RBS sows further seeds of support for farmers with £1.3bn lending pot

Royal Bank of Scotland (RBS) has today confirmed an additional £1.25 billion lending package for UK farming – saying this will help it deal with various cost pressures, and accelerate the transition to more sustainable practices.

By Emma Newlands
Monday, 18th July 2022, 12:30 pm

The lender, which says it is the UK’s biggest bank for business with 40,000 agriculture customers, explained that the move complements a previous set of measures for the sector announced in June.

It also said the newly announced £1.25 billion pot will be deployed via several routes including Green Loans, conventional loans, asset finance and increased overdrafts, supplementing capital repayment holidays and reductions on small business loans unveiled last month.

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In addition, 150 of the bank’s agriculture relationship managers have already been trained by the universities of Cambridge and Edinburgh in sustainability so they can signpost farmers to the latest support on offer.

RBS said it is taking such steps as businesses in UK agriculture find themselves facing inflation of more than 25 per cent and price hikes in the region of 200 per cent 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 outlays for nitrogen fertiliser have increased almost threefold, and electricity bills have spiked by up 40 per cent, for example.

Ian Burrow, head of agriculture at RBS – part of NatWest Group – said: “The UK farming sector is currently facing unprecedented cost pressures, caused by a perfect storm of external factors.

RBS says the latest funding is to help the farming sector deal with cost pressures and accelerate its transition to more sustainable practices (file image). Picture: Daniel Leal/AFP via Getty Images.

"Inflation, supply-chain challenges and the war in Ukraine are combining to cause steep rises in the cost of essential materials for the sector such as fertiliser and feed, on top of the broader challenge of fuel and energy costs that the wider economy faces. Together, these impacts are putting intense pressure on profit margins, and we know the sector needs access to funding to navigate through the coming months.

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“We are boosting our financial support for farmers by £1.25bn to help them through this challenging period. Our agricultural managers have in-depth knowledge of the sector, including being able to offer this individual financial support where needed. We would urge affected customers to get in touch with their local agriculture relationship manager to discuss how we can help.”

Furthermore, RBS noted that it last month published a new white paper on the need for a sustainable transition in the sector, which found 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”.

In terms of related initiatives, RBS said in April that thousands of its staff were to get training to help business customers profit from the shift to net zero as part of a £1.5 million tie-up with the University of Edinburgh. The announcement came in the wake of a report published in 2021 estimating that the UK’s move to a lower-carbon economy could open up £160bn of new revenues for businesses.