The British farming community is receiving financing thanks to an announcement made by NatWest bank.
NatWest, the largest commercial bank in the UK, which serves 40,000 agricultural customers, has announced that it will extend a credit package totaling an additional 1.25 billion pounds to the nation’s farmers.
The bank claims that this will assist them in coping with a range of cost challenges and will also assist them in transitioning to methods that are more environmentally friendly.
The actions that were announced in June for the sector will be expanded upon by this statement, which was made in July.
As a result of the combined effects of inflation, Brexit, and the War in Ukraine on supply costs to the industry, businesses in the agriculture sector of the UK are facing inflation of over 25 percent, price hikes in the region of 200 percent for fertiliser, gas, and fuel, and a raft of other cost pressures on feed, electricity, and seeds. Additionally, businesses in the sector are facing a host of other cost pressures on seeds.
As a direct response to these constraints, NatWest has decided to give $1.25 billion in support to the agricultural industry.
This money will be deployed by the bank through a variety of channels, such as Green Loans, conventional loans, asset finance, and increased overdrafts. These initiatives are intended to supplement the capital repayment holidays and reductions on small business loans that were announced the previous month.
In addition, the University of Cambridge and the University of Edinburgh have already provided training on sustainability to one hundred fifty of NatWest’s agriculture relationship managers. This training will enable these relationship managers to direct farmers to the most recent forms of support that are available.
According to the findings of the bank’s study, the price of nitrogen fertiliser has increased by almost a factor of three, reaching approximately £760 per tonne. This represents an increase from the price of $280 per tonne in May 2021. The majority of the manufacturing takes place in Russia and Ukraine.
The price of energy is also continuing to have an effect on the market, with gas prices having increased by 200 percent since 2021 and electricity prices having increased by 40 percent.
The combined cost pressures on agricultural inputs are making profit margins in the farming industry even thinner.
NatWest’s head of agriculture, Ian Burrow, made the following statement:
“As a result of a perfect storm of external causes, the agricultural industry in the UK is today confronting cost pressures that have never been seen before. Inflation, difficulties in the supply chain, and the ongoing conflict in Ukraine are all contributing factors that are driving up the price of essential materials for the sector, such as fertiliser and feed. This is on top of the broader challenge of rising fuel and energy prices that the economy as a whole must contend with. The combined effects of these factors are exerting significant pressure on profit margins, and we are aware that the industry requires access to finance in order to successfully traverse the upcoming months. To further assist our nation’s farmers during this trying time, we have decided to increase the amount of financial assistance we provide them by 1.25 billion pounds. Our agricultural managers have extensive understanding of the industry, and as a result, they are in a position to provide individual financial support, when and where it is required. We strongly encourage concerned customers to get in touch with the agriculture relationship manager in their area to discuss the ways in which we might be of assistance to them.”
A new white paper titled “Financing nature-positive transitions in the farm sector” was issued by NatWest last month. The research examined the necessity of a sustainable transition in the industry and was titled “Financing nature-positive transitions in the agriculture sector.”
According to the findings of the paper, in order for the United Kingdom to enjoy the benefits of a sustainable food and farming system, it is necessary to prioritise near-term investments in agricultural infrastructure, ambitious legislative incentives, and a consistent set of measurements.
