The government aims to reset its relationship with farmers with what it describes as a “new deal” for the industry.
Farmers protested in their tens of thousands after controversial changes were made to agricultural inheritance tax and the EU-derived subsidy system.
On Thursday, at the Oxford Agricultural Conference, the Environment Secretary will announce his ‘new deal for farmers’. The Guardian understands that the aim will be to “make agricultural businesses more profitable and sustainable”.
Steve Reed says he hopes to ensure farmers are paid more fairly for their products, making them less dependent on subsidies. When the UK was part of the EU, farmers received a flat rate for every acre grown under the Common Agricultural Policy, designed to keep farmers on their land and keep food prices low .
Today, the English government has redesigned these programs and is phasing out these flat rate payment rates in favor of paying farmers for restoring and protecting nature. The devolved governments have their own grant schemes. The current allocation of agricultural payments to England stands at £5 billion over two years, although the recent Budget indicated that agricultural programs would be reviewed from 2025-26.
Research has shown that farmers receive just 1p for every loaf of bread or block of cheese sold. However, it will be difficult to resolve this problem without causing food prices to rise or resorting to unprecedented government legislation to interfere in the supply chains and business practices of supermarkets. Some believe British consumers pay too little for food; The US, Singapore and Ireland are the only countries where consumers spend a lower proportion of their income on food than in the UK.
The low incomes of many farmers have posed problems with government plans to tackle inheritance tax avoidance. From 2026, for the first time in decades, farms worth more than £1 million will have to pay a 20% inheritance tax rate, with payments spread over 10 years. However, with farms making an average annual return of just 0.5% on the value of their land, livestock and machinery, these payments could wipe out the entire income of many farms, analysis suggests. of the National Farmers Union.
A survey by organic vegetable company Riverford found that 64% of UK fruit and vegetable growers said in 2024 their farm was at financial risk, up from 49% in 2023.
Despite anger over the tax changes, the Guardian understands Reed will not announce any changes to policy and will instead focus on how to make farms more profitable in the long term.
No changes will also be announced to the reduction in lump sum payments given to farmers as the EU system is phased out. For the 2025-26 tax year, the Department for Environment, Food and Rural Affairs plans to cut the first £30,000 of a payment farmers would otherwise have received by 76%, while not making no payment for anything above this amount. For example, a payment of £40,000 would be reduced from £32,800 to £7,200.
Instead, updates are expected on the timing of the government’s land use framework, which aims to prioritize agricultural and natural areas. Ministers are also working on a food strategy which will aim to protect the UK’s food security against climate shocks.
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Conservationists said the impact of climate change on agriculture could not be ignored by Reed and that the nature-friendly agricultural payments system was essential to improving biodiversity. Last winter, more than 1,000 flood warnings were issued for England’s best quality farmland, a record, and 2024 was the second worst harvest on record in England. Analysis by the Energy and Climate Intelligence Unit estimated this was equivalent to a £600 million reduction in farmers’ incomes compared to 2023.
Barnaby Coupe, senior director of land use policy at the Wildlife Trusts, said: “The Government must urgently set out a clear future for nature-friendly agricultural projects. The ambitions of too many farmers are being stifled by a lack of certainty about what actions will be available to them and when they will be able to access payments.
“The Government is expected to publish an agricultural roadmap in early 2025, and it is imperative that this includes a predictable, long-term and sustainable plan to support farmers in the transition to nature-friendly and climate-adapted agriculture.
theguardian