Farming plays a crucial role in our society, providing fresh produce for our plates, wool for our woolies, honey for our porridge and a multitude of other essential products to meet our demands. As with many industries, farming is being hit with numerous challenges as governments seek to create a more environmentally friendly and carbon neutral world. We are all bombarded with reduce, recycle and reuse messages — but what does a more eco-friendly future mean for farmers? What has the agriculture sector been asked to do to fight against climate change and how can it achieve this?
The main policies relating to farming in the UK aim to reduce greenhouse gas (GHG) emissions to ‘net zero’. The UK government’s target is to achieve this by 2050, while in Northern Ireland this may be changed to 2045 (as outlined in the Climate Change Bill). In England and Wales, the NFU (National Farmers Union) has set an even more ambitious goal. It aims to reach net zero across the whole agricultural sector by 2040.
These targets will be hard to achieve. According to the Climate Change Committee, even a 50% fall in meat and dairy production in Northern Ireland by 2050, combined with significantly greater levels of tree planting on the land released, would not be enough to achieve net zero by then. To get anywhere near these targets, farmers across the UK will have to change what they farm and how they operate. They will need to become more carbon neutral across all their activities — and all within the next 25 years.
Such a change in practice is daunting especially when there is extremely limited guidance on how to progress and move forward.
Government Grants for Agricultural Research & Development
From 2022, however, the government has indicated that farmers will benefit from increased investment in agricultural R&D. The investment (though government grants) is intended to:
- Enable more farmers and agri-food businesses to drive innovation
- Support farmer-led R&D projects to trial and demonstrate the viability of new and existing technologies to improve on-farm productivity
- Promote research into how agriculture can meet its longer term goals to reduce GHG emissions and achieve net zero
- Fund equipment and technology in a targeted and more efficient way
Farming more efficiently means lower costs, improved yields, reduced emissions and other environmental benefits from using less land and other inputs to achieve the same level of production. Investments could include:
- Precision slurry application equipment
- Variable rate nutrient or pesticide applicators
- Efficient irrigation systems
- Energy-efficient lighting
- Automated or robotic planting, weeding and harvesting equipment
- Robotic milking systems
Providing investment grants for equipment and technology is a fantastic step forward for the industry but they are not yet in place. They also don’t cover everything. There are also labour and consumable costs (as well as risks) involved in trialling new technologies and processes.
Thankfully, there is a current government incentive in place that helps innovation and diversification on the farm. The R&D Tax Credits scheme enables farmers (operating as limited companies) to claim a proportion of the wages, consumables, software and sub-contractor costs that they have incurred carrying out R&D.
R&D Tax Credits for Agricultural Research & Development
R&D Tax Credits are available now for farming companies to take advantage of — and there are numerous areas where farmers can conduct research prior to the investment grants becoming available. Significant benefits can be obtained by improving current facilities and processes, as well as trialling new equipment and processes (see some examples here). As well as this, there are various improvements that can be implemented across the sector to help minimise GHG emissions. R&D can include trialling things like:
- The use of controlled release fertilisers and inhibitors to increase efficient use of nitrogen and reduce emissions
- Feed additives to reduce methane emissions from ruminant livestock
- Improving health in cattle and sheep to reduce methane emissions and boost growth rates
- Precision farming for crops to deliver nutrients and crop protection more efficiently
- Loosening compacted soils and preventing soil compaction in cropland and pasture, reducing the need for cultivation and minimising nitrous oxide emissions
- Anaerobic digestion to convert animal manures, crops and crop by-products into renewable energy
- A wide range of energy efficiency measures to reduce usage of fuels and electricity
- Gene editing for disease resistance to improve health and productivity of crops and livestock and reduce emissions
How we can help you
At IF R&D Tax Credits, we are here to help you on your journey of agricultural innovation and advancement. We can assist you with all your R&D Tax Credit needs and advise you on how to plan for future R&D — to ensure you gain the maximum benefits.
If you would like to know more about R&D Tax Credits, please get in touch for a no-obligation discussion.