Truss trade deal effects felt by British farmers

Liz Truss allegedly used a private jet to fly to Australia to secure a trade deal there.  She certainly got a good selfie and displayed the union flag, but there were concerns at the time that the marginal gains from the deal were offset by the potential costs to British farmers.   These concerns are now becoming more real.

An influx of Australian steak into the UK is undercutting domestic beef production, British farmers have warned, as the livestock sector starts to feel the effects of post-Brexit trade deals. A sharp uptick in imports of prime Australian cuts such as strip loin and rib was eroding confidence in the livestock sector, the National Farmers’ Union and National Beef Association told the Financial Times.

“These high-value cuts have the most distorting impact upon the UK beef market,” said David Barton, NFU chair of the national livestock board, because they are sold at a lower price than British cuts. In the first five months of 2025 Australia exported 6,503 tonnes of beef to the UK, more than in the whole of 2024, according to the Australian Department of Agriculture, Fisheries and Forestry.

The uptick follows a free trade agreement struck between London and Canberra, which came into force in 2023 and gave Australia access to a duty-free quota of 35,000 tonnes. Australia had previously exported modest amounts of beef to the EU, including the UK, typically under a quota arrangement paying a 20 per cent tariff rate. Some 95 per cent of imports in the first two months of the year were made up of fresh and boneless, high-end cuts, according to analysis by the UK Agriculture and Horticulture Development Board, a levy board that supports farmers.

Neil Shand, National Beef Association chief executive, said: “We need imported product when we’re not self-sufficient. But what we don’t like is putting it on the shelf at a lower price than our product.” Industry confidence was at “rock bottom” because of current government policy, he added, referring to recent changes to inheritance tax rules for farmers and the reduction of farm subsidies.

The UK imported 5,515 tonnes of beef from Australia and 4,110 tonnes from New Zealand in 2024, according to data from HM Revenue & Customs. The figures represent increases of 534 per cent and 339 per cent, respectively, compared with 2022, before free trade agreements agreed with the countries entered into force.

While volumes have soared, Australia is still significantly under utilising its access to UK markets, shipping only 15 per cent of its 43,300 tonne quota in 2024, according to the AHDB. Under the trade agreement, the quota will increase each year, reaching 110,000 tonnes by 2033.    One has to remember that Australia has significant commercial markets in the Middle East and Asia.   I visited one very large dry lot beef farm in New South Wales which was producing just for the Japanese market.

Farming groups have been sounding the alarm after seeing more beef from overseas on the shelves of major UK supermarkets, despite retailers’ commitments to source exclusively British prime cuts. The majority of the recent imports from Australia were going into food service, the NFU said. “We’re disappointed that retailers have broken their promise,” Shand told the Pink ‘Un. The NFU, meanwhile, claimed that Australian beef was produced to a lower standard than British beef, citing stricter UK rules on how long live cows can be transported before they require rest time.

The Australians, meanwhile, are pleased with how things are turning out. The surge in high-quality beef sales to the UK has helped restore historic trade ties between Australia and the UK, according to Andrew Cox, general manager of international markets at Meat & Livestock Australia, an industry body. “Before 1973, the UK was our largest agricultural export market,” he said. “It’s a ready-made market.”

The writer should point out that he has made a number of farm visits in Australia and is grateful  for funding in the past from Defra and also for the cooperation and hospitality of the federal government, state governments, farm organisations and individual farmers who have offered me generous hospitality on their farms.

Opposition grows to 'mega' farms

Cherry Tree in Norfolk and other intensive pig and chicken farms owned by Cranswick, the FTSE 250 food producer, are now struggling against opposition from locals and animal welfare and environmental campaigners. The farm manager faces regular complaints from one nearby resident in particular, although the Environment Agency has “only confirmed strong odours on a few occasions”.

 This culminated in April when Cranswick’s plan to build a “megafarm” to raise 14,000 pigs and 714,000 chickens at a time at an existing pig farm near two Norfolk villages was rejected by the borough council. It drew thousands of objections, including from Terry Jermy, Labour MP for West Norfolk, who declared it was “not the kind of farming this country wants or needs.”

Cranswick’s reputation was further damaged last week by the revelation in the Mail on Sunday of cruelty, including killing piglets with blunt force, at one of its 400 pig farms. Its shares fell by 9 per cent as supermarkets suspended supplies from the Lincolnshire farm, which had been certified by the Red Tractor “farmed with care” scheme. Cranswick describes the mistreatment as “wholly unacceptable.”

That contrasts with Cranswick’s growth in recent years, with its share price rising by 74 per cent since May 2023 to a market capitalisation of £3bn. It was founded in 1975 to make pig feed but has steadily expanded, entering chicken farming in 2016. Its shares recovered on Tuesday to a record high as it announced a 14.6 per cent rise in pre-tax profits for the year to March. Like the odour at Cherry Tree Farm, an air of unreality hangs over the anti-Cranswick campaign.

The cruelty in Lincolnshire was reprehensible and the company must prove it was isolated. But it generally conforms to supermarket-monitored welfare and environmental standards and its practices are akin to many farms.

Take one Cranswick chicken farm the Finanvial Times visited, where 33,000 eggs per shed are laid out on straw to hatch. The fast-growing chickens that emerge spend their brief lives in sheds, pecking at bales for up to 38 days before being slaughtered. Nearly 300,000 chickens are raised at a time at a nearby Cranswick farm with eight sheds. There are no cages and welfare standards have tightened. Cranswick just increased the space per bird in sheds by 20 per cent to 16 per square metre to comply with supermarket edicts.

It faces pressure to switch to more natural, slower growing varieties, which take longer to reach their final weight, under the Better Chicken Commitment campaign. Cranswick wants to build 20 chicken sheds at its site near the villages of Feltwell and Methwold, and a smaller number of new pig sheds. Despite its promised improvements, such as air scrubbers to curb emissions, it has been spurned. It is now raising 7,500 pigs there in ageing barns (the site has a permit for 29,000).

 While many prefer farms to be small-scale and free range, that can have drawbacks: free-range chicken farms have been blamed for some pollution in the River Wye because it is harder to contain waste.

The council ruled that Cranswick’s proposed new facility could harm the local environment and strangely cited a 2024 Supreme Court ruling on global warming and oil wells. The campaign, although largely principled, is impractical.

The UK relies on intensive farming for self-sufficiency, rather than importing EU chicken and pork raised to similar standards. Companies such as Cranswick need more space to keep filling supermarkets. The UK produces 1.2bn chickens for eating a year but met only 82 per cent of poultry demand in 2023. 

Cranswick can appeal and the application could be called in by Angela Rayner as housing secretary. “A pig is as clean as you make it,” the farm manager told the Pink ‘Un. Given the stakes for the country, someone should clear up the mess.

The writer of this blog has a substanial shareholiding in Cranswick

Defra committee suggests changes to farm policy

The House of Commons Defra Committee has some sensible and politically feasible suggestions in relation to recent Government farming policy.  Full report is accessible here: https://committees.parliament.uk/work/8722/the-future-of-farming/publications/

'Closing the Sustainable Farming Incentive 2024 (SFI24) without notice affected confidence in the Environmental Land Management Schemes (ELMS). This must be repaired to secure their future success. An alternative funding mechanism should be put in place to fill the gap in funding for those who missed out on the SFI24, and the Government should set out details of the next iteration of SFI as a priority. 

 We support the Government’s objective of reforming agricultural property relief (APR) and business property relief (BPR) to close the loophole that has encouraged wealthy investors to buy agricultural land to avoid inheritance tax. We are concerned, however, that no consultation, impact assessment or affordability assessment was conducted before the announcement of the reforms. 

The lack of proper evaluation of the impact of these changes 1 means that the scale and nature of its impact on family farms, land values, tenant farmers, food security and farmers in the devolved administrations is disputed and unclear. This comes with a considerable risk of negative unintended consequences. 

 Alternatives to the Government’s approach have been proposed, which may achieve the same policy outcomes while protecting vulnerable farmers. We are not in a position to assess the merits of each alternative but there is sufficient time for the Government to do so. Stakeholder concerns about the Budget’s taxation proposals have made it difficult for Government to articulate and deliver its wider vision. 

A pause in the implementation of the reforms would allow for better tax policy to be developed and the Government to convey a positive long-term vision. The Government should delay announcing its final APR and BPR reforms until October 2026, to come into effect in April 2027. This would also provide farmers with more time to seek appropriate professional advice.'

Farmers are unfortunately notoriously poor at succession planning and they need more time to adjust.

US targets more of UK agriculture for tariff cuts

The US is eyeing a multibillion-dollar slice of Britain’s pork, poultry, rice and seafood sectors, as it looks to expand its trade agreement with the UK, Donald Trump’s agriculture secretary said on Tuesday. 

Texan Brooke Rollins said these sectors were “at the front of the line” in ongoing negotiations to build on the trade deal announced last week, which gave US beef and bioethanol producers expanded access to the UK market.

Washington has touted the deal as a $5bn opportunity for American farmers, ranchers and producers, but the initial text of the agreement only covers about $950mn of trade in hormone-free US beef and ethanol. “Certainly pork and poultry are at the front of the line, along with rice and seafood,” Rollins said at a press conference in London on Tuesday, when asked about further products under discussion.

She added: “Food security is national security. The UK, for example, really relies on China and Russia for your seafood. America has extraordinary best-in-class seafood. Let’s talk about that.”

The remarks are likely to stir concern among British farmers and food producers, who have already raised alarms about potentially being undercut by cheaper US imports that may not meet UK or EU production standards.

 The UK has high tariffs on many agricultural products including up to 72 pence per kilogramme on pork, 107p on poultry, and 18 per cent on shrimp.

“We are more than happy to compete on a like-for-like basis,”  Richard Griffiths, chief executive of the British Poultry Council told the Financial Times. “But if we allow imports that are produced to standards beneath ours, that’s unfair competition.” 

Rollins suggested some US exporters would adjust to meet British expectations, in a softening from last week when she said no industry had been “treated more unfairly than our agriculture industry”. While she defended the safety of hormone-treated beef and chlorinated chicken, she said beef producers may be prepared to ditch hormones in order to sell to the UK and stressed “only about 5 per cent” of US chicken is now washed with chlorine.

 American producers “are constantly watching what the markets look like, and if the markets are calling for a specific type, or they have more opportunity somewhere, then I think that we, potentially, do see some movement in the market”, Rollins added.

Griffiths countered that among US producers “it’s standard practice to clean up at the end” with chemical washes — including but not limited to chlorine. British poultry farmers have to promote hygiene throughout the whole process, and can only use water. This is much costlier, he added.

UK ministers have repeatedly insisted that chlorinated chicken and hormone-treated beef would remain illegal in Britain. Rollins also stressed the reciprocal benefits for UK exporters: “While, in fact, we are excited about getting American beef, ethanol [and] hopefully down the line, rice, seafood, other products are coming into your country, this is also about getting more of your country’s products into ours as well.”

 Steve Reed, UK environment, food and rural affairs secretary, said the trade deal with the US would “protect Britian’s farmers and secure our food security”. “We have always been clear that this government will protect British farmers and uphold our high animal welfare and environmental standards,” he added.

Will the UK Government give away the farm?

The last Government (and Liz Truss in particular) concluded farm trade deals with the likes of Australia which were seen to potentially disadvantage UK farmers.

However, a more serious threat has always been a trade deal with the US with its mega food and farming corporations.   Much of the focus has been on the notorious chlorinated chicken, but if it was labelled properly, UK consumers could avoid buying if they wished (although it might be more difficult to avoid in takeaways and the catered food sector more generally).

The hope of a bespoke UK trade deal with the US may be a mirage.   However, it is clear that the UK Government has been prepared to make concessions on farm trade to secure a deal.   For its part the US administration needs to offer something to its rural base which may suffer from other measures.

Admittedly, the Government has been reluctant to make concessions on what are known as sanitary and phytosanitary measures, for example it is not willing to give ground on animal welfare or food hygiene standards.  This means that hormone treated beef will not arrive in the UK.

Britain is a major exporter of salmon, chocolate and cheese to the US.  Cheddar shipments have grown from about 4,500 tonnes in 2020 to more than 6,000 tonnes last year.   These are generally price sensitive products.

However, it does seem prepared to give ground on tariffs of up to 12 per cent on US chicken, pork and beef.   That could have significant implications for the UK food industry.

This time farmers have a justified grievance

Under the CAP farmers received a 'basic payment' with larger scale farmers getting more.  How this was spent was only loosely constrained so in practice it could be used for consumption as well as investment in the farm business.

Michael Gove came up with the idea of 'public money for public goods'.  In other words, farmers should be subsidised to farm more sustainably and benefit the environment.   (Note that we are talking just about England, policy in the devolved regions is different).

It took far too long to get the Sustainable Farming Incentive up and running and now it has been closed without the required six weeks notice because the money (£1.8 billion) has run out.   Uptake covers just 50 per cent of funding against a 70 per cent target.

Defra is not a 'protected' department and the Government is short of money as it tries to ramp up defence expenditure.  Nevertheless, some calculations suggest there could be headroom of £400m in the Defra budget.  Perhaps some extra money could be found, certainly wildlife groups hope so.   For a fuller critique: https://www.thetimes.com/article/510e633d-69f1-40fc-bba8-78ef0ce8d9c4

I think that farmers are increasingly realising that the Treasury is not going to back down on the changes to inheritance tax.   Some farmers are talking of going 'full French', but any government that surrenders to direct action risks its authority.

Personally I would have looked at reducing or eliminating the capital gains tax rollover relief for farmland sold for development, but that might be seen at odds with housing policy.

Farmers will still pay half the prevailing rate of inheritance tax and get 10 years back to pay the bill free of interest, a privilege the rest of us don't get.

Yields from farm inheritance tax changes uncertain

The Office for Budget Responsibility has brought out a short report on the proposed changes in inheritance tax for farmers and in Business Property Relief: https://obr.uk/docs/dlm_uploads/IHT-APR-and-BPR-supplementary-release-Jan-2025.pdf

It is necessarily a very technical report, but the main takeaway seems to be the uncertainty associated with the revenue yields which are the stated main objective of the policy.  In other words, the political cost may outweigh the financial gain.   Some would argue that changing the rollover relief for selling land for development would yield more revenue and cause less pain.

Meanwhile a number of major supermarkets, most recently Tesco and Lidl, have declared their opposition to the proposed reforms.  Of course, words are cheap and major supermarkets have been squeezing farmers margins (or worse) for years.

Farmers are notoriously slow in many cases to put succession plans in place, but could be allowed more time to do so, while the precise calculation of the threshold for liability is complex but needs further examination.