Barclays has set up a £100 million ($129 million; €116.7 million) debt fund to insulate UK agricultural producers from market volatility.
The funding will be directed to farmers planning to modernise operations and improve efficiency by investing in new infrastructure, agri-tech or developing additional revenue streams, according to a release.
Loans will have fixed fees starting at 0.6 percent for loan terms of up to five years, 0.9 percent for six to 10 year loans and 0.9 percent for 10 to 15 year loans.
The funding could prove useful for growers if Brexit leads to a drop in foreign investment in the UK agricultural sector. Barclays did not link the fund to Brexit, but experts have told Agri Investor that if banks show willingness to extend credit to farmers it might help calm uncertainty in the sector.
UK agribusinesses could suffer economic pressure if EU subsidies are not matched by a UK replacement. In the six months to April this year, anxiety over the referendum could have contributed to the sharpest fall in farmland prices since the 2008 financial crisis, although prices had been unexpectedly high in 2015. Prices dropped over 4.5 percent on average between the start of the final quarter of 2015 and the end of the first quarter of 2016.
Representatives from Barclays said the bank hopes the £100 million will help stabilise a UK agri sector that has been challenged by commodity price volatility.
“After the turbulent times of the last few years, many farm businesses have found ways to improve efficiency, this fund is released to assist the progression of this – it is not about increasing production, it is about helping our customers access the finance to invest in producing the same quality and quantity of product for less cost, or finding solid alternative income streams,” said Barclays national agricultural strategy director Oliver McEntyre in a statement.