Many of the global problems faced by agriculture are only set to increase in severity in the future with further population growth, warmer temperatures and drier soils. R&D tax relief for the agricultural sector has a vital role to play, incentivising businesses to dedicate resources to solve some of these grave issues through the advancement of agritech.
After all, the future would be looking decidedly bleak for farming and food production were it not for advances in technology and their potential to tackle these major challenges head-on. The investment, research and innovation in the agritech sector offer a beacon of hope.
R&D tax incentives and Agriculture
If your business is innovating in the agriculture space, then there’s every chance some of your projects may qualify for R&D tax relief. This powerful incentive allows you to recoup some of your investment in developing industry leading innovative techniques and technologies to overcome challenges, whether this is to improve yields, reach sustainability targets or any other area where the outcomes are unknown.
HMRC R&D tax credit statistics for 2022 revealed that there was an 11% reduction in R&D expenditure in the agriculture, forestry, and fishing sector with 1180 R&D claims, at an average value of £42,373. There is potential for more companies to claim in this space and be rewarded for their innovation.
What counts as R&D in the agricultural sector?
Businesses can qualify for R&D tax relief in the field of agricultural science if they meet the criteria set out by HMRC. Qualifying R&D projects in the agricultural sector could include improving yields through methodical experimentation for example with animal nutrition or crop growth, the creation of new pesticides, fertilisers, and chemicals, to experimenting with renewable energy technology, automated farming processes through AI, and even alternative farming methods such as advanced vertical farming.
For more information on how you can use this tax incentive for your agricultural R&D and help combat global challenges, contact ForrestBrown today.
What global food challenges do we face?
Agriculture is facing pressure from all sides. Farmers and agritech businesses need to work together to increase yields to feed growing populations. At the same time, climate change has worsened droughts, changed weather patterns and soil ecology.
On top of this, supply chain issues stemming from the COVID19 pandemic, Brexit and the conflict in Ukraine, have collectively contributed to major challenges for the agricultural industry.
Labour and skill shortages in the food and farming sector due to Brexit and increases in the cost of energy have further compounded the issues. It is abundantly clear that the agricultural industry must find solutions and become more sustainable too. The answer lies in innovation.
What is agritech?
The agritech sector is where technology is being utilised to provide solutions to problems in agriculture, farming, and food production and distribution. Scientists, technologists and engineers are joining forces with a whole range of start-ups and more established companies to focus on agriculture innovation. Ultimately agritech is helping farming to become more efficient, environmentally friendly, less labour intensive and high yielding.
Keeping farming commercially sustainable through R&D
It’s important to consider the historical context to better understand the issues that agriculture faces today. Since World War Two, there has been a need to increase agricultural productivity to keep up with food demand and ultimately keep prices down.
Then, in the 1960s and 70s, the ‘Green Revolution’ saw farms become businesses. Farmers were now looking carefully at ROI, examining the cost of their inputs (seed, water, and nutrients) against the money they were generating from their harvests.
Today the demands on farmers are ever-increasing: resources are stretched and the input costs have generally gone up. These challenges have a very real economic impact – with farms struggling to operate as profitable businesses. So where do we go from here?
Step up agritech where new technologies are being developed to allow farmers to increase productivity and reduce costs. The focus is on increasing productivity through technology and data rather than developing more land for agricultural use. In response, the UK government is investing in the sector with £270 million made available in 2022 as part of its Farming Innovation Programme to further solidify the UK’s position at the centre of the agritech revolution.
Big data in agriculture
The potential of Big Data to affect major change in all sorts of areas is much lauded. However, it could be the agricultural sector that sees the biggest impact. When it comes to applying big data in agriculture, analytics has the potential to dramatically improve efficiency and drive productivity up, working towards maximum output for minimal input. It also has a significant role to play in minimising the environmental impact of farming.
Where does R&D fit into agritech?
There are numerous real-world problems affecting farmers in the UK and around the world such as climate change, bigger populations, extreme weather events and soil erosion. R&D in the agritech sector is therefore applicable to any technological innovation that aids overall progression in the sector in:
- Feeding a growing global population
- Relieving pressure on resources & natural resources
- Overcoming supply chain issues
- Proofing against environmental threats and resilience including disease and disaster
- Reducing energy use
- Preventing waste in harvest and storage
- Improving labour productivity through robotics and machines
- Creating better resource management
- Advancing Biotechnology
- Finding better methods of soil management & smart irrigation
- Creating innovation in vertical farming (more yield on less space)
R&D Tax Relief for Agriculture
In the UK, there is the opportunity for agritech businesses to take advantage of HMRC’s R&D tax credit incentives to get cash to further invest in their research. The HMRC test for genuine R&D is whether an ‘appreciable improvement’ has been found, addressing a ‘scientific or technological uncertainty’.
The agritech sector is therefore a hotbed for R&D. Path-breaking new technologies are being applied to solve problems and make farming processes appreciably better, often by improving efficiency with greater yields for less input. There are many companies helping to solve global problems that could be benefiting from R&D tax relief.
Examples of qualifying R&D in agritech
Technological innovation in the agritech space is multidimensional since smart farming combines both an analytical aspect (data about land condition and performance) and a physical one (ploughing, planting & harvesting). This means that the areas open for innovation and R&D in the sector are plentiful.
Big data in agriculture
Sensors are now fitted on most pieces of farm machinery and are used to gather data and track various changes. These sensors can record information on soil quality and moisture content, the effectiveness of seeds and various types of fertiliser, the performance of crops and even the spread of disease.
A huge amount of data can be collected from a wide variety of sources, covering a number of different areas of farming. This data can then be collated and processed with special programs and analytical software, making it accessible to farmer businesses and enabling them to make very precise decisions based on this information. By constantly measuring, analysing and adjusting when it comes to how they manage their fields, farmers can improve performance dramatically.
The role of big data in agriculture
When it comes to big data, a farmer may use the data they collect to make more informed decisions on where to plant what crops, and then how best to tend them. Yet the real power of big data is when you combine the data from multiple farms – farms could share their data with other farmers in a region, country or even upload it for the benefit of a global community. Collecting, aggregating, and analysing all of this data in real-time could improve productivity dramatically.
On a larger scale, big data could identify emerging trends and lead to optimised planting and crop management, the identification of diseases and the creation of better seeds. Already data analysis has reduced input costs for farmers and increased yields with crops more accurately and successfully managed. To help realise the potential of big data and informatics, the UK government created Agrimetrics. Agrimetrics is a joint venture between Rothamsted Research, the University of Reading, SRUC and NIAB.
Smart land monitoring – remote sensing agriculture
The remote monitoring of various aspects of the farming process can provide data that helps improve the farming process and cut costs. This can cover everything from the amount of fertiliser left in a tank level to soil and water management. As well as removing the need for a person to do this manually, it also helps provide data and in turn insight into usage.
One example of innovation in remote monitoring is the work of Powelectrics. Their technology allows farmers to monitor fuel, fertiliser, water levels, as well as gas emissions, waste, and much more. These systems also allow remote identification of any issues that farmers may face, allowing them to be more efficient, while also freeing up much needed human resources.
Similarly, Monnit provides a range of remote sensing technologies, allowing for the instant identification of any issues through real time data alerts on their mobile devices. This enables farmers to keep their livestock healthy, improve crop yields, and improve efficiency.
Satellite agriculture monitoring
One application of big data is in Precision Agriculture or satellite farming. By using satellite technology alongside other data-gathering technologies to observe and record the performance of crops across different fields, farmers have information on how to best manage their fields.
According to Statista, just 27% of English farms use precision farming techniques and only 20% of dairy farmers. The principal reasons for using precision farming techniques are to increase productivity or performance. There is still potential for more farms to adopt this approach in the UK and to integrate it into their existing operations.
It doesn’t stop there either – big data, collected from all of these sources, will feed back into many of the agritech technologies being developed, improving their efficiency further.
Leading on from this, the Agri Internet of Things refers to how all of these existing and new technologies will communicate with each other and utilise the power of big data. High speed and robust broadband is essential for the Internet of Things, but is unfortunately still not available in all regions.
One company innovating around the Internet of Things and agriculture is The Yield. They utilise IoT technology to help improve yields and profitability by using a network of wireless sensors to collect localised data. An analytics programme then transforms this raw data into valuable information.
It is no surprise that a number of start-ups are entering the agritech market looking at big data analytics, crowdsourced data and real-time monitoring. The challenge they face is to make the data meaningful to farmers so that they can better manage their fields to increase profits and minimise their environmental impact.
It’s important to point out that when it comes to big data, there are some major issues for farmers around who owns the data and about sharing any information with their competitors.
Drones and robotics in farming
Developments in robotics, drones and AI all have the potential to solve some of the big issues facing agriculture, in particular by improving productivity and helping reduce the need for human labour and the associated costs.
Autonomous robots or agribots are used by farmers to water, fertilise and harvest some of their crops. With further agribots being developed to carry out a number of tasks including soil and crop scouting and automated harvesting of different crops, the potential to improve productivity in the UK and around the world is huge, especially in light of labour shortages.
Robot harvesters also prevent crops from rotting in fields, which represents one of the biggest losses in farm revenues. If you think that a robot can potentially work 24 hours a day you can see how this would increase efficiency and save on expensive manual labour costs.
When it comes to developing robot harvesters to perform farming tasks usually performed by humans there are a number of challenges. For example, when crops such as lettuces and cauliflowers are covered in layers of extra vegetation, robots are unable to determine which ones are ready for harvest.
Engineers at KMS Projects and Vegetable Harvesting Systems (VHS) are looking at developing robots that use Infravision and scanner technology based on radio frequencies, microwaves, terahertz and the far-infrared in order to tell when cauliflower is ready to be harvested.
The European Commission developed an agricultural robot for sweet pepper harvesting as part of a €4M project. The Sweeper team also researched machine vision, making it possible for the robot to correctly identify the peppers. After finding the pepper, the robot then needed to be able to grip and cut it.
Another impressive agribot is the IBEX, which has been developed by a consortium of SMEs (Hunshelf Hall Farm, G32 Technologies Ltd and Digital Concepts Engineering) to operate on remote farmland where it is “uneconomical to spray manually, or too dangerous to drive with a tractor”.
The IBEX weed sprayer was trialled in the difficult sloped terrain of Yorkshire. The robot employs a combination of sensors and Bayesian machine learning software to navigate autonomously, covering a user-defined area or an optimised route. IBEX has the potential to reduce the high costs of spraying manually and be affordable to farmers.
Drones are being used to provide aerial images to farmers to enable them to identify weeds and diseases. Piloting the drone from the ground, farmers are able to survey their land (potentially covering over a 1000 acres an hour) and capture whole fields in single high-resolution shots. They can then analyse these detailed images to facilitate highly accurate spraying programmes to prevent the spread of disease and kill weeds.
When these images are used in conjunction with data collected from other monitoring devices, farmers can make better decisions about how they manage their fields. This can help cut input costs and ensure maximum yields are achieved.
One example of how drones can be used to improve crop yields is Outfield Technology’s system which combines cutting-edge drone and machine technologies to provide essential crop insights. Specifically designed for orchard tree crops, “Outfield Technology’s analysis shows that farmers can increase productive yield from an orchard by 10%”
Smart tractors and farming
Tractors can already drive themselves across fields using GPS signals. Smart or intelligent tractors are equipped with various sensors and technology that means they can be directed using big data and drone imagery around the farm. They can be programmed to take the shortest routes in order to reduce fuel and cut down on damage to crops and soil.
Conserving natural resources in farming
An ongoing struggle for agriculture concerns the use of resources such as water, sunlight, soil and land. The agritech sector is looking at innovative ways of dealing with scarcity in these areas, investigating ways that technology can provide the ideal environment for crops.
A big area of agritech is vertical farming. These indoor farms are based on farming crops indoors in trays that are stacked in racks vertically. It is a method that uses less water and less land to grow food as well as ruling out exposure to pests. Since it can be set up anywhere, the food doesn’t need to be transported long distances.
It works particularly well in urban environments where it can be carried out in underutilised warehouse space. Many vertical farms use only a fraction of the water required in an outdoor field and rely on LED lights.
Vertical farming is well established in Japan where Spread has made leaps and bounds since becoming the first vertical farm to achieve profitability in 2007. In 2018, Spread developed Techno Farm Keihanna, which utilises automated cultivation, precise environmental control technology as well as other revolutionary technologies.
The cultivation of their sustainable vegetable ‘Vegetus’ requires only 1% of the water used in conventional farming, with production loss of around 10% compared with 40% on average for conventional farming. Their aim is to produce 100 tons of lettuce daily by 2030, while also growing pesticide-free strawberries using artificial lighting since 2021.
Much closer to home, Growing Underground operates a carbon-neutral urban farm in a World War Two air-raid shelter 115 feet below Clapham in South London. The 1,805-square-foot urban farm uses hydroponic techniques to create pesticide-free crops like pea shoots, coriander and red amaranth. The plants are watered mechanically and lit by ultraviolet light itself powered by renewable electricity sources.
In the UK, Jones Food Company (JFC) are building and operating some of the largest vertical farms in the world, with grow spaces of up to 15,000m2. This has allowed them to achieve a growing capacity of up to 1000 tonnes of herbs and leafy greens each year.
Read more on R&D tax credits in renewables >
One of the main issues with vertical farms is that staple crops like grain and rice can’t currently be grown in this way, although a vertical farm has managed to grow Temasek Rice in Singapore. There are also issues around the energy used with LEDs and the corresponding carbon footprint. That being said, vertical farming is an area of great potential and some serious R&D.
Smart floating farms
Another way of getting around the issue of a lack of farmable land has been proposed by Forward Thinking Architecture in Barcelona who want to build ‘smart floating farms’ on large bodies of water. It would have a stacked hydroponic organic crop farm and feature solar powers to provide energy. There are serious issues with the costs of building and running such farms, and their ability to feed people but it is certainly a fascinating proposal.
Soil management & smart irrigation
Another process that agritech is looking to improve is that of soil and water management, providing a solution to issues with scarce resources.
Water scarcity and water pollution is an issue faced by many farmers. Smart water irrigation is all about using technology to lower costs and increase yields. It does this by systematically and accurately delivering water and nutrients only to the growing areas that actually require water. It is a method that delivers water (as well as nutrients and in some instances fertiliser) to the crops in the most efficient way, preventing wasteful run-off. The plants are given all they need to thrive via drip irrigation systems or drippers. Sensors in the soil and attached to the plant roots monitor various conditions and feedback into a computerised smart irrigation system which then delivers the required amount of water at the right time.
Crop disease management
As J. Piesse and C. Thirtle state in their essay on Agricultural R&D technology and productivity– “As crops become less genetically diverse, the risk posed by new pests or viruses increases.” Diseases pose a very serious risk to farms and therefore effective disease management, powered by technology is going to be a key area for agritech.
The so-called ‘cereal killers’, which include the rust fungi that is affecting resistant wheat strains – is just one example. As mentioned, drone technologies and satellite imagery can help identify diseases quickly and sensors can help gather data on the emergence and spread of the disease. But as the threats evolve so must the technology combating them.