Lloyds Banking Group has reinforced its commitment to UK farmers by providing fee-free lending, financial support and resources for agroforestry projects over £25,000.
The banking group offers financing for agroforestry costs through its Clean Growth Financing Initiative (CGFI), which features a 0% set-up fee for term lending on sustainable farming investments. This loan helps UK farmers reduce their ecological impact while enhancing the financial and environmental resilience of their businesses.
Ben Makowiecki, Agriculture Sustainability Director at Lloyds Banking Group, shares his insights and practical tips to help farmers navigate the financial aspects of implementing agroforestry systems.
“Integrating trees with crops or livestock can help boost overall farm income and resilience,” he said. “Agroforestry can significantly enhance farm productivity through higher land equivalent ratios (LER) compared to single crops, potentially achieving 120-140% productivity.
“This makes the land work harder, utilising vertical space, while bringing broader benefits, including increased biodiversity, enhanced soil health, improved water management and shade for animals.”
Mr Makowiecki emphasises the importance of thorough financial planning and projections to demonstrate profitability and debt serviceability for these types of projects.
He advises farmers to consider all business planning aspects, including profit projections, production timelines, exploring new markets, packaging, and future equipment needs when applying for financing.
“We’ll fund agroforestry in the same way as other sustainable farming projects through CGFI, but it's crucial to have a clear, comprehensive plan. This ensures all aspects of the project, from initial costs to long-term maintenance and market considerations, are thoroughly accounted for,” he says.
Mr Makowiecki provides several tips for farmers considering agroforestry projects. He stresses the importance of planning up to the time trees start producing commercially viable fruit and highlights the need for financial planning beyond this phase:
“Think about ongoing pruning and maintenance, replacing dead trees, and ensuring a defined market is in place for new produce.
“If you’re growing fruit or nuts for the first time, you may need extra grading or packing and storage equipment. Also, budget for new trees and identify end uses for timber as the agroforestry area expands,” he notes.
Lloyds Banking Group has partnered with Soil Association Exchange (SAX), a comprehensive farm assessment tool and consultancy service, funding access for existing clients.
“Using SAX, farmers can assess their current environmental impact and evaluate where to bring in on-farm changes while identifying funding options. This could include combining sustainability-linked bank lending alongside schemes such as SFI or the Woodland Trust MOREWoods scheme, sponsored by Lloyds Bank, which covers up to 75% of planting costs,” he says.
Managed in the right way, agroforestry offers economic benefits, rewarding farmers for providing public goods, but also contributes to the environmental sustainability and resilience of farm businesses and the land, Mr Makowiecki added.
