Farming is changing. The future of agriculture is centred on a new era of agri-tech, where advances in technology yield new growth in the sector to meet increasing demand and enable the UK to meet net zero targets. In this blog, we delve into the current state of the sector, the challenges within agriculture, and the role innovation plays in overcoming these challenges in 2023.
There is a string of challenges for the agricultural sector. The fact is the world’s population is growing at a much faster rate than the supply chain for food production. Arable land needs significant restoration before it can sustain crops at scale. Environmental pressures such as climate change, which creates warmer temperatures and drier soils, are affecting farming practices. And, the National Farmers’ Union has not been shy when it comes to expressing its concern about rising costs, labour shortages, bird flu, adverse weather affecting output, and post-Brexit changes.
The impact of climate change on agriculture is drastic – reducing crop yields and lowering livestock productivity. However, the agricultural industry is not the innocent party, as farming practices contribute to climate change by way of greenhouse gases released into the atmosphere. The situation is that, despite greenhouse gas emissions from agriculture decreasing by 16% between 1990 and 2020, the sector still contributes 11% of all greenhouse gas emissions in the UK. There is good news, though, as according to the Agri-climate report 2022, 58% of farmers were taking actions to reduce emissions.
Innovation within agriculture and food production can help minimise this and contribute to net zero goals. Earlier this month at the Agriculture Innovation Mission for Climate Summit, the UK pledged to be a global leader in food productivity, sustainable farming and tackling climate change. As well as investing £3 million into developing more sustainable fertilisers, hundreds of millions of pounds will be ploughed into ongoing support and grants for UK farmers to foster innovation within the sector.
The introduction of technology within agriculture enables the sector to tackle its problems head on in all aspects of farming, food production and distribution, in turn increasing productivity and becoming more sustainable. Rather than developing more land for agricultural use, the agriculture sector is encouraged to use technology as a solution and embrace innovation and agricultural R&D.
A report released by the World Government Summit in 2018, Agriculture 4.0 – The Future of Farming Technology, stated that demand is increasingly growing, leading to a need to produce 70% more food by 2050. The use of tech in agriculture will be the catalyst for change and improvement.
Some exciting examples of agri-tech in 2023 include a hands-free solution to monitor a cow’s welfare and performance, and a working herd of harvesting agri-robots.
Other examples of technology in agriculture include:
Agri-tech allows farms to be more profitable, efficient and environmentally friendly.
In 2021, the UK agriculture industry was made up of 216,000 farm holdings. Innovation is frequent on farms – from adapting products to keep up with changes in climate to developing new techniques to extend the growing season.
Here are some examples of R&D in agriculture:
If a farmer has addressed a scientific or technological uncertainty whilst innovating and made an advance in the industry – even if the project was unsuccessful – they could be able to take advantage of HMRC’s R&D tax credit incentives.
For the tax year 2020/2021, HMRC’s R&D tax relief statistics revealed that the agriculture, forestry and fishing sector received £70 million of R&D tax relief, but only 1.3% of businesses in the sector (1,275 businesses) made an R&D claim. The average agricultural R&D tax relief claim was worth £55,000.
Making an agricultural R&D tax relief claim
We understand it can be daunting considering an R&D tax relief agricultural claim, because of uncertainties of eligibility, and a lack of time and understanding, especially in these challenging times. Catax’s team of specialists can go through your projects, identify R&D and innovation and create a robust report for HMRC on your behalf.
There are so many qualifying activities for R&D, but we have the expert knowledge and experience to identify these for you and create a comprehensive, well-written claim.
From process innovations to product innovations, the R&D opportunities in the agricultural sector are diverse.
If your agricultural business is linking with a tech start-up to undertake research and development (R&D) for the future of agri-tech, for example, you could be eligible for R&D tax relief.
The client case studies below highlight some real-life examples of R&D in agriculture and the benefits of claiming agricultural R&D tax relief.
This client runs a successful UK potato farm, producing a wide variety of potato crops for seeding and the consumer market in the UK. Choosing to diversify their stock and improve their storage facilities to grow their business, the company needed to invest in the development of their facilities.
The business undertook two projects, the first focusing on their storage facilities, resulting in a 12-month programme of development managed internally with support from external subcontractors.
They required a facility that could hold a large quantity of produce for extended periods while maintaining optimum quality. To ensure this, they retrofitted a bespoke facility incorporating a drywall, ventilation system and a new software system to control and monitor the conditions. This resulted in absolute control of the temperature, humidity and carbon monoxide levels within their facility, all running on lower power levels than previously used.
Their second project focused on their potato stock, trialling new varieties in varying conditions to see if it was a viable investment. This project included renting acreage to test a range of soils and conditions, alongside intensive testing and monitoring of the conditions and quality checking the resulting crops.
With the support of Catax, this client has received over £80,000 in agricultural R&D tax relief so far.
Our client is a family-run business that has been farming for over three generations. For the last 15 years, they have been supplying high-quality equipment to the agriculture industry. They continually strive to improve farming and agricultural processes by trialling new methods.
The business has worked on several projects to overcome issues within their industry. These included the development of a combined GPS and operational intelligence system for the sector, and working with contractors to create a new piece of software that allowed a better assessment of land, alongside better monitoring of areas in use. Our client has worked to make their equipment more efficient, cost-effective and eco-friendly.
Projects to affect this include the design of more efficient systems for the drying of products, blending processes and systems for cleaning and chopping produce.
To find these solutions, they invested in research with external partners to find ways to adapt and modify existing machinery and create better processes. The impact of these developments for their clients means a much more cost-effective and green way of working.
At Catax, we not only ensure that our clients are receiving the maximum return on their investments but also work with our clients to ensure they record their future projects to benefit fully from the tax reliefs they are entitled.
This client has received over £118,000 in R&D tax relief so far for its agricultural innovation.
Our client is a leading grower of vegetables, melons, roots and tubers.
Some of the qualifying R&D projects included:
At the outset, there existed a significant degree of scientific uncertainty that the business attempted to overcome.
Across two claims, Catax has so far helped the business to receive R&D tax relief to the value of over £100,000.
Our client is one of the leading agricultural family-owned farms in the industry, with a business that has been passed on from generation to generation. They maintain their market position by appreciably improving current processes, attempting new processes, and developing innovative new solutions within their trade activity.
This company sought an advance in the field of Agricultural Technology and Veterinary Medicine through R&D into natural methods of preventing the gastrointestinal disease, cryptosporidiosis, caused by the cryptosporidium protozoa in prenatal ruminant cattle.
At the outset, there existed a significant degree of scientific uncertainty, which the business attempted to overcome. Existing methodologies were expensive and reactive in form, but our client developed a technology not comparable to anything existing in the marketplace.
Catax helped the business secure an R&D tax credit of over £4,000 for its agricultural innovation.
Our client is a family-run business that has been farming for over three generations. The company continually strives to improve farming and agricultural processes by formulating unconventional methodologies to overcome the multitude of logistical and technological limitations that continually arise within the industry.
Some of the qualifying R&D projects included the business:
Across six R&D claims, Catax has so far helped the business to secure a six-figure sum of R&D tax relief.