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Food production is no longer profitable for the average English farm, according to a government-commissioned review into the economic viability of the struggling sector.
The farm profitability review, led by former National Farmers Union president Minette Batters, found that nearly a third of farms in Great Britain were lossmaking last year, with many unable to generate enough income from food production to support a household.
The review set out 57 recommendations to make the sector viable again, including simplifying agricultural support schemes, exporting more English produce and helping farmers access private funding through natural capital and carbon offsetting schemes.
Batters also called on the government to improve fairness in the supply chain, include agriculture in Stem education and extend the government’s seasonal worker visas from six to nine months.
For the average farm, food production itself is no longer profitable, the report found. In the 2023-24 financial year, the average English farm made a net loss on agricultural activities, with state funding and diversification out of farming “providing the bulk of an average farm’s income”.
Rising input costs such as fuel, fertiliser and animal feed following Russia’s invasion of Ukraine — as well as increasingly volatile weather — have battered confidence in the sector, the report found.
But constant shifts in government policy, including the swift removal of agricultural support schemes, had weighed on real farm incomes. In March the government suspended one of its post-Brexit support schemes, the sustainable farming incentive, because the budget had run out, leading to a sharp drop in income for many farms. The government has not confirmed when it will be restarted.
In 2023-24, the average income from farming in Great Britain was £41,500 per farm. A review by land agents Strutt & Parker found fewer than half of England’s farms made more than £34,500, the minimum income they define as economically sustainable.
The review also identified the Department for Environment, Food and Rural Affairs’ lack of political direction since Brexit, and the policy void left after England left the EU’s Common Agricultural Policy. English farming’s transition to a new system of subsidies had been beset with “uncertainty and instability”.
“In the past nine years, farming policy has undergone the greatest set of changes in living memory . . . with no consistent political direction at a time when farming needed it most,” Batters wrote.
The government’s scrapping of 100 per cent inheritance tax relief for farmers, meanwhile, had left the sector “bewildered and frightened of what might lie ahead”. Many farmers, particularly in the arable sector, were now concerned for the viability of their businesses, let alone profitability, the report added.
The report also identified a collapse in confidence around the government’s handling of the transition to a new agricultural support scheme. Only 7 per cent of farmers say they fully understand Defra’s vision for farming, down from 10 per cent at the start of the process.
In response to the report, the government said it was launching a Farming and Food Partnership Board chaired by environment secretary Emma Reynolds, made up of leaders in farming, retail, finance and government to help strengthen food production.
The government said it was already taking action to improve supply chain fairness, tackling barriers to private finance and boosting exports to new markets. Tom Bradshaw, the current president of the NFU, said the “ball [was] now in Defra’s court” to push forward these priorities. But he added: “there are other immediate actions that are needed to boost British farming”, including clarity on when support payments for farmers would be resumed.