New government data showing an alarming slump in farm business incomes “paint a stark picture of the challenges facing many farmers”, NFU president Tom Bradshaw has warned.
With farmers across the UK gearing up for widespread protests next week, the latest annual Farm Business Income figures from Defra revealed incomes (calculated as output generated by the farm business minus total farm costs) fell on farms of almost all types in the 12 months to the end of February 2024.
Cereal farm incomes fell by 73% to an average of £39,400, while general cropping farms saw incomes drop by 24% to £95,300, the Defra data, confirmed today, showed.
Dairy farms also saw a big decline, falling by 68% this year to £70,900 on average, driven by falls in farmgate milk prices. Meanwhile, the grazing livestock sector (lowland and less favoured areas) saw 24% and 12% falls in income respectively to £17,300 and £23,500.
Factors behind these falls included a progressive reduction to the Basic Payment farm subsidy scheme currently being phased out – which fell by 21% year on year and accounted for an average farm income of 40% across the sector. Defra also cited the impact of the past 18 months’ volatile weather as another key driver.
Only specialist pig farms and specialist poultry farms saw any increase in average farm incomes (up 87% and “almost a quarter” respectively), the research showed, with Defra stressing the poultry figures should be treated with caution due to a small survey sample.
The figures come amid a growing clamour for direct action in response to the government’s controversial changes to inheritance tax eligibility for farms, announced in Rachel Reeves’ budget on 30 October.
The so-called Family Farm Tax has provoked anger throughout the farming sector, and will see thousands of farmers protest in London and around the country on Tuesday, with the NFU planning a “mass lobby” of MPs in a bid to persuade them to pressure the chancellor to perform a u-turn.
Some farmers are also set to take to the streets in protest, while others have threatened to “go on strike” and withhold their produce from market.
Read more: Why is the budget such bad news for the UK’s farmers?
“When these figures were first estimated back in March 2024, we said that we needed a government that would create policies to support British agriculture and help farmers and growers to build financial resilience into their businesses,” the NFU’s Tom Bradshaw said.
“Profitable farm businesses are essential if we are to deliver what the country needs; food security, with food produced to world leading standards and environmental protection. Instead, we have seen the opposite.”
The changes to Agricultural Property Relief and Business Property relief will see inheritance tax liable at 20% for properties worth more than £1m. And while the government has outlined various other mitigations since the budget, the changes had “left farmers reeling”, Bradshaw said.
“Many will be faced with a tax bill of millions,” he added. “Some will be forced to sell all or part of their farm to raise the funds.”
His concerns were echoed earlier this week by Ranjit Singh Boparan, owner of poultry giant 2 Sisters Food Group, who said the budget was a “disaster for business” that has dealt a “fatal final blow” to British farmers.
The Treasury had made a clear “miscalculation” about the impact the IHT changes would have on farm businesses, Bradshaw said, adding that it would hit the smaller farms government is claiming to protect.
According to Bradshaw, Defra itself has figures which show that two-thirds of farms could be affected by this change, and there are now growing rumours of a battle within government over the proposals.
“Another key question is, what impact assessment has been done ahead of this policy announcement on homegrown food production? Because if farms are being broken up and sold, British food will be hit,” said Bradshaw. “There is a very real threat to our long-term food security because there is no incentive to invest for the future.”
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