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The agricultural industry, due to its sheer influence over the UK, is often subject to numerous regulatory changes. Such changes can mean major alterations to pre-existing operations, which can lead to farmers feeling left behind, and stressed out.
To cope with such changes, agricultural institutions may find themselves needing to rely on alternative forms of funding, the likes of which can only be secured through various forms of business finance packages.
As a broker, it’s a good idea to stay updated on the latest changes the agriculture sector faces, to provide a service that’s devised to help overcome challenges. To assist you do just that, keep reading and we’ll recount the most important changes that brokers should be aware of in agriculture.
With the advent of agricultural technology, in addition to various regulatory alterations, the agricultural industry is vastly different to what it was in previous years. There are a few dynamics that brokers need to be aware of when advising the sector:
Technology has become and has always been a pertinent part of agriculture. Manual tools and techniques are now very few and far between, with agriculture mostly making use of as many automated processes as possible.
The downside to this, of course, is that such technology involves heavy, expensive machinery. The capital needed to maintain and operate this machinery isn’t always in close reach of farmers and other agricultural practitioners. As a result, finance services become an attractive option.
The agricultural industry is continually faced with scrutiny in the eyes of sustainability and environmental friendliness.
This has meant that despite such scrutiny, the industry has been undergoing a sustainability revolution of sorts. From more efficient farming practices that utilise as little resources as possible to more efficient, hydrogen-powered equipment, agriculture and sustainability go hand in hand.
Agriculture is heavily dependent on external factors, such as climate change and weather conditions. This dependency can make it tricky for the industry to stand on its own in adverse situations, outlining a need for self-sufficient farming.
This resilience takes shape in multiple forms, but perhaps the most important of which is referred to as regenerative agriculture; a process that involves not only circumventing climate change, but actually reversing its effect by restoring and improving soil health.
Studies into this practice have shown that not only is regenerative agriculture better for our planet, but better for profits, too. Regenerative agriculture uses less fertiliser, water, and machinery, allowing farmers to reduce their costs by up to 40%.
Partially influenced by major political developments like Brexit, UK consumers in particular are finding themselves being more and more reliant on food that is sourced locally, as opposed to overseas.
This increased preference has placed a great strain on the agricultural sector, forcing it to produce more product at a faster rate than ever before.
Some of the more substantial changes that agricultural workers face come right from the Government:
Published in 2021, the UK Government has outlined and reiterated its stance on ensuring that all industries are decarbonised by 2050. Published under the Net Zero Strategy, such a change introduces various policies that businesses must abide by for the UK to become a net zero nation in just over 25 years.
It is a legal obligation for businesses to achieve this goal and it instructs them to demonstrate plans on substantially reducing their emissions output.
This newer goal is more aggressive than the previous objective of an 80% reduction in emissions compared to 1990 levels and makes the UK the first economy to pass a law on net zero.
Since early 2024, any business importing products deemed as medium-high risk food (such as animal feed) from EU suppliers must now obtain an Export Health Certificate.
These same rules apply to imports originating from the Republic of Ireland. Such certificates can be applied for online and should be done seven days before export dates.
The costs of these certificates vary from different councils and depend on the complexity of the cases.
Perhaps one of the most impactful changes seen by agriculture from Brexit is the loss of the Common Agricultural Policy (CAP). The CAP was an EU policy devised to support agricultural workers by providing a reliable, steady influx of funds depending on how much land they farm. This change means a loss of around £3.5 billion to farmers per year.
With the UK no longer being in the EU, the nation is free to develop its own plans to replace CAP. While such plans exist, they are classified slightly differently to CAP, with farmers needing to meet different criteria to receive payments.
The Sustainable Farming Incentive, for example, requires applicants to complete a soil assessment and commit to meeting the requirements of any actions that follow such assessment. Such actions could mean following unexpected changes to existing farming practices – a timely (and costly) process.
The Sustainable Farming Incentive is a spiritual successor to CAP in the UK. It provides farmers with funding on the basis that they demonstrate a clear prioritisation of sustainable farming practices.
Armed with these recent, critical changes, you should now have a deeper understanding of the most topical challenges and cycles faced by agricultural clients.
Knowing these challenges and keeping them front-of-mind in consultations can enable you to provide a much more tailored, well-rounded experience that your clients will certainly appreciate.
At Aldermore, we’re committed to supporting you to help find your clients the right financial deals for them. For more information on our products and services, contact us today.
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