A new independent review of farm profitability has revealed that farmers are “bewildered and frightened” by proposed government changes to inheritance tax, with many questioning the viability of their businesses.
The government-commissioned report, published on Thursday after a long wait, outlines 57 recommendations aimed at enhancing productivity, investment, and resilience within the agricultural sector.
However, Baroness Minette Batters, the report’s author and former president of the National Farmers’ Union (NFU), cautioned that there is “no silver bullet” to ensure profitability for farms in England.
Environment Secretary Emma Reynolds stated that the government and the farming and food industries will collaborate more closely moving forward.
This collaboration will be facilitated through a newly established farming and food partnership board, comprised of senior industry and government leaders, which will “drive growth, productivity, and long-term profitability across the sector,” she explained.
“When farming thrives, the whole country benefits. British farmers are central to our food security, our rural economy and the stewardship of our countryside,” the Secretary of State added.
“This is about serious action to remove barriers, unlock investment and make the food system work better, so farm businesses can grow, invest and plan for the future with confidence.”
Baroness Batters’ review calls for a “new deal for profitable farming” that accurately reflects the costs associated with food production and environmental stewardship.
While the report did not delve deeply into the proposed inheritance tax changes, which are set to apply to farm businesses valued at over £1 million at a rate of 20% beginning in April 2026,
Baroness Batters noted that it was consistently raised as the primary concern by nearly all stakeholders in the farming sector during the review process.
She highlighted that the sector has faced a sharp increase in costs and increasingly extreme weather conditions, including a severe drought this year.
Uncertainty surrounding the closure of applications to the Sustainable Farming Incentive scheme – the post-Brexit agricultural payments scheme – and proposed changes to inheritance tax have created “significant” ongoing concern, with some farmers “questioning viability let alone profitability”.
In the review, she stated: “The farming sector is bewildered and frightened of what might lie ahead.”
The report further notes that costs are projected to be 30% higher in 2026 compared to 2020, while the £2.4 billion farming budget for England has remained relatively constant since 2007 – even as farmers and growers are being asked to do more to comply with environmental legislation, with less funding and no certainty.
Baroness Batters added: “Farmers don’t want handouts from the state, they want nothing more than to run thriving, profitable farming businesses, by earning a fair return for what they produce.”
The NFU described the report as “a thorough and complex report” that is “right to recognize reform is needed.”
President Tom Bradshaw stated that among the issues raised, fairness in the supply chain is a “top priority,” alongside planning reforms and a focus on growing exports.
“But alongside this, there are other immediate actions that are needed to boost British farming like providing much-needed clarity and certainty on the future of the sustainable farming incentive and doing the right thing on the pernicious inheritance tax changes,” he added.
Gavin Lane, president of the Country Land and Business Association, which represents rural businesses and landowners, welcomed the review and emphasized the need for “urgent action.”
“As this report highlights, profitability across the sector is perilously slim, with farmers battling high input costs, low commodity prices and volatile weather conditions.”
“Many farm businesses are marginal or loss-making, yet will soon be hit with unaffordable inheritance tax bills, which in many cases will dwarf their annual profit,” he explained.
In response to the review, the government stated that it is also taking action on planning reform to make food production a clearer priority, expedite on-farm reservoirs, polytunnels, and farm shops, and make it easier for farmers to invest.
The government is also intensifying efforts to ensure fairness in the supply chain, addressing barriers to private finance, and supporting exports and new markets, according to a spokesman for the Department for Environment, Food and Rural Affairs (Defra).
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