Welsh farmers will soon be able to apply for low-interest loans to help modernise their businesses and cut carbon emissions under a new scheme announced by the Welsh Government.

The Sustainable Agriculture Loan Scheme will offer fixed interest loans at three per cent to support investment in areas such as energy efficiency, waste management and improvements to farm productivity.

The scheme will be delivered by the Development Bank of Wales and is expected to launch later this year.

Under the plan, farms will be able to borrow between £25,000 and £1 million for each project. Loans can be repaid over up to 15 years, and farmers will be offered a six-month break at the start before repayments begin.

£5 million has been set aside for the scheme during the 2026/27 financial year. The programme will begin as a 12-month pilot, with the possibility of extending it if demand is strong.

The money is aimed mainly at small and medium-sized farms that want to invest in equipment or improvements that could lower emissions and improve efficiency. Seasonal repayment options are also being considered to better fit the farming year.

Deputy First Minister with responsibility for Climate Change and Rural Affairs, Huw Irranca-Davies, said: “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.”

The government says the scheme is intended to work alongside other support already available to the sector, including grants and the wider Sustainable Farming Scheme.

The chief executive of the Development Bank of Wales, Giles Thorley, said: “Supporting farm businesses with patient and flexible funding packages is critical at a time of much transition in the sector. We look forward to working closely with Welsh farmers to support new projects enabling them to both ‘invest to save’ and enhance their future sustainable farming delivery.”

The announcement has been welcomed by NFU Cymru, which said access to finance can be a major barrier for farmers who want to invest in improvements.

NFU Cymru president Abi Reader said the union was pleased to see the scheme introduced.

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

She added that the problem can be particularly difficult for young farmers, new entrants and those who do not own the land they farm.

The union said it had previously called for measures to help farmers secure funding to invest in sustainable food production and reduce carbon emissions.

Ms Reader said NFU Cymru was encouraged that the loan scheme would sit alongside existing grant schemes rather than replace them.

The union said it would now study the details of the programme to understand how it will work in practice once applications open.

Further information about the loan scheme, including how farmers can express interest, is available from the Development Bank of Wales.