Bank offers support for agroforestry projects

Farmers are being offered fee-free lending, financial support and resources for agroforestry projects over £25,000.

Lloyds Banking Group says the deal is available through its Clean Growth Financing Initiative (CGFI), which aims to help farmers reduce their environmental impact.

“Integrating trees with crops or livestock can help boost overall farm income and resilience,” said Lloyds agriculture sustainability director Ben Makowiecki.

Productivity

“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.”

Thorough financial planning and projections to demonstrate profitability and debt serviceability are vital for these types of projects, he added.

“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.”

Budgets and forecasts

Tips for farmers considering agroforestry projects include forecasts and budgets up to the time trees start producing commercially viable fruit. Financial planning is important 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.”

The Lloyds Banking Group remained committed to offering farmers guidance to help implement more sustainable, profitable farming practices, said Mr Makowiecki.

To accelerate this transition, the bank had partnered with Soil Association Exchange (SAX) – a farm assessment tool and consultancy service – funding access for existing clients.

Investment

Using SAX, farmers could assess their current environmental impact and evaluate where to make changes while identifying options. This could help open up investment.

Sources could include combining sustainability-linked bank lending alongside schemes such as Sustainable Farming Incentive or the Woodland Trust MoreWoods scheme, sponsored by Lloyds Bank, which covers up to 75% of planting costs.