesses, including those in the agri-food sector, for projects that focus on increasing farm productivity and rural tourism initiatives.

These funding opportunities are a vital instrument in driving forward the agri-food sector's innovation, making it more sustainable, efficient, and ultimately more responsive to consumer needs. As the sector continues to evolve, tax credits, alongside initiatives like the Farming Innovation Programme, will be essential in shaping its environmental and economic future.

As the agri-food sector evolves, its ability to adapt to both immediate and long-term challenges will be essential to ensuring food security, sustainability, and economic vitality across the UK.

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