‘Bewildered’ farmers need new deal to be profitable

Farmers are “bewildered and frightened”, with many questioning the future of their businesses due to the Government’s proposed changes to inheritance tax, an independent review of farming profitability has found.

The long-awaited report commissioned by the government was published on Thursday and contains 57 recommendations aimed at improving productivity, investment and resilience in agriculture.

But author Baroness Minette Batters, former president of the National Farmers’ Union (NFU), warned there was “no silver bullet” to making farms in England profitable.

Environment Secretary Emma Reynolds said the government and the agricultural and food industries would work much more closely together in the future.

This would be done through a newly created Agriculture and Food Partnership Council, made up of senior leaders from industry and government, which would “drive long-term growth, productivity and profitability across the sector”, she explained.

“When agriculture prospers, the whole country benefits. Britain’s farmers play a central role in our food security, our rural economy and the management of our countryside,” added the Secretary of State.

“It’s about serious action to remove barriers, unlock investment and make the food system work better, so agricultural businesses can grow, invest and plan for the future with confidence.”

Baroness Batters’ study calls for a “new deal for profitable farming” which would recognize the true cost of food production and respect for the environment.

The report did not look in detail at the government’s proposed changes to inheritance tax, which are set to apply to farming businesses worth more than £1m at a rate of 20% from April 2026.

But Baroness Batters said this issue had been raised as the biggest concern by almost everyone in the agricultural sector she spoke to as part of the review.

She said the sector was facing sharply rising costs and increasingly extreme weather, with a severe drought this year.

Uncertainty around the closing of applications for the Sustainable Farming Incentive Scheme – the post-Brexit Farm Payments Scheme – and proposed changes to inheritance tax have caused “significant” and ongoing concern, with some farmers “questioning viability, let alone profitability”.

In her report she said: “The agricultural sector is confused and frightened by what might lie ahead. »

The report adds that costs would be 30% higher in 2026 than they were in 2020, while the £2.4 billion farm budget for England was almost the same since 2007 – even though farmers and producers are being asked to do more to comply with environmental legislation, with less funding and without certainty.

Baroness Batters added: “Farmers don’t want state help, they want nothing more than to run successful, profitable agricultural businesses, earning a fair return on what they produce.”

The NFU said it was a “thorough and complex report” which was “right to recognize that reform was needed”.

Chairman Tom Bradshaw said among the issues raised, fairness in the supply chain was a “top priority”, alongside planning reforms and a focus on export growth.

“But alongside this, other immediate actions are needed to boost UK agriculture, such as providing much-needed clarity and certainty on the future of incentives for sustainable farming and doing the right thing on pernicious changes to inheritance tax,” he added.

Gavin Lane, chairman of the Country Land and Business Association, which represents businesses and rural landowners, welcomed the review and said it was now time for “urgent action”.

“As this report highlights, profitability in the sector is dangerously thin, with farmers facing high production costs, low commodity prices and volatile weather conditions.

“Many agricultural businesses are marginal or loss-making, but will soon face unaffordable inheritance taxes, which in many cases will eclipse their annual profit,” he explained.

In response to the review, the government said it was also taking steps to plan reform to make food production a clearer priority, accelerate tanks, tunnels and on-farm stores, and make it easier for farmers to invest.

The Government is also stepping up action to promote fairness in the supply chain, removing barriers to private finance and supporting exports and new markets, a Department for Environment, Food and Rural Affairs (Defra) spokesperson said.