Industry Trends – Agri-Tech
As the world’s population continues to grow, governments have been calling for more sustainable farming methods. As a result, the agricultural community is being encouraged to develop new ways to produce more quality food, whilst maintaining the health of livestock, crops and the environment. This is where agri-tech comes in.
Agri-tech helps farmers produce more with less, using technology to improve processes, yield, efficiencies, and profitability. This includes the use of:
- Big data
- AI & robotics
- Drones & satellites
- IoT solutions
- Vertical Farming
- Precision Agriculture Technologies
- Biotech and more.
The UK government is supporting the agriculture innovation drive with several funds. Last year they committed £24 million to 9 innovative farming projects from fruit picking robots, to satellite data automated desert algae growing systems. Only this October, they announced the Farming Innovation Programme, which has three funds starting with the £17.5 million “Industry-led R&D Partnerships Fund”.
One way to fund this innovation, which has been available for many years, is the R&D tax credit incentive. In 2019/20 the UK Agriculture, Forestry and Fishing industries made 1,120 claims, amounting to £55 million in tax relief. However, this is somewhat of a red herring as the majority of agri-tech claims would fall into the information and communications (tech/software) category, which amounted to £1.5 Billion in tax relief.
With the drive to innovate, it will be interesting to see whether there is a rise in traditional agricultural businesses developing their own innovative solutions, rather than waiting for a software provider to create a generic, off the shelf option. This would allow them to utilise the R&D tax credit incentive and the additional benefit of up to 33p for every £1 spent on R&D.
Eligible R&D Tax Credit Agri-Tech Projects
If a business tries to create a new or modify an existing product or process, they could be eligible for R&D tax credits. Areas of development include:
Health & Environmental Improvements
- Developing an animal wellbeing detection system
- Developing new crop protection, pest control or disease reduction techniques
- Developing new waste and pollution reduction techniques
- Developing and trialling more efficient animal feeding or heating factors.
- Modifying crop properties
- Developing and trialling different seeds, soil formulations or fertilizers
- Improvements to crop growing and ripening methods
- Development or adaption of machinery
- Designing new equipment or structures
- Appreciable improvement or automation of processes
- Creating bespoke agriculture software systems/apps or coding to link various systems together
For more information on the R&D tax credits and the qualifying costs you can claim for click here.