The lender said agriculture firms are facing inflation of more than 30 per cent, adding that its own analysis has found that costs on fertiliser have increased three-fold, with the price per tonne now sitting at around £850, up from £280 in May 2021, due to much of the manufacturing taking place in Russia and Ukraine. Energy costs are also continuing to affect the market, with gas up 200 per cent on 2021, and electricity up 40 per cent, RBS also stated.
It said that in response to these pressures, it is introducing the support package, with individual financial support available for those hit by increased farm running costs. The bank will offer capital repayment holidays as well as increases to overdrafts, and for smaller businesses in the agriculture sector, it has already announced reductions in interest rate on its range of small business loans up to £40,000.
Roddy McLean, head of agriculture at RBS, said: “We are here to support our customers in the farming sector through this challenging period. Our agricultural managers have in-depth knowledge of the sector, including being able to offer individual financial support, where needed, to help customers navigate high energy, feed and fertiliser prices.
"We would urge affected customers to get in touch with their local agriculture relationship manager to discuss how we can help. As always, we are also here to support our customers in the long term.”
Dr Maria Carvalho, head of climate economics and data at RBS parent brand NatWest Group, which has just published a new white paper into the need for a sustainable transition in agriculture, said: “There are huge commercial opportunities in farmers transitioning to lower-carbon, nature positive methods of food production – from a reduction of input costs, to unlocking price premiums from food retailers, and accessing the benefits of green finance.
"This is an opportunity for a new and sustainable revolution of the food system in balance with the planet and the wellbeing of society.”