A review for the Government has found the farming sector has been left “bewildered and frightened”.

Inheritance tax and farming payment changes are causing significant ongoing concern for people working in agriculture.

The farm profitability report by former National Farmers’ Union president Baroness Minette Batters has called for a “new deal for profitable farming” that recognises the true cost of producing food and delivering for the environment.

The terms of the review by Baroness Batters did not include the controversial changes to inheritance tax, which will are set to apply to farm businesses worth more than £1million.

But she said it was raised as the single biggest issue regarding farm viability by almost all respondents to her review.

She said the sector had faced a sharp rise in costs and increasingly extreme weather, with severe drought this year.

Uncertainty surrounding the closure of applications to the sustainable farming incentive scheme, the main post-Brexit agricultural payments and proposed changes to inheritance tax had created “significant” ongoing concern.

Some farmers have been left questioning viability let alone profitability.

Baroness Batters, a tenant farmer in Wiltshire and first female president of the NFU, said farming remained a vital part of the UK economy and food system.

However, she said it had faced significant instability in the past nine years, from global market shocks to Brexit, rising costs and extreme weather.

Costs will be 30 per cent higher in 2026 than they were in 2020, while the £2.4billion farming budget for England has been almost the same since 2007.

This is despite the fact farmers and growers are asked to do more to comply with environmental legislation, with less funding and no certainty, she said.

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She added: “Farmers don’t want handouts from the state, they want nothing more than to run thriving, profitable farming businesses, by earning a fair return for what they produce”.

Baroness Batters said a new deal for farming needed to be developed between Government and industry.

The key focus points needed to be a long-term plan that increases demand for British produce, boosts farming incomes, productivity and resilience, makes supply chains fair, and values nature, wildlife and water quality.

However, Baroness Batters made it clear there was no silver bullet to farm profitability, and outlines 57 recommendations in her report.

These include simplifying the sustainable farming incentive (SFI), so farmers not in the scheme can access it, focusing on options that make producers resilient and provide for upland and hill farmers, and only supporting “active farmers” from the farming budget.

She also called for the Government to place more economic value on nature, develop standardised measures for farm-focused environmental outcomes such as hedgerows and healthy soils, and mandate nature reporting for companies to boost private sector green financing.

There needs to be a Great British farming advisory board to increase the market share of British raw ingredients in retail and public procurement, measures to make sure trade deals support farmers and extensions to the Grocery Supply Code of Practice, she argued.

She also called for a “food and drink England” body to be established to champion English food producers, encouraging seasonality, healthy diets and reduced food miles, for agriculture to be taught as part of Stem subjects and more focus on teaching children about food and cooking at school.

Responding to the report, Environment Secretary Emma Reynolds said: “British farmers are central to our food security, our rural economy and the stewardship of our countryside.

“Baroness Batters’ review underlines the need for government, farming and the food industry to work much more closely together.

“That is exactly what the new Farming and Food Partnership Board will do.

“This is about serious action to remove barriers, unlock investment and make the food system work better, so farm businesses can grow, invest and plan for the future with confidence.”