EXCLUSIVE: A major new report has painted a worrying picture for the future of the sector.

Paul Tompkins is Chair of the NFU dairy board (Image: NFU)

Farmers have said that the Government seems to be struggling to understand economics and their businesses will become unviable after a review of the sector was published today. Baroness Minette Batters wrote in her review of farmland’s profitability that growers are “bewildered and frightened” about the future, with inheritance tax (IHT) and farming payment changes causing significant ongoing concern. Rachel Reeves’s plan to introduce the family farm levy next year was raised as the single biggest issue as regards farm viability by almost all respondents to her review.

Baroness Batters added that 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 (SFI) – which financially rewarded landowners for “sustainable food production while protecting and enhancing nature” – and the looming IHT had created “significant” ongoing concern.

Paul Tompkins owns a farm in the Vale of York (Image: Christopher Booth)

Paul Tompkins, 46, Chair of the National Farmers Union (NFU) Dairy Board, runs a dairy farm in the Vale of York.

He told The Express: “The review rightly recognises that dairy farmers are already struggling with high input costs and poor returns.

“The suggestion that future government policy should focus public money on efficient food production, improved grassland and soil management together with more risk management and fairer supply chains is a direction of travel my farm would benefit from.

“For me, the report shines a light on the culture of uncertainty that features on too many dairy farms, farmers are bewildered by the shear volume of demands being placed on our businesses before our primary job of producing food is considered.”

These demands include environmental outcomes like GHG reduction, water and air quality, raising increased revenue for the exchequer.

His farm could have to find £20,000 a year for 10 years if it had to pay a family farm tax.

“I feel saddened that money that I thought was for the kids to one day invest in the farm leaves their future in doubt,” Mr Tompkins added.

Paul Chubb is regional Chair of the NFU in Devon (Image: Humphrey Nemar)

David Chugg, 53, sheep and arable farmer and NFU chairman in Devon, said: “The farming industry faces many huge and wide-ranging challenges including the unfair and unjust family farm tax – and we are pleased that this has been recognised within the review.

“We cannot give up and our fight continues on it. Government must do the right thing and remove the elderly and terminally ill from the eye of the storm.

“The NFU will work with the wider industry, supply chain and MPs to secure these changes to this policy.”

He added: “Farmers take all the risk. We are the most unsupported and heavily regulated in the western world

“Government must supply the policy framework that enabled agriculture to get on and deliver the rest.

“Whilst acknowledging the spousal transfer in the budget, which helps just a few, by further changing the finance bill, bringing back a meaningful SFI policy and planning reform, this will help us to get on and deliver.”

On reports that farmers are considering suicide to stop their children paying IHT, he said “it’s reality”.

“I’ve seen elderly farmers in tears and you don’t know what to say. What do you say to these people?”

Growers are making 1% profit and “there’s nothing to reinvest”, Mr Chubb said.

If farmers have to sell off land to pay IHT, “the smaller your business gets and the more unviable your business gets”, he added.

Jeremy Yabsley is a farmer in Devon (Image: Humphrey Nemar)

Jeremy Yabsley, 69, a farmer and former Tory councillor in Devon, is worried his son could be landed with a £500,000 bill due to IHT.

The report renders a picture of “a most uncertain future for all farming businesses”, he said.

“This is due mainly I think to many farmers are not necessarily geared well for considering very strategic issues but these must be grasped.

“There is much free advice available. However, turning this into something positively useful for a farming families future is not quite so straightforward.

“As I have discovered myself, taking the free advice means looking to use pay for professionals to move forward to a business solution to remedy, to some extent, the IHT problems faced by the receiving generation when the time comes.

“I have been quoted £3,000 for initial consultation re forming a simple Farming Partnership and circa £7,000 drawing up that agreement.

“Forming a limited company from existing assets brings Capital Gains Tax problems when transferring those assets.”

The farmer added: “So, no surprise that this issue is top of the list. But, to be fair, Baroness Batters mentions many more issues that are likely to be just as crucial to farming’s future. Viability has to be right up there in importance, if it’s not economically viable it won’t be happening for long! Economics seems to be something that our present Government struggles to understand!”