Soaring inflation devaluing Welsh farm improvement grants

Soaring inflation is exposing flaws in the farm capital grants system, with long gaps between cost estimates being submitted and work getting under way resulting in government contributions falling far short of the intended 40%.

In Wales, the government is being urged to show flexibility, with farmers already under considerable financial pressure from the investment needed to make their farms compliant with new rules on slurry storage by 2024.

See also: Slurry infrastructure grant details in England released

Currently, applicants for schemes such as the last round of the Sustainable Production Grant (SPG) in Wales must submit three quotes with their “expression of interest”, and the 40% grant is based on figures in the full application that follows.

But with capital work such as erecting roofs to cover cattle yards requiring planning permission and compliance with other regulations, many months can pass before that work can be done, by which time the original quote is outdated.

Sharp rises

Carmarthenshire dairy farmer Haydn Evans said an SPG grant he was awarded for covering feeding areas and a storage silo at Lan Farm, Meidrim, was worth only 29% of the eventual cost.

Quotes he submitted in 2019 put the job at about £45,000, with a grant contribution of about £18,000. But planning consent was needed and a Sustainable Urban Drainage System (Suds) report completed, which delayed the process.

A final contract was issued in October 2020 and work started in April 2021, after the silage pit had emptied.

A sharp rise in materials meant the builder had to requote for the job and it had increased to £61,000.

With the grant contribution static at £18,000, Mr Evans had to find the additional £16,000 from his own pocket.

“There is a lack of awareness about what is going on,” he said. “There has to be a recognition of what is happening in the wider world.”

“Builders and suppliers can’t quote for jobs when the cost is changing by the week – for instance, if they had quoted me £600/t for steel in February the actual cost would now be £1,700/t.”

Mr Evans said there was “deep concern” in the industry around how farms would be able to afford to become NVZ compliant when the actual grant contribution was worth much less than 40%.

Response

A Welsh government spokesman recognised that it was a “very challenging time for farmers”, and encouraged grant applicants to submit planning applications “at an early stage”, if possible, before applying for a grant, so that once a contract had been offered the building work could begin as soon as possible.

“A new Nutrient Management Investment Scheme opened on 4 July, and we encourage farmers to consider the potential costs carefully before submitting an expression of interest,” the spokesman said. “This grant rate will be 40% of eligible capital costs.”