How BREXIT damaged British Farming

Last week, thousands of farmers descended upon the capital to protest the Labour Party’s proposal to increase inheritance tax on farming estates valued over £2.5 million when passed to a spouse and then to children. This change, according to HM Treasury, could affect approximately 500 farms each year, potentially leading to forced sales due to increased tax obligations (HM Treasury, 2023) [1].

The proposed increase in inheritance tax comes at a challenging time for British farmers, who are still grappling with the repercussions of Brexit. Since the UK's departure from the EU, the agriculture has faced numerous disruptions and set backs which have put pressure on farm finances. The average mixed farm takes home around £35,000 a year after expenses and a large amount work their finger to the bone to break even (DEFRA, 2023) [2]. Even if their lifestyle choice does have it's redeeming qualities and they have access to their own produce, prices, land value, community, production and trade are all still concerns for farmers in the absence of the single market.

Context

The tax exemptions for agricultural land, first introduced by Margaret Thatcher in 1984, have long attracted wealthy individuals looking for tax advantages, which is typical of the iron lady. Figures like Andrew Lloyd Webber, James Dyson, Lord Rothemere have purchased farmland, drawing criticism for using these properties primarily to avoid tax. Jeremy Clarkson himself declared this to the Sunday Times when he acquired Diddly Squat farm. While Chancellor Rachel Reeves’s plan aims to curb these practices by closing the loophole, it doesn’t fully account for the wider pressures on agricultural land. The Office for National Statistics (ONS) shows that only 45% of farmland sold through inheritance ends up being purchased by other farmers, indicating that non-farming interests—like housing development and energy infrastructure—remain significant drivers of demand (ONS, 2022) [3].

Brexit’s Impact on British Farming

Import Deals acquired outside of the EU
The post-Brexit trade agreements with Australia and New Zealand were intended to expand market access for British goods. However, British farmers have struggled to compete with cheaper agricultural imports from these nations. According to the Department for International Trade (DIT), while overall trade volume with Australia and New Zealand increased, the benefits to British agriculture have been minimal (DIT, 2023) [4]. British beef and lamb producers, in particular, have faced competition from Australian imports, raising concerns over the viability of certain UK farming sectors (House of Commons, 2023) [5].

Labour Shortages Due to Brexit
Brexit has severely affected the availability of labour in the agricultural sector. Prior to Brexit, UK farms relied on over 70,000 seasonal workers from the EU annually (DEFRA, 2020) [6]. However, the end of free movement saw a 34% drop in EU agricultural workers by 2023, according to the UK Agriculture and Horticulture Development Board (AHDB, 2023) [7]. This labour shortage has forced many farms to reduce production or increase wages to attract domestic workers, driving up operational costs.

Market Access and Customs Barriers
Brexit has also complicated access to EU markets, the UK’s largest trading partner for agricultural goods. Increased paperwork, longer customs checks, and compliance costs have contributed to a 15% decline in agricultural exports to the EU between 2019 and 2023, according to the UK Food and Drink Federation (FDF, 2023) [8]. These logistical barriers, along with tariffs, have made it harder for British farmers to remain competitive, with many struggling to adapt to the new regulatory landscape.

Economic and Market Challenges

Inflation and Rising Costs
The economic shifts following Brexit have driven up costs across the agricultural sector. Data from the Office for National Statistics (ONS) shows that agricultural inputs, including fertilisers, fuel, and feed, rose by 21.4% in 2023 alone (ONS, 2023) [9]. These increased costs have tightened profit margins for farmers, particularly smaller-scale operations, which face challenges in passing on these costs to consumers. Food prices have also risen, with a 19.1% increase in 2023 compared to the previous year, reflecting broader inflationary pressures in the market (ONS, 2023) [10].

Loss of EU Agricultural Subsidies
The cessation of EU subsidies has significantly impacted the UK farming sector. Under the Common Agricultural Policy (CAP), British farmers received consistent financial support. The UK’s replacement scheme, the Environmental Land Management Scheme (ELMS), has been criticised for being less generous and less predictable. A study by the University of Exeter found that ELMS payments were, on average, 25% lower than the subsidies provided under CAP, creating financial uncertainty for many smaller farms (Exeter University, 2023) [11].

Conclusion

Brexit has undoubtedly reshaped British agriculture, from labor shortages and trade barriers to inflation and reduced subsidies. These pressures are compounded by proposed inheritance tax changes, which could force more family-run farms to sell off land. It’s important to note that while farmers were perceived as strong Brexit supporters, the actual voting data suggests their support was only slightly above the national average (NFU, 2016) [12]. Even if they did vote for Brexit, the sector should not bear a disproportionate share of the economic burden. Effective support mechanisms including accessing arable land, reliable subsidies, equitable trade deals, and solutions to labor shortages, are essential to ensure the long-term sustainability of British farming.

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