Dry Summers and Farm Water Resilience: Financing Water on Arable Farms

Farm water resilience has moved rapidly up the agenda for arable businesses. Dry springs, prolonged periods of heat and increased pressure on available water can affect crops, irrigation plans, livestock supplies and the wider financial performance of a farm.

For many farmers, the question is no longer simply how to manage the current dry spell. It is whether the business has the infrastructure needed to cope with similar conditions in future without placing unnecessary pressure on working capital.

The Environment Agency’s report covering 17 to 23 July 2026 illustrates the scale of the challenge. Rainfall received across England by 21 July was only 3% of the long-term average for the month, while 1,353 abstraction licence restrictions were in place. The report also highlighted early cereal harvesting, reduced crop yields and growing concerns about water resilience.

Why Farm Water Resilience Requires Long-Term Planning

Weather has always shaped agricultural decision-making, but repeated dry periods can expose weaknesses that were previously manageable.

A farm may have enough water in a typical year but struggle when irrigation begins earlier, reservoir levels fall faster or abstraction restrictions come into force. A system designed around historic demand may also be less suitable where the business has expanded or changed its cropping rotation.

Water resilience is therefore not solely an environmental issue. It can influence yield, crop quality, production costs and the ability to fulfil contracts. Investing before a system reaches breaking point can give a farm more options and avoid urgent decisions at the most expensive point in the season.

Start with the Farm’s Actual Water Requirement

The right project depends on how water is currently sourced, stored, distributed and used.

Before committing to a major investment, it is helpful to establish:

• Current and anticipated daily and seasonal demand
• Which crops, livestock or enterprises are most vulnerable
• How much storage is available and how reliably it can be replenished
• Where water is being lost through inefficient systems
• Whether expansion or changes in cropping will increase demand
• What licences, planning permissions or environmental approvals may apply

This assessment may identify one significant requirement or reveal that several smaller improvements would provide better value. One business may need greater storage, while another may benefit more from improved pipework, monitoring and targeted application systems.

Farm Water Infrastructure Worth Considering

Additional Water Storage

New or expanded reservoirs, tanks and other storage facilities can help farms capture water when it is available and reduce dependence on abstraction during the driest periods.

However, a larger reservoir is not automatically the right answer. The design must reflect demand, refill arrangements, the available land, planning requirements and the farm’s ability to distribute the stored water efficiently.

Rainwater Harvesting

Agricultural buildings can provide a substantial catchment area. Guttering, downpipes, filtration and suitable tanks can allow rainwater to be captured for appropriate uses around the farm.

Rainwater harvesting may not replace every source, but it can reduce demand for treated or abstracted water, particularly where the business has extensive roof space or is already planning new buildings.

Efficient Irrigation and Monitoring

Modern irrigation equipment, soil-moisture monitoring, flow meters and improved controls can help businesses apply water where and when it is most valuable.

Greater accuracy can reduce avoidable use and improve decision-making when supplies are limited. It may also help the business understand which crops or areas are delivering sufficient value to justify irrigation during periods of restricted availability.

Boreholes and Alternative Sources

Some farms may consider a borehole or another abstraction source, but these projects require careful investigation and cannot be treated as a guaranteed solution.

In England, taking more than 20 cubic metres of water a day will generally require an abstraction licence. Groundwater projects may also need consent before investigative or construction work begins, making early professional and regulatory advice essential.

Costing Farm Water Resilience Properly

One of the biggest risks is budgeting for the headline asset while overlooking the surrounding work needed to make it operational.

A realistic project budget may need to include:

• Surveys, design and professional advice
• Planning and environmental applications
• Groundworks and access
• Pumps, filtration and power supplies
• Pipework and distribution equipment
• Monitoring and control systems
• Contingency for unforeseen site conditions
• Ongoing maintenance and energy costs

The financial assessment should also consider the project’s value to the wider business. That may include protecting yields, maintaining higher-value crops, supporting expansion or reducing the risk of interruption. Its value may lie partly in limiting exposure to a serious operational and financial risk.

Farmers should also consider whether the proposed infrastructure meets their likely requirements over the longer term. A project designed only around the current season may be insufficient if the business intends to expand, change its cropping mix or bring additional land into production.

Financing Farm Water Infrastructure Without Draining Working Capital

Even where an investment makes commercial sense, paying for it entirely from farm cash reserves may create another vulnerability.

Working capital is still needed for seed, fertiliser, fuel, labour and the many other costs that continue while infrastructure is being developed. This is particularly important after a difficult season, when crop income may already be under pressure.

Specialist agricultural finance can allow the cost of suitable infrastructure to be spread over an appropriate period rather than absorbing capital needed for day-to-day operation.

The structure should reflect the project, the farm’s assets, existing borrowing, expected cashflow and how quickly the investment is likely to benefit the business.

Grant funding may support some elements of a project, but farmers should not assume that every cost will qualify or that grant payments will match the construction timetable. The business may still need to finance ineligible expenditure, initial costs or a gap between completing the work and receiving any grant payment.

A Bespoke Approach to Farm Water Resilience

No two farms have the same water requirements, infrastructure or financial position. A solution that works for one arable enterprise may be unsuitable for another, even within the same region.

UK Agricultural Finance takes the time to understand the agricultural assets, the business behind the borrowing request and the purpose of the proposed investment. This allows us to consider a bespoke financial structure rather than applying a rigid, one-size-fits-all process.

As Client Relationship Manager for the East of England, Ryan Morley works with farmers and rural professionals across the region. His experience in finance and debt structuring enables him to consider both the immediate funding requirement and how it fits within the borrower’s wider plans.

Dry weather cannot be controlled, but farms can make considered investments that give them more options when water becomes scarce. The strongest time to assess those options is often before the next difficult season makes the decision urgent.

To discuss finance for agricultural water storage, irrigation, infrastructure or wider farm investment, contact Ryan Morley on 07465 745 329 or email Ryan@ukagriculturalfinance.com.