Welsh government unveils £5m finance scheme for farm improvements

Welsh farmers will soon be able to access low-interest loans of up to £1 million to modernise their businesses under a new government-backed finance scheme.

The Sustainable Agriculture Loan Scheme (SALS), announced by the Welsh government and delivered through the Development Bank of Wales, will offer loans at a fixed 3% interest rate, repayable over up to 15 years.

Farm businesses will be able to borrow between £25,000 and £1 million per project, with a six-month repayment holiday at the start of the loan to allow farms time to see the benefits of their investment before repayments begin. Seasonal repayment options are also being considered.

Up to £5 million will be available during the 2026/27 financial year, with the scheme initially running as a 12-month pilot and the potential for expansion depending on demand.

The loans are designed to help small and medium-sized farms invest in energy efficiency, slurry and nutrient storage, waste management and productivity improvements.

NFU Cymru has welcomed the launch of the scheme, saying improved access to finance is often a major barrier preventing farmers from investing in their businesses.

NFU Cymru president Abi Reader said the union strongly supported the initiative.

“NFU Cymru very much welcomes today’s SALS announcement,” she said.

She said access to finance for farm investment can be particularly difficult for young farmers, new entrants and those who do not own the land they farm.

“Access to finance to undertake productivity and efficiency improvements is often cited as a barrier to undertaking investment on farm,” she said.

Ms Reader noted that the union had previously called for measures to help farmers invest in sustainable food production while reducing carbon emissions.

“In 2023, NFU Cymru’s Next Generation Development Group launched the union’s Framing the future for the next generation report, where one of the key recommendations was for Welsh government to implement provisions for farmers struggling to access finance to support investment in sustainable food production and to help reduce carbon emissions,” she said.

She added that the union was encouraged the scheme would work alongside existing government support.

“The union is also encouraged that the Deputy First Minister has already confirmed that the SALS scheme will be complementary to existing Welsh government grant schemes and the Sustainable Farming Scheme,” she said.

Deputy First Minister with responsibility for climate change and rural affairs Huw Irranca-Davies said the scheme would provide farmers with another route to invest in their businesses.

“I’m pleased that we’re able to work with the Development Bank of Wales on this new scheme which will be another way of supporting Welsh farming businesses to modernise and remain financially sustainable,” he said.

The Development Bank of Wales, which already provides finance to businesses across Wales, will manage the loans and work with farmers on investment projects.

Chief executive Giles Thorley said flexible finance would play an important role as agriculture adapts to major changes.

“Supporting farm businesses with patient and flexible funding packages is critical at a time of much transition in the sector,” he said.

He added that the bank looked forward to helping farmers develop projects that would allow them to “invest to save” while improving the long-term sustainability of their businesses.

The scheme will align with Wales’ Sustainable Land Management duties and is intended to complement the rollout of the Sustainable Farming Scheme.

Officials say the initiative will provide farmers with an additional financial tool to invest in modern equipment, improve efficiency and reduce emissions as the sector adapts to changing environmental and economic pressures.

If demand is strong, the Welsh government has indicated the loan programme could be expanded beyond its initial pilot phase.