The U.K.’s biggest corporate lender, Natwest Group Plc, is offering financial support to the country’s farmers in a bid to help them with spiraling costs for fertilizers and other critical inputs.
The banking group in a media release on June 21 said it will offer individual farms a range of measures to help tackle cost challenges, including capital repayment holidays, increased overdraft limits, and reductions to interest payments on small loans.
U.K. agricultural businesses are facing inflation of over 30% and price hikes in the region of 200% for fertilizer, 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 in Ukraine on supply costs to the industry, said NatWest.
The banking group recently published a white paper finding that near-term investment, policy incentives, and common metrics are needed for U.K agriculture to transition to a sustainable food system.
NatWest’s analysis found that costs on fertilizer have increased three-fold over the past 12 months, with the cost per tonne now sitting at around £850 (approximately $1,041 at current exchange rates), up from £280 ($343) in May 2021. It noted that energy costs are also continuing to affect the market, with gas up 200% on 2021 and electricity up 40%.
These combined input cost pressures are squeezing the farming industry’s margins tighter, the bank noted.