Farmers are “bewildered and frightened” with many questioning the future of their businesses because of the government’s proposed changes to inheritance tax, an independent review of farm profitability has found.
The long-awaited government-commissioned report was published on Thursday with 57 recommendations designed to improve 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 farming and food industries would work much more closely together in the future.
That would be done through a newly created farming and food partnership board made up of senior industry and government leaders that would “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 called for a “new deal for profitable farming” that would recognise the true cost of producing food and delivering 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 farm businesses worth more than £1 million at a rate of 20% from April 2026.
But Baroness Batters said it was raised as the single biggest concern by almost everyone in the farming sector she talked to as part of the review.
She said the sector had faced a sharp rise in costs and increasingly extreme weather, with 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 had created “significant” ongoing concern, with some farmers “questioning viability let alone profitability”.
In the review, she said: “The farming sector is bewildered and frightened of what might lie ahead.”
The report added that costs would be 30% higher in 2026 than they were in 2020, while the £2.4bn farming budget for England had been almost the same since 2007 – even as farmers and growers are 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 said it was “a thorough and complex report” which was “right to recognise reform is needed”.
President Tom Bradshaw said that of the issues raised, fairness in the supply chain was a “top priority” alongside planning reforms and 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 said it was now time 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 said it was also taking action on planning reform to make food production a clearer priority, speed up on-farm reservoirs, polytunnels and farm shops, and make it easier for farmers to invest.
The government is also stepping up action on supply chain fairness, tackling barriers to private finance and supporting exports and new markets, a spokesman for the Department for Environment, Food and Rural Affairs (Defra) said.
