Feed and farmer groups warn of negative impact of UK budget
The AIC, which represents over 230 businesses across key supply chain sectors in UK agriculture, including the feed sector, has warned that certain measures in the recent UK budget could stifle productivity, deter inward investment, and place financial strain on the agricultural supply sector.
“While AIC welcomes the government's overarching ambition to drive economic growth throughout the UK, it is concerning to see the tax burden mounting,” remarked Ed Barker, head of policy and external affairs at the AIC.
Delinked payments
AIC decried the speed at which 'delinked' (former Common Agricultural Policy/Basic Payment Scheme) payments will be cut, with all payments in 2025 capped at £7,200 (US$9,258).
Since 2019, these payments have been gradually reduced in a phased manner, offering farms some financial predictability. However, the new timeline leaves many businesses unprepared, facing a potential income shortfall of 50% or more, it argued.
The AIC is calling on the government to urgently clarify how these cuts will be redirected to farmers through alternative environmental or productivity schemes to avoid a cashflow crisis. In addition, it wants a full impact analysis done to show how this will affect farm businesses.
The proposal for National Insurance contributions to be increased to 15%, and the threshold at which some businesses begin to pay being lowered, will create an immediate cost pressure for companies, according to the AIC.
AIC members, it confimed, have expressed concerns that this action will hinder inward investment, prevent job creation, and suppress wage growth.
Agricultural property relief
In addition, the industry body raised concerns over proposed reductions to agricultural property relief (APR) and business property relief (BPR) rates, with the budget introducing a 20% inheritance tax on farms valued over £1m.
The sector has only 18 months to adjust, and the AIC is urging the government to pause the proposal and engage in a full review process. It is seeking to ensure that these reliefs are applied fairly and without unintended consequences for farmers.
“We welcomed one of the environment secretary Steve Reed MP's priorities back in July, to instill more confidence in the farming sector. So far this proposal, and the way it has been implemented, has had the opposite effect,” said Barker.
The NFU is leading a campaign urging the government to reconsider this change to the APR, with many British farmers concerned that they will be forced to sell parts of their land to meet the tax obligations. The measure has sparked widespread outcry from both the farming community and the general public. The NFU reported that over 150,000 people have signed its petition to overturn the tax, and more than 3,500 emails have been sent from NFU members to MPs in opposition.
FSA funding
The AIC welcomed the additional £6m funding for the Food Standards Agency (FSA), but it stressed the need for faster regulatory approvals for novel foods and feed additives as well as ensuring it is able to maximize the full benefits of the Precision Breeding Act.
It also wants the government to release its much-anticipated Land Use Framework, in addition to providing clarity on wider land use pressures for food and farming businesses.
With the fertilizer sector confirmed to be included in the proposed Carbon Border Adjustment Mechanism (CBAM), the AIC also warned that this could lead to significant price increases for fertilizers, impacting the wider food and farming supply chain. At current prices, the additional cost could reach £36-40 per ton, further squeezing margins for agricultural businesses, it cautioned.
