A rare combination of financial factors has created a window of opportunity for farms hoping to invest in the long-term resilience of their business, said rural agents.
Jason Cantrill, senior associate director in the Norwich office of Strutt and Parker, said the uncertainties of Brexit and the phasing out of the EU's direct farm subsidies meant many businesses are exploring how to raise productivity and broaden the scope of their activities to safeguard their future.
In order to achieve this, they may need to find the money for new infrastructure and technology such as crop drying and storage equipment, irrigation, better drainage systems, slurry handling arrangements or machine stores.
But Mr Cantrill said factors such as low borrowing costs and new tax reliefs and funding streams had combined to make current conditions "more favourable than they have been for a very long time for judicious, long-term investment". They include:
- The increase in the Annual Investment Allowance from £200,000 to £1m for qualifying plant and machinery - a temporary concession, only available until the end of 2021.
- The re-introduction of "capital allowances" on buildings via the new Structures and Buildings Allowance Scheme, which allows investment in buildings to be written down against tax over 50 years.
- Historically-low long-term borrowing costs. For example, Mr Cantrill said the cost of 25-year and 30-year fixed rate loans from some specialist agricultural lenders has fallen by almost 50 basis points since December 2018.
- Round two of the Countryside Productivity Small Grants Scheme is expected to open shortly, and other similar initiatives are promised during the transition period in the Agriculture Bill.
Mr Cantrill said: "The next 10 years will undoubtedly be a period of change which will present challenges.
"The withdrawal of direct support in its current form, and its replacement by a system of payment for public goods by 2028, suggest a very different agri-economic landscape in the future.
"However, if the change is managed sensibly, and judicious investment made at the right time, many farms and estates will emerge stronger and better equipped for the future."
Mr Cantrill said while some rural businesses want to boost efficiencies within their existing ventures, others are responding to the changing economic environment by diversifying into food and drink manufacturing or processing, tourism, leisure, energy generation or the provision of office and work space.
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