Farm income falls in England after extreme weather and subsidy cuts

Income fell on almost all farm types in England last year, as extreme weather hit yields and the government cut subsidies.

Farmers fear future hits to their industry after a hugely unpopular change to agricultural property relief which means some farms will be saddled with a large, unexpected tax bill, and a surprise, severe cut to the EU-derived basic payments scheme meaning a shortfall in cash that they had not predicted.

Last year, average farm business income was lower for all farm types except specialist pig farms and specialist poultry farms, figures the Department for Environment, Food and Rural Affairs (Defra) show. Extreme weather including floods hit farmers hard, causing entire crops to be submerged. Experts said these events were being made more likely by climate breakdown.

Cereal farms fared the worst, with a drop in income of 73%. For general cropping farms, the average income was 24% lower. Dairy farm income plummeted by 68%, and on lowland-grazing livestock farms, average income fell by nearly a quarter to £17,300, driven by lower output from crop and sheep enterprises.

However, payments under the post-Brexit nature-friendly farming schemes gave farmers a small boost: net income from agri-environmental activities increased by an average of 14% to £10,600.

Olly Harrison, who farms cereal near Liverpool, said next year's numbers were likely to be even worse as the bad weather continued in 2024 and the government was cutting grants to farmers for technology.

"That data is a year out of date. We've had the worst harvest ever just now for cereals: no sunlight in June, poor planting last autumn, the perfect storm, floods – [income] will go down next year," he said. "I bet food self-sufficiency has gone down after this last harvest – it's got to be. I've been growing overwintered bird food and deliver for nature, and have the kit and technology to do no-till [farming]. If the government invested we could boost food security and nature."

The UK is about 60% self-sufficient in food and reliant on imports. Harrison is one of the organisers of a mass protest expected to take place in Westminster next week over changes announced in the budget earlier this month.

Speaking in parliament on Tuesday, the Liberal Democrat environment spokesperson, Tim Farron, said the government had "rashly cut the basic payment by 76%. That will hit livestock farmers, upland farmers, dairy farmers and destabilise the whole industry."

Responding, the farming minister, Daniel Zeichner, said the Labour government had given the "biggest boost to sustainable farming that the country has seen". He said it was "determined to tackle the extreme climate crisis we have globally" by changing the payment schemes.

New data from the Agricultural Industries Confederation (AIC) shows cuts to government payments have fallen far more sharply than expected. After Brexit, ministers pledged to slowly phase out the land area-based payments which the EU gave out under the common agricultural policy. This was to allow farmers to transition to a new system of being paid for action on nature – such as planting hedgerows and looking after the soil – without a huge financial shock and potentially going bust.

However, in her first budget, the chancellor, Rachel Reeves, announced a cut of 79% to these payments. Farmers were expecting a more tapered cut: the AIC data shows that, at the top end of the scale, a farmer receiving £62,000 last year was expecting £38,000 this year but will be getting £7,200. For farmers on tight margins, this change could wipe out profits.

Martin Lines, the chief executive of the Nature Friendly Farming Network , said the system had to change.

"Farmers need fairer prices for their produce and better treatment across supply chains, along with international trade deals that don't undercut them by allowing imports from countries with lower welfare and environmental standards," he said. "Farmers also deserve to be properly recompensed for all the public goods their land provides – like flood defences and habitat restoration.

"Working with nature and investing in our landscapes is absolutely crucial. As we face extreme weather events and the havoc these are already wreaking on harvests, it should be clear by now that maintaining food security and protecting nature cannot be separated."

Defra has been contacted for comment.