Labour's 'New Deal for Farmers' Aims to Revitalize Industry Ties.

Steve Reed is set to declare an emphasis on enhancing the profitability and sustainability of farming during the Oxford Farming Conference.

Labour aims to establish a "new deal for farmers" to improve its relationship with the agricultural sector.

Farmers have expressed significant discontent, with protests numbering in the tens of thousands, following contentious modifications to agricultural inheritance tax and the subsidy framework inherited from the EU.

During the Oxford Farming Conference on Thursday, the environment secretary is set to unveil this "new deal for farmers.", the initiative will concentrate on enhancing the profitability and sustainability of farming operations.

Steve Reed has articulated his intention to ensure that farmers receive fairer compensation for their products, thereby reducing their dependence on subsidies. Previously, while the UK was part of the EU, farmers received a uniform payment for each acre cultivated under the common agricultural policy, which aimed to support farmers and maintain affordable food prices.

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Currently, the English government is revamping these subsidy schemes, transitioning from flat-rate payments to a model that compensates farmers for their efforts in environmental restoration and conservation. The devolved administrations have established their own subsidy frameworks.

Presently, the allocation for farming payments in England stands at £5 billion over a two-year period, although the recent budget indicated that these farming schemes would undergo a review starting in 2025-26.

Research indicates that farmers receive merely 1p for each loaf of bread or block of cheese sold. Addressing this issue poses significant challenges, as it may lead to increased food prices or necessitate unprecedented government intervention in supply chains and supermarket operations. Some contend that consumers in the UK pay insufficient amounts for food; only the US, Singapore, and Ireland have lower food expenditure as a percentage of income compared to the UK.

The limited income of many farmers has complicated government efforts to address inheritance tax avoidance. Starting in 2026, for the first time in decades, farms valued over £1 million will be subject to a 20% inheritance tax rate, with payments distributed over a decade.

However, given that farms typically generate only a 0.5% annual return on their land, livestock, and equipment, these tax obligations could potentially deplete the entire income of numerous farms, as highlighted by the National Farmers’ Union's analysis.

A survey conducted by the organic vegetable company Riverford revealed that 64% of British fruit and vegetable farmers reported financial risks in 2024, an increase from 49% in 2023.

Despite the discontent regarding the tax reforms, Reed will not propose any modifications to the policy, opting instead to concentrate on strategies to enhance the long-term profitability of farms.

No modifications will be made to the reductions in flat payments allocated to farmers as the EU system is gradually discontinued. For the tax year 2025-26, the Department for Environment, Food and Rural Affairs intends to decrease the initial £30,000 of payments that farmers would have otherwise received by 76%, with no payments being made for amounts exceeding this threshold. For instance, a payment of £40,000 would be diminished by £32,800, resulting in a final amount of £7,200.

Conversely, updates are anticipated regarding the timeline for the government's land use framework, which seeks to prioritize regions for agricultural and ecological purposes. Additionally, ministers are developing a food strategy aimed at safeguarding the UK's food security against climate-related disruptions.

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Nature advocates have emphasized that Reed must not overlook the effects of climate change on agriculture, asserting that the nature-friendly farming payment initiative is essential for enhancing biodiversity.

Last winter, over 1,000 flood warnings were issued for England's prime agricultural land, marking an unprecedented level, while 2024 witnessed the second poorest harvest recorded in England's history. Research conducted by the Energy and Climate Intelligence Unit estimated that this situation resulted in a £600 million decrease in revenue for farmers compared to 2023.

The Wildlife Trusts’ senior land use policy manager, Barnaby Coupe, said: “The government needs to outline a clear future for nature-friendly farm schemes as a matter of extreme urgency. The ambitions of too many farmers are being stifled by a lack of certainty about what actions will be available to them, and when they will be able to access payments.

“The government is expected to publish a farming roadmap early in 2025, and it is imperative that this comprises a predictable, long-term and sustainable plan to support farmers along the transition to nature-friendly and climate adapted farming.”

Labour’s new deal for farmers presents an optimistic approach to revitalizing the agricultural sector, focusing on improving profitability and sustainability. By shifting the emphasis from subsidies to fair compensation for farmers' efforts in environmental restoration, the plan aims to create a more resilient and future-proof industry.

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With a clear focus on long-term strategies and food security, the initiative seeks to support farmers through uncertain times, addressing challenges such as climate change and financial pressures. This approach has the potential to strengthen the farming community while contributing to the broader goal of a sustainable and thriving food system.