Farmers are “confused and scared” with many questioning the future of their businesses due to the Government's proposed changes to inheritance tax, an independent review of farm profitability has found.
The long-awaited report, commissioned by the government, was published on Thursday and makes 57 recommendations aimed at improving agricultural productivity, investment and sustainability.
But author Baroness Minette Butters, a 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, agriculture and food industries would work much more closely together in the future.
This will be done through a newly created Agriculture and Food Partnership Council, made up of senior industry and government leaders, which will “drive growth, productivity and long-term profitability across the sector,” she explained.
“When agriculture prospers, the whole country benefits. “British farmers play a central role in our food security, our rural economy and the governance of our countryside,” the Secretary of State added.
“This is about serious action to remove barriers, attract investment and improve the functioning of the food system so that farming businesses can grow, invest and plan for the future with confidence.”
Baroness Butters' review called for a “new deal for profitable farming” that took into account the true environmental cost of food production and delivery.
The report does not detail the government's proposed changes to inheritance tax, which will apply to farming businesses worth more than £1 million at a rate of 20% from April 2026.
But Baroness Butters said almost everyone in the farming sector she spoke to as part of the review cited it as the biggest issue.
She said the sector had faced soaring costs and increasing extreme weather conditions, including severe drought this year.
Uncertainty surrounding the closure of applications for the Sustainable Farming Incentive Scheme (the post-Brexit Farm Payment Scheme) and proposed changes to inheritance tax have caused “serious” ongoing concerns, with some farmers “questioning viability, let alone profitability”.
In the review, she said: “The farming sector is confused and scared about what may lie ahead.”
The report added that costs will be 30% higher in 2026 than in 2020, while England's £2.4 billion farm budget has been almost the same since 2007 – even as farmers and producers are asked to do more to comply with environmental legislation, with less funding and uncertainty.
Baroness Butters added: “Farmers don’t want handouts from the government, they want nothing more than to run a thriving, profitable farming business, getting a fair return for their produce.”
The NFU said it was a “thorough and comprehensive report” that was “appropriate in recognizing the need for reform.”
Of the issues raised, President Tom Bradshaw said fairness in the supply chain was a “top priority” along with planning for reforms and a focus on export growth.
“But alongside this, there are other immediate actions that are needed to boost British farming, such as providing much-needed clarity and certainty about the future of incentives for sustainable farming and getting the right things done about the damaging changes to inheritance tax,” he added.
Gavin Lane, president of the Country Land and Business Association, which represents rural businesses and landowners, welcomed the review and said it was time for “urgent action”.
“As this report highlights, profitability across the sector is dangerously tight as farmers face high input costs, low input prices and unstable weather conditions.
“Many farming businesses are marginal or unprofitable but will soon be faced with unaffordable inheritance tax bills, which in many cases will dwarf their annual profits,” 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, speed up the creation of on-farm tanks, polytunnels and farm stores, and make it easier for farmers to invest.
The government is also stepping up action to ensure supply chain fairness, removing barriers to private finance and supporting exports and new markets, a Department for Environment, Food and Rural Affairs (Defra) spokesman said.
