UK farming is at a critical point, with farmers facing spiralling costs, inheritance tax changes and changing weather patterns, but could agri-tech be the solution to all of these problems?
For a number of years, emerging technologies in the agricultural industry have been pointed to as an all-encompassing solution to these growing challenges.
The term ‘agri-tech’ conjures up thoughts of drones and robots, but it is an incredibly broad sector, covering everything from the use of AI to assist farmers with data driven decisions to carbon capture technology or gene editing.
The UK’s agri-tech sector is now thought to be worth an estimated £13bn, but whilst farmers are open to innovation in the methods they use, often this investment has not directly led to significant changes or improvements on the ground.
A new report from Barclays has identified the barriers holding back agri-tech on farms and also assessed what government can do to make the sector more effective.
Through surveys and discussions with farmers, they came up with three recommendations for government: that they need to provide a clear national strategy, improved and targeted financial support, and develop better connections across the sector.
Lack of clear policy direction
Both farmers and agri-tech companies identified a lack of clear government policy direction as one of the biggest barriers to the effectiveness of agri-tech on farms.
The government is clearly still in the process of evolving its approach to agriculture support and, in addition to the live consultation on land use, is expected to publish a 25 year agriculture roadmap and a national food strategy in 2025.
At present there is little clarity over how this will look and only adds to the continued uncertainty in the industry post-Brexit.
Farmer confidence in government is at a major low following multiple blows through the changes to Agricultural Property Relief (APR) as well as the sudden and unexpected closure of the Sustainable Farming Incentive (SFI).
In the report’s survey, famers pointed to this lack of long-term policy stability as the biggest obstacle they face in making their businesses sustainable, whilst farmers also felt that the governments lack of advocacy and promotion of UK farms was a major hindrance.
The absence of policy direction not only discourages farmers from investing in agri-tech solutions, but it also hits the confidence of investors.
Agri-tech businesses highlighted the sense that the new government did not have a clear strategy which is having a big impact on the ability of these businesses to make long-term plans.
At times it was felt that government regulation was not fit to encourage investment and also hampered the scale up of different projects, particularly in areas such as insect proteins, animal feed, and pesticides.
The CEO of one agri-tech start-up said that political instability is pushing investors away, whilst another criticised governments lack of balance between a clear policy direction and a ‘hands off’ approach that allows experts closest to the issues lead on the delivery.
They told the report: “The problem we have is that government get involved in the detail of how to implement things when that is not their job or skillset. Let us do that”.
The report also flags a general sense that the lack of strategic forward direction post-Brexit had put UK startups at a disadvantage.
A different CEO said: “With Brexit happening we’ve basically been put into a bit of a limbo period, we haven’t been able to adopt EU regulation as perhaps we should have done, they’re running about three years ahead of us which puts us at a disadvantage if we’re looking to export”.
Agri-tech needs to be financially viable
Ultimately the bottom line is the key driver in decision making on the farm and a number of participants in the report suggested that forms of agri-tech need to be proven as financially viable before they will be taken up.
Many highlighted the growing costs that they face as well as the fact that climate change was making budgeting more difficult.
Farmers said they needed to make a mindset shift away from yield to overall margin, considering how to generate return on each bit of land and being willing to try new things.
Yet despite this willingness to embrace new ideas there was a belief that the amount of investment in agri-tech does not marry up to the impact it has had.
One survey participant said: “how much money has been spent on agri-tech in the last ten years and how much has actually been used on farms is staggering”.
Barclays report notes that this is seen as down to the failure of agri-tech to deliver at scale, as farmers shared experiences of being approached by companies seeking very small portions of land to run schemes which they felt were just not financially viable.
Funding worries for agri-tech firms
It is not just farmers who are finding financial constraints to be a major barrier to investment, but agri-tech developers also expressed concerns about funding their projects.
There is a significant amount of grant funding available for agri-tech businesses, particularly through the government agency Innovate UK.
However, many companies criticised the conditions for securing the grants, as well as the lack of follow through after the grants have been awarded.
The founder of one agri-tech business said: “There is so much money being offered in grants, only to find that if you want a £500,000 grant, someone says 'no problem, but you have to spend the money first and show us the receipts'.
"If I had the £500,000, I wouldn’t be asking them for the money," the founder told Barclays.
There was also a belief that funding becomes increasingly more challenging as a company grows and moves up the financing ladder, holding back larger scale agri-tech.
Political instability has made investors more hesitant, but some also felt that high profile parts of the agri-tech sector that had subsequently failed or underperformed had hampered wider investor appetite for agri-tech investment.
Three recommendations
Despite the significant obstacles, the report found both farmers and agri-tech businesses to be optimistic about the future of agri-tech and its role in the future of farming.
The report put forward three recommendations for government about how to harness this optimism and overcome these barriers.
The first of these is that the government needs to deliver an overall strategy for the future of agriculture.
The planned announcement of a 25 year roadmap for the industry provides government with the ideal way to articulate this and should take the opportunity to review the success of the previous 2013 agri-tech strategy.
It also advises that government should provide longer term clarity and certainty around the evolution of the Environmental Land Management Scheme (ELMS).
Whilst this is broader than just agri-tech, this would provide farmers with the necessary clarity to consider future investments and income streams on the farm, and would support farmers in making longer-term choices about land use and investment, including in agri-tech.
The report also stressed the importance of improved collaboration between Defra and agri-tech firms to help government better understand the unintended consequences of decisions, but also to ensure regulation is fit for purpose and helps to accelerate the development of new agri-tech.
The second recommendation was that government needs to do more to tackle the disconnect between key players in the industry.
A key concern highlighted by both farmers and agri-tech developers was that agri-tech was not being designed specifically for farmers needs and therefore investment in the sector is not flowing directly into farms.
The report suggests that government can be a more effective go-between for farmers, developers, and the academic community resulting in more fit for purpose technology.
One suggestion as to how this can work in practice is that the recently established UK Agri-Tech Centre, backed by Innovate UK, should build in a clearer role for farmer participation and input.
One way that this could operate is by backing more pilot or demo farms that allow agri-tech companies to test and innovate alongside farmers.
Another important role put forward for the UK Agri-Tech Centre was in developing skills and promoting careers in the industry. A previous survey found that just 3% of 18-30 year olds saw working in agriculture as a desirable career.
Promoting the industry and building a talent pipeline in agri-tech is viewed as crucial. The report suggested that this could work in a similar way to a scheme that brokers work experience in the space sector and has provided a wide range of work experience placements, helping to drive talent into the area.
The final recommendation put forward by the report was that appropriate and targeted financial support needs to be put in place to aid the development and uptake of agri-tech.
Undoubtedly farmers require more financial certainty before they are likely to be willing to invest money in new technologies and try new ideas.
Certainty must be provided
Farmers have already suffered from a lack of clarity in the direction of government funding since Brexit and Defra’s closure of the SFI will only have knocked farmers confidence in government and financial support schemes further.
The report advises that certainty on this must be provided, and that government should also work harder to showcase success stories of farmer adoption of agri-tech.
Failure to recognise that a wider vision and well planned support are required will hold both agri-tech and farming back at a time when the industry requires more, rather than fewer, options.
