The government is aiming to reset its relationship with farmers with what it describes as a “new deal” for the industry.
Farmers have protested in their tens of thousands after controversial changes were made to agricultural inheritance tax and the EU-derived subsidy scheme.
At the Oxford Farming Conference on Thursday, the environment secretary will announce his “new deal for farmers”. The Guardian understands this will be focused on “making farm businesses more profitable and sustainable”.
Steve Reed says he hopes to ensure farmers are paid more fairly for their produce, making them less reliant on subsidies. While the UK was in the EU, farmers were paid a flat rate for each acre they farmed under the common agricultural policy, which was designed to keep farmers on the land and maintain low food prices.
Now, the English government has redesigned these schemes and is phasing out these flat payment rates in favour of paying farmers for restoring and protecting nature. The devolved governments have their own subsidy schemes. The current farming payments allocation for England is £5bn over two years, though the recent budget
said the farming schemes would be reviewed from 2025-26.
Rural MPs urge government to reassure farmers over inheritance tax
Research has found farmers get just 1p for every loaf of bread or block of cheese sold. However, it will be difficult to fix this problem without causing food prices to rise, or using unprecedented government legislation to interfere in supply chains and supermarket business practices. Some argue UK consumers pay too little for food; the US, Singapore and Ireland are the only countries where consumers spend less of their income on food than the UK.
The low income many farmers make has caused problems with government plans to crack down on inheritance tax avoidance. From 2026, for the first time in decades, farms worth more than £1m will have to pay a 20% inheritance tax rate, with payments spread over 10 years. However, as farms make on average just a 0.5% annual return on the value of their land, livestock and machinery, these payments could wipe out the entire income of many farms, according to analysis by the National Farmers’ Union.
A survey by the organic vegetable company Riverford found 64% of British fruit and vegetable farmers reported in 2024 that their farm was at financial risk, up from 49% in 2023.
Despite the anger over the tax changes, the Guardian understands Reed will not announce any changes to the policy, and will instead focus on how to make farms more profitable in the long term.
Neither will there be any changes announced to cuts to the flat 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 have otherwise received by 76%, while making no payments for anything above this. For example, a payment of £40,000 would be reduced by £32,800 to £7,200.
Instead, updates are expected on a timeline for the government’s land use framework, which aims to prioritise areas for farming and nature. Ministers are also working on a food strategy that will aim to protect the UK’s food security from climate shocks.
