We often find the funding of farm diversification projects to be a significant obstacle for many farm businesses. This is especially true if the nature of the enterprise itself requires a large amount of upfront capital to get it off the ground. Projects involving the conversion or construction of buildings would be a good example of this. Farm businesses may be more reluctant now than ever to release capital, due to the high financial risk imposed by current volatility in input costs, brought about by recent global issues and uncertainty. So what are the other options for financing a project?
Farm businesses can benefit from grant funding in a variety of ways. You not only gain working capital for your diversification projects, but you also get confirmation that your proposals and budgets are credible enough to be financed. Another advantage is that you won’t have to surrender any equity or compromise any plans with investors.
Previously, there has been numerous opportunities for grant funding, specifically for farm diversification. Most notably, these have been in the form of the Rural Development Programme for England (RDPE), LEADER funding, The Princes Countryside Fund and the Farm Diversification Grant Programme. However, since many of these schemes were EU funded, these have since come to a close.
Unfortunately, there is nothing certain in the pipeline with regards to grant funding for farm diversification projects. However, there is a possibility for future funding although these appear very much in development.
Read on for an insight of what may be to come for grant funding for farm diversification.
Farming Investment Fund
Perhaps the most promising source of grant funding towards diversified projects, lies within the Agricultural Transition Plan and its respective funding channels. There are 5 funding channels:
- Environmental Land Managment Scheme (ELMS)
- Lump Sum Exit Scheme
- Improving Farming Prosperity
- Delinked Basic Payment Scheme
- Environmental and Animal Welfare Schemes
Whilst these are largely focused on delivery of production and environmental benefits (some of which may diversify your income streams), the one that appears most linked to farm diversification is the “Improving Farming Prosperity” channel. Encompassed within this channel is the “Farm Investment Fund” (FIF). The FIF is divided across 2 schemes:
- Farming Equipment & Technology Fund (FETF) provides smaller grants to improve business performance.
- Farming Transformation Fund (FTF) supports larger investments.
The FTF, sets out to deliver 3 themes:
- Water Management
- Improving Farm Productivity
- Added Value
As of yet, there has only been guidance on the “water management” and “improving Farm Productivity”. Although it is difficult to know the extent of farm diversification that it will cover, the “Added Value” theme seems promising. By definition, we believe this will support enterprises which process their own produce. See more about added value products here. We are currently awaiting guidance on this final theme, which should hopefully be released over the coming months.
Other grant opportunities
Other than the traditional grant schemes focused on supporting rural businesses, it may be worth looking into your local grant funding groups or initiatives. Many of these will offer small business grants, though many are aimed at existing SME’s and often do not offer funding for larger capital projects.
Here at Dudley Peverill Associates, we will be keeping our ears to the ground for any grant funding opportunities that become available!
Unsure of what farm diversification enterprise is for you? Use our free diversification discovery assistant. Simply fill out the short questionnaire and receive a brief, free review of what farm diversifications may suit you and your business.