Farming News - Lack of access to finance main barrier keeping farmers from adopting nature-friendly practices

Lack of access to finance main barrier keeping farmers from adopting nature-friendly practices

The Department for Environment, Food & Rural Affairs (Defra) should design post-Brexit UK farming subsidies so that they specifically encourage nature-friendly farming practices such as agroecology, according to research from the New Economics Foundation (NEF) published today. The report finds that lack of access to finance is the main barrier keeping farmers from adopting nature-friendly practices. The report recommends that the new subsidy schemes due to be rolled out over the next four years should fund farmers to produce food in a way which tackles the climate crisis and supports wildlife.

During 2021, the UK will begin leaving the European Union’s (EU) subsidy scheme, the Common Agriculture Policy (CAP). The report argues that, with the signing of the Agriculture Bill into law at the end of 2020, the UK has an opportunity to redesign its farming system to address the climate crisis and damage to ecosystems. The details of the government’s new subsidy regime are yet to be confirmed, but the government has said that it will pay farmers to manage their land in an environmentally sustainable way, with a focus on the climate crisis, wildlife, and flood mitigation. But the report argues that this approach risks neglecting support for sustainable food production itself, and that an explicit incentive for agroecology would enable this.

The report finds that the key barrier to more widespread adoption of agroecological farming is farmers’ limited access to finance like subsidies, loans, or other sources of funding. The report argues that due to the small size of nature-friendly farms and the difficultly for new entrants to own farmland, nature-friendly farming is less attractive to banks and other lenders. While loans from banks make up the biggest source of funding for UK agriculture as a whole, this lending tends to focus on conventional industrial agriculture rather than sustainable farming.

As a result, the report highlights that nature-friendly farming is not being widely adopted. For example, government statistics show that less than 3% of farmland in the UK is currently certified organic. The report argues that nature-friendly farming benefits both the environment and the economy, through storing more carbon in the soil, producing fewer polluting emissions, boosting wildlife, providing higher levels of year-round employment, and requiring shorter supply chains.

The report urges policy makers, financial institutions, impact investors and philanthropists to redirect finance towards agroecology. It recommends that:

  1. Defra’s post-Brexit subsidies should actively support existing and new farmers to adopt nature-friendly farming practices.
  2. Philanthropic foundations and trusts, that collectively manage more than £65bn in the UK, should do more in pooling their grants to support agroecology.
  3. A new Agroecology Development Bank be set up in the UK, to channel public finance towards sustainable farming.

Chris Williams, senior researcher at the New Economics Foundation, said:

“How we farm has a major impact on our health, our communities, our climate and nature. The way we farm has contributed to the UK being one of the most nature-depleted countries in the world. But UK agriculture is now at a crossroads. Access to land and access to finance are crucial for this transition to genuinely sustainable agriculture and this report sheds light on how finance can be used to aid a just transition to agroecological farming.”

Sue Pritchard, chief executive of the Food, Farming and Countryside Commission, said:

“This ‘super year’ for action on the climate and nature emergencies is an absolutely critical time for governments across the UK to step up, with bold and coherent policies, backed by the right resources commensurate to the challenge. To meet its ambitions, the government needs to pay attention to essential discussions, like those in this report, about how we finance a just transition to more sustainable agriculture and land use. NEF’s clear and practical proposals will speed the necessary shift to agroecology and regenerative farming.”