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As we have often discussed, the funding of farm diversification projects appears to be a significant obstacle for many farm businesses. Many diversification projects require large amounts of capital expenditure. The current market volatility and soaring input costs place UK farmers in a position where they face larger than ever, looming operational costs.
Having a robust cashflow is now increasingly vital to sustaining a farm business, to pay for necessary inputs such as fertiliser, which has seen an increase in price by approximately 180% (AN 34.5%) since this time last year. It is therefore understandable that many are hesitant to invest in the development of new enterprises.
However, on the 23rd of May, as part of the wider Agricultural Transition Plan, DEFRA announced the release of the third grant theme of the Farm Transformation Fund.
The “Adding Value” Grant (AV) is a welcomed and invaluable source of funding for UK farms, hopefully facilitating diversification to increase farm business resilience and boost the rural economy.
Read on for an overview and our thoughts on the new Adding Value grant.
Feel free to contact us today to discuss the Adding Value grant funding or for a free, no obligations initial consultation, for advice surrounding your farm diversification aspirations.
What is the Adding Value grant?
The Adding Value grant is intended to help farmers in processing, diversifying, and adding value to their produce. The grant should enable farmers to shorten supply chains and potentially increase the quantity of produce sold directly to consumers. The agricultural produce that is deemed eligible can be found within the “list of eligible agricultural products” (link at the bottom of this article).
There is £30 million of funding allocated to this particular scheme. Farmers and growers can apply for between £25,000 – £300,000 for up to 40% of their eligible project capital costs. Therefore, the minimum total project cost is £62,500 and a maximum of £750,000.
What will the grant help pay for?
Ultimately, the capital costs mentioned above relate to the purchase of eligible capital items, which include:
- equipment for preparing or processing edible agricultural products for added value sales
- equipment for ‘second stage’ processing of grain – for example, colour sorting, blending
- equipment for processing non-edible agricultural products into new products (for example, flax, hemp, wool, hides, and skins)
- equipment for retailing eligible agricultural products (for example, vending machines or display facilities)
- premises for the preparation or processing of added value agricultural products, including associated integral storage areas.
To clarify using examples, the grant aims to aid farmers and growers in adding value to eligible agricultural products by:
- Washing
- Sorting and grading
- Topping, tailing, dicing and cutting
- Bottling and packaging
- Second stage processing (e.g. grain colour sorting)
Furthermore, the grant also offers to subsidise the purchase of retail facilities. For example, this may include buildings for retail, displays, retail equipment and automation (e.g. vending machines). However, it is worth noting that retail facilities are considered a lower priority and will score lower than the higher priority items that physically “add value” to produce within your application.
The grant will also aim to cover other eligible costs involving the commissioning of electrical power supplies, websites or e-commerce platforms that are required to facilitate the project, providing the funding requested is not more than 10% of the total amount.
The grant also covers second-hand items, but there are further conditions to this to be aware of.
Grant funding will be payable to successful claimants through reimbursement. Once your application is successful, you must submit proof of purchase before funding will be paid.
What won't the grant help pay for?
To summarise, the grant states explicitly that the following costs will not be eligible for funding:
- Agricultural business costs
- Business running costs
- Financial costs
- General costs
- Certain land, building and equipment costs
More detail on the costs listed above can be found within the RPA guidance (links at the bottom of this article).
What are the Rural Payments Agency's funding priorities?
As there is a limited amount of funding available (£30 million), the grant applications will be competitive. Therefore, applications that propose to target and fulfil the RPA’s funding priorities will have a greater chance of success. These priorities consist of projects that will:
- Increase, enhance or introduce new processing capabilities to your existing farm business
- Grow your business, to increase business resilience
- Process products and add value for the first time within your farm business
- Shorten supply chains
- Encourage or involve collaboration and partnerships
- Particularly including other third party businesses (including commercial businesses)
- Improve environmental sustainability through:
- Renewable energy
- Increased energy and water use efficiency
- Increased sustainability in packaging and materials used
- Reduction of harmful emissions
When planning and writing your application, make sure you consider how it may or may not align with the above priorities. Are there ways you can adapt your project to meet more of the priorities?
When and how to apply
The Adding Value grant is a two stage process which launches in June 2022, where you will have 6 weeks to submit an eligibility form including summary details regarding your project (stage 1). This eligibility form should take no longer than 10-15 minutes.
If your project is deemed eligible, you will be sent an application form and project reference number to create a full, detailed application (stage 2). Assuming your project is invited to apply for the said full application, a project sponsor will be allocated to your application to answer any queries you may have. The application window for stage 2 closes on 31st January 2024 but can be submitted any time before. Once submitted, the RPA aim to provide a decision on your full application within approximately 60 days. Further details on what will be required in these applications can be found in the link at the bottom of this article.
Before starting any project works, committing to any costs, entering into any legal contracts or placing any orders, you must first receive a successful funding agreement.
Please note, you can apply for this theme as well as the other themes under the Farm Transformation Fund, providing the application windows remain open. For example, you may also have applied for the Farming Equipment and Technology Fund (FETF).
We believe the arrival of this grant to be a significant opportunity for UK farmers to reconnect with the consumer, delivering increased value not only to their farm businesses but to the wider food and farming sector.
If you have a project idea that you think is eligible for this grant, don’t miss out! Contact us today to discuss or ask questions about this grant scheme. We can help you write your application and tailor it to your project, ensuring you have the best chance of success.
Links
Below are links to the official RPA documents regarding the Adding Value grant:
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.
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