Ability to adapt is key to success

The farming sector in Scotland feels as though it operates through a constant state of flux.

Political changes, regulatory and support changes, as well as taxation changes all contribute to a background of uncertainty within which farmers have become accustomed to operating.

Operating a farm business has always involved taking account of factors outwith the farmer’s direct control. However, the scale and pace of change and the variety of factors which are influencing that change appears to be as significant now as it has ever been.

Farmers are renowned for their resilience and also for their ability to adapt to new circumstances.

Many farmers are also risk takers and have a distinct entrepreneurial streak, which can stand them in good stead in times of change.

Where there is change there is usually opportunity.

The recent Oxford Farming Conference addressed the theme of Embracing Change and heard from various speakers who gave their views on what the farming sector must do to embrace and thrive in a changing environment.

Similarly, the forthcoming Farming Scotland Conference, being held in Carnoustie next month has the theme of Innovations in Farming.

The focus on sustainability and innovation in the farming sector in order for it to grow confidently over the coming years will be a key consideration for speakers and delegates.

So there is a very definite recognition that farming has to innovate and adapt to meet current and future challenges.

In Scotland we are fortunate to have many progressive businesses in the agriculture sector who have grown new crops or varieties, or developed new machinery or ways of using it.

There are also many primary producers who have identified and grasped opportunities to add value to their raw materials to create products which they can market and sell, capturing valuable margin. The key, as in every sector, is to identify and then meet market demands.

Where businesses are able to grasp and implement innovation on the farm it may be that they are able to capture valuable government tax incentives in the form of Research and Development (R&D) tax credits.

R&D tax credits are a Government incentive to encourage innovation and technological advancements.

The myth that R&D claims can only be made where scientists in white coats are involved is slowly being dispelled.

There are now many examples of successful R&D claims being made within the agriculture sector, including advancements in the manufacture and use of machinery, and advancements to growing systems for certain crops to enhance shelf life and nutritional value.

To qualify for a claim the business must be a limited company and incur costs on an identifiable project which aims to achieve an advance in science or technology.

The relief takes the form of a significant uplift in eligible costs from taxable profits, thus reducing the company’s corporation tax liability.

Typically wages costs and the cost of materials used in the R&D process will be the main costs which will form part of a claim.

So the challenge for farm businesses is clear. Change is a constant, but it is how you adapt and seize opportunities from that change which will determine future success. The incentives to make it worthwhile are there.