Farming News - NatWest announces support packages for UK farmers hit by rising inflation
NatWest announces support packages for UK farmers hit by rising inflation
Businesses in the UK agriculture sector are facing inflation of over 30% and price hikes in the region of 200% for fertiliser, gas and fuel, and a raft of other cost pressures on feed, electricity and seeds, as a result of the combined impacts of inflation, Brexit, and the War on Ukraine on supply costs to the industry.
The bank’s analysis has found that costs on fertiliser have increased three-fold, with the cost per tonne now sitting at around £850, up from £280 in May 2021, due to much of the manufacturing taking place in Russia and Ukraine. Energy costs are also continuing to affect the market with gas up 200% on 2021, and electricity up 40%. These combined input cost pressures are squeezing the farming industry’s margins tighter.
In response to these pressures, NatWest is today introducing a package to help support customers in the agriculture sector, with individual financial support available for those hit by increased farm running costs. The announcement comes as the bank also publishes a white paper recommending a series of longer-term interventions that should be taken by policy makers, financial services and the sector itself to achieve a nature-positive transition.
The bank will offer capital repayment holidays – where the business only needs to pay the interest on a loan for an agreed period, reducing the amount due each month – as well as increases to overdrafts. For smaller businesses in the agriculture sector, the bank yesterday announced reductions in interest rate on its range of Small Business Loans up to £40,000, by between 0.5% and 1.35% dependent on term and amount.
In March, NatWest launched a new Green Loan and Green Asset finance product, allowing businesses to borrow with no fees to invest in eligible clean energy, clean buildings, clean transport and agriculture. These loans can help future proof their business by investing in assets such as solar panels, electric vehicles or heat pumps. The products are one of the ways the bank is delivering on a commitment to lend £100bn of Climate and Sustainable Funding and Financing by 2025.
Ian Burrow, Head of Agriculture at NatWest, said:
“We are here to support our customers in the farming sector through this challenging period. Our agricultural managers have in-depth knowledge of the sector, including being able to offer individual financial support, where needed, to help customers navigate high energy, feed and fertiliser prices. We would urge affected customers to get in touch with their local agriculture relationship manager to discuss how we can help.
“As always, we are also here to support our customers in the long-term. That’s why we encourage customers to discuss the impact on their own individual business with a relationship manager to establish how we may be able to support them.”
Financing the transition in the agriculture sector
NatWest has also today published a new white paper into the need for a sustainable transition in the sector, titled ‘Financing nature-positive transitions in the agriculture sector’. The report finds that near-term investment in agricultural infrastructure, ambitious policy incentives and a common set of metrics need to be prioritised if the UK is to benefit from a sustainable food and farming system.
Dr Maria Carvalho, Head of Climate Economics and Data, NatWest Group said:
“There are huge Commerical opportunities in farmers transitioning to lower-carbon, nature positive methods of food production – from a reduction of input costs, to unlocking price premiums from food retailers, and accessing the benefits of green finance. This is an opportunity for a new and sustainable revolution of the food system in balance with the planet and the wellbeing of society.”
Last July, the bank joined forces with the Sustainable Food Trust to launch the Global Food Metric, an internationally standardised framework for measuring the sustainability of farming and food production. The metric provides a summary for farmers to highlight strengths and areas for improvement, allowing to take action to reduce their emissions.
To contact NatWest’s agriculture team, email firstname.lastname@example.org or your local agricultural manager. Business customers can also call NatWest Business Banking on 03457 114 477.