Britain’s Farmers Under Strain: Challenges Facing The Agricultural Sector

As reported by the below article from the Financial Times, more English farms are on the market than at any time in the past two decades, reflecting the mounting pressures facing the agricultural sector, with Strutt & Parker's analysis suggesting 177 farms were put up for sale in the first half of this year.

This surge in sales comes as farmers grapple with a combination of rising costs, falling incomes, policy changes and growing uncertainty about the future viability of family farming.

Farmers struggling to reap a profitable return

The Andersons Centre, a farm business consultancy, has recently reported that agricultural input inflation or 'agflation' had reached 7.6% by March 2026 - compared to general CPI inflation at 3.3%. Feed, fuel and fertiliser costs have spiked, exacerbated by the effect of global conflicts on supply chains such as the continued problems affecting the Strait of Hormuz.

Conversely, agricultural output prices continue to fall 5.8% year-on-year. The Andersons Centre reported that milk prices were 25% lower than a year ago, and pork prices had fallen by 12%. The effects of climate change on harvests, whether as a result of heavy rain or heatwaves and droughts, is piling pressure on arable farmers facing dents in crop yield and quality.

In addition, since leaving the EU's Common Agricultural Policy subsidies received by farmers as direct payments have been replaced by a new scheme rewarding farmers in exchange for environmentally friendly practices, even if such practices are not always the most profitable.

Inheritance tax changes and issues with raising cash

The outlook is not only bleak for profitability. Farming families also face stark challenges when it comes to succession planning. The Government's changes to Inheritance Tax have been widely reported. Despite protests from the National Farmers' Union and even an application for a judicial review in the High Court, the availability of inheritance tax relief for family farms and businesses has been restricted.

Whereas previously there was uncapped 100% relief from inheritance tax for agricultural and business property ('APR' and 'BPR'), since 6 April 2026 full relief is now capped at £2.5 million per individual or trust, with 50% relief applying to anything above that.

Larger farming estates will now face an increased inheritance tax exposure and families will need to undertake careful planning to minimise this. With the reduction in inheritance tax reliefs many estates will now be considering, or have already decided on, selling farmland and investing the proceeds in assets which deliver greater returns.

For those larger estates continuing to farm, they will need to consider how a current or potential future inheritance tax liability might be funded, especially with a large proportion of the value of many farming businesses being tied up in illiquid assets such as land and machinery. Any form of diversification needs to be carefully thought through, because APR and BPR reliefs are still important despite the restrictions, and must be considered if changes to the farming business might affect its ability to qualify for these reliefs.

The final harvest for many smaller farms

As Strutt & Parker's analysis suggests,manysmaller farms (those Strutt & Parker define with less than 500 acres of land) are struggling to keep afloat and are being taken over by larger farms, with their data suggesting the number of full-time farms in the UK has fallen from 66,510 in 2000 to 51,350 in 2025. That the proportion of farms being bought by farmers is at a seven-year high supports the fact that fewer non-farmers and 'lifestyle buyers' are investing in agricultural land. Whilst it is arguable that the restrictions to APR / BPR were trying to prevent 'lifestyle buyers' from buying farmland, whether it was also intended for this to be done at the expense of smaller farm owners is unlikely.

The outlook for British farming during this 'cost of farming crisis' is tough. Decreased returns from farmland and farming activities and fewer tax advantages for passing on agricultural businesses to the next generation will in our view likely see the sale trends continue, at least in the short term.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.