Weather adds to worries of British beef farmers

The only thing saving UK beef production from collapse os that an increasing proportion of calves born to dairy cows are being reared for beef.  Although generally inferior in taste, it is cheaper to produce as it uses calves that are effectively a by-product of milk production.   But even these calves ae increasing in number as the dairy herd shrinks.  More milk is being produced per ciow because of improved genetics.

British beef consumption per capita is in steady decline but beef imports forecast tt increase in the medium term.  British beef farmers face a double blow from the changing climate as relentless rain forces them to keep cows indoors, after last summer’s drought stopped them storing away enough hay for the winter. This year’s rain has left grazing fields waterlogged and cattle stuck indoors, with insufficient hay to munch on because last summer was unusually dry — adding to the pressure on farmers also dealing with lower subsidies and volatile energy and feed prices.

 If the rain persists it could eventually put upward pressure on beef prices — which rose 28 per cent last year — alongside global factors such as shrinking herds and growing demand. The rain has blown a hole in farmers’ planning because they would normally only bring cattle inside for four to five months over winter, for which they would buy enough feed.

As little as two or three extra weeks indoors is a significant extra cost. Lucy Eyre, a beef and sheep farmer in Wales,told the Financial Times that British producers have had the “worst of both worlds” with “very poor” yields of silage, a feed made from hay, because of the dry summer.

And now turning cattle out too early is risky: on saturated ground they “make a mess” and “the grass won’t do as well later”. “Having to house livestock for two to three weeks longer might be the difference between making a loss and breaking even for many farmers,” Eyre told the Pink ‘Un.

The episode shows how the changing climate can weigh on farmers’ profits and eventually feed through to diets and consumer wallets. Food price inflation has proved stubborn in the UK, and rising grocery bills remain politically charged. Food and non-alcoholic beverage prices rose about 4.5 per cent in the year to December 2025 — an acceleration on the previous month, even as overall inflation eased.

David Swales, the interim chief economist of the UK Agriculture and Horticulture Development Board, told the leading business paper that tight supplies of beef globally, including a declining herd size in the UK, had pushed up prices, but the bad weather could exacerbate the problem. “It’s been very wet the last two months — if it carries on as wet as this, it could be very disruptive, and it could add a lot to farmers’ cost of production in the year ahead,” he said. “And this could mean further down the line that food prices have to rise.”

While the weather in Britain would not have an impact on the global market, not all beef is easily swapped for imports. Swales said “100 per cent British” pledges by supermarkets and restaurant chains such as McDonald’s meant their prices were more likely to be affected by the weather.

The AHDB said UK beef production in 2025 was 3.5 per cent lower than the year before due to shrinking cattle herds. It expects production to fall again in 2026 and close 1.3 per cent lower than 2025.  David Barton, chair of the National Farmers’ Union Livestock Board, said wet weather “shouldn’t have much impact on beef supply . . . So long as we have good weather late March into April all should be fine.” He argued that global supply and demand imbalances were causing price rises.

Cattle numbers have been falling in Britain and abroad. In the US, drought across key cattle states has led to herds falling to their lowest levels in decades, driving up prices. Imports to the UK also fell last year, down 3 per cent year on year due to tight supply in Ireland, which accounted for 62 per cent of all beef imports last year.

Irish producers have been losing share of the UK market to cheaper suppliers from Brazil, Australia and New Zealand. But greater imports could also have an impact on the national diet. “There’s two different kinds of beef,” said Tim Hayward, author of Steak: The Whole Story and an FT columnist. “There’s the stuff that runs to the American standards, which is grown now pretty much all over the world, with restricted roaming and feeding on corn, and that gives you fat, soft beef, very, very quickly.” And then there is beef grown in the UK: “We tend to grass finish our animals over here . . . If there is a reduction in the UK herd, and we’re doing more importation, it would be more importation of the crap beef.”

Farmers line up behind Farage

Why I am not surprised that 40 per cent of farmers say they would vote for Reform if an election was held tomorrow?   Owner occupier farmers have always been on the right politically, many of them holding posts in local Conservative associations.   However, they have become disillusioned with the Tories, although in a real general election I am sure that many of them would drift back.

In the 2024 general election, Farmers Weekly data shows that 57 voted Conservative and 15 per cent Reform.  Labour support today stands at just one per cent.

Reform support was strongest in the Midlands (52 per cent) and lowest in Scotland (31 per cent).  In Wales 22 per cent of farmers said they would vote for Plaid Cymru, but Reform would attract 35 per cent.  Just nine per cent of Scottish farmers would back the SNP, behind the Liberal Democrats on 13 per cent.

The Lib Dems did best in the South East and their traditional stronghold of the South West,

Despite the IHT controversy, only 35 per cent of farmers have a robust succession plan.   This is a worrying feature of an industry where those who are 80+ think they know best

Government gives way on farm inheritance tax

In a Christmas Eve u-turn the Labour Government has backed down on inheritance tax for farmers.  My estate will still attract 40 per cent, but only a minority of farmers will pay 20 per cent over a ten year period.

No doubt farmers will say it was their parades of shiny kit in London that made the difference, but I think a revolt by backbench Labour MPs from rural seats was more significant.  As many as forty of them were prepared to move an amendment to the Finance Act in what would have been a major revolt..

Moreover, it seemed unlikely that the measure would yield significant sums.

Fewer farmers will start paying inheritance tax from April after UK ministers were forced into a £130mn climbdown by a fierce backlash against the policy from rural communities and some Labour MPs. In a surprise U-turn just before Christmas — and with parliament not sitting — the government announced it was lifting the threshold above which farmers will have to pay death duties.

Chancellor Rachel Reeves announced in last year’s Budget that farmland would no longer be exempt from inheritance tax and would be liable for a 20 per cent levy on assets worth more than £1mn from April 2026. But on Tuesday ministers bowed to pressure and announced the threshold would be raised to £2.5mn, meaning that spouses or civil partners with combined estates worth up to £5mn will pay no inheritance tax on top of existing allowances.

Officials said the changes would reduce the number of family estates facing inheritance tax bills to about 1,100, from 2,000 under the original plans (these official  figures have always been disputed by farm organisations).

Only 15 per cent of farms will be liable for the levy, down from 25 per cent under the previous proposals. Introducing inheritance tax on agricultural land had been expected to raise £430mn a year for the government by 2029-30, but that figure is now likely to be £300mn — meaning a net annual cost of £130mn.

Environment secretary Emma Reynolds said the government had “listened closely to farmers across the country” and was making changes “to protect” more ordinary family farms. “It’s only right that larger estates contribute more, while we back the farms and trading businesses that are the backbone of Britain’s rural communities,” she added.

Farming groups have organised regular, noisy protests in Whitehall over the past year, with ministers criticised by opposition parties and some rural Labour MPs. Markus Campbell-Savours, MP for Penrith and Solway in Cumbria, recently voted against the original proposals and was suspended from the Labour party as a result.

A significant number of backbench Labour MPs abstained. David Smith, Labour MP for North Northumberland, said on Tuesday that the government’s decision was “sensible and mature”. Prime Minister Sir Keir Starmer last week met Tom Bradshaw, president of the National Farmers’ Union, who urged him to protect “the vulnerable and elderly” from the tax changes.

Bradshaw said on Tuesday that “while there is still tax to pay, this will greatly reduce that tax burden for many family farms, those working people of the countryside.  Starmer was also spurred into action by last week’s government-commissioned review of farming by former NFU president Minette Batters which found nearly a third of farms in Great Britain were loss making last year.

Batters said the inheritance tax changes had left farmers “bewildered and frightened of what might lie ahead”. One Labour MP questioned the timing of the announcement during the Christmas “dead zone”, saying: “My general view is if you are going to U-turn, reap the political benefits of it and properly argue for it.”

Asked why the change was not in last month’s Budget, a government official said ministers had wanted to “get it right” after a long time engaging with the farming industry.

I do hope that despite this policy change farmers will take succession planning more seriously and allow younger family members more say in the running of farms.

It also seems to me that the Government has spent a lot of political capital and been distracted from other issues while gaining very little in fiscal terms: this also applies to the winter fuel allowance.

Of course the animal welfare strategy just announced by the Government has also raised concerns in rural areas, in part because of production restrictions on pigs and poultry that di not apply to imported food and in part because of the proposed ban on trail hunting.

Food production is no longer profitable

Minette Batters has completed her review of farm profitability which some see as the Government using the former NFU president as political cover.

Nevertheless, I agree with her that Defra has lacked good political direction, being treated as an up or out way station for ministers (my words, not hers).  It pains me to say it but the only minister who showed any real leadership was Michael Gove,   Certainly not Liz Truss with her selfies and disastrous trade deals.

Batters reckons that Brexit left a policy void created by exit from the CAP (in my view something better could have been put in its place but wasn't.)

For the average farm, food production itself is no longer profitable, the report found. In the 2023-24 financial year, the average English farm made a net loss on agricultural activities, with state funding and diversification out of farming “providing the bulk of an average farm’s income”. 

Rising input costs such as fuel, fertiliser and animal feed following Russia’s invasion of Ukraine — as well as increasingly volatile weather — have battered confidence in the sector, the report found. But constant shifts in government policy, including the swift removal of agricultural support schemes, had weighed on real farm incomes. 

In March the government suspended one of its post-Brexit support schemes, the sustainable farming incentive, because the budget had run out, leading to a sharp drop in income for many farms. The government has not confirmed when it will be restarted. 

In 2023-24, the average income from farming in Great Britain was £41,500 per farm. A review by land agents Strutt & Parker found fewer than half of England’s farms made more than £34,500, the minimum income they define as economically sustainable.

In addition farmers are still smarting from the (partial) imposition of inheritance tax where a prolonged campaign has led to only minor government concessions.

Farm returns fall but little benefit for consumers

Farmers are known for complaining, but right now they may have a point. Agricultural commodities such as grains and sugar have plummeted on futures markets as global supplies have surged. European farmers are suffering in particular as they contend with high input costs and increasingly competitive global rivals.

Benchmark wheat futures in Paris have fallen more than 20 per cent this year to multiyear lows, dragged down by bumper harvests in Russia, Australia and parts of South America. Meanwhile, speculators are building bets on further price falls, with investment funds adding more than 280,000 new short lots in milling wheat futures in the week to November 21, extending their net short position, according to Euronext data. For UK growers, the fall has been brutal. Wheat prices are now little more than half the levels reached in 2022 following Russia’s invasion of Ukraine. Yet fertiliser, fuel and machinery costs — inflated during the energy shock — have barely retreated.

For arable farmers in Europe, “it’s not a happy situation at all,” Ole Hansen, head of commodity strategy at Saxo Bank told the Financial Times. There is a big gap between “the cheap crop that leaves the farm gate” and the price of bread “when it hits the store”, he said. While the upcoming harvest in Norfolk looks promising, the UK’s wheat yields at this year’s harvest fell after last winter’s torrential rain. But because international markets are well supplied, that does not translate into higher prices.

The financial squeeze is prompting visible restructuring. Brown & Co, the UK’s largest dedicated agricultural auctioneer, said the number of agricultural machines being put up for sale has risen sharply. “It’s become hard to find a day of the week without an auction,” said partner Simon Wearmouth. “I’ve never known the calendar this crowded.”

Even as grain markets sink, UK shoppers have seen little relief in the cost of bread, beer or baked goods. That is because the raw commodity typically accounts for only a small fraction of the retail price. In a loaf of bread costing £1.50, wheat may only account for 16.5 pence to 22.5 pence, according to Financial Times calculations based on research by the Agriculture and Horticulture Development Board, while barley only accounts for a small proportion of a pint of beer.

Energy, packaging, transport and processing costs and retail margins are the main components of the final price. Annual food inflation in the UK was 4.9 per cent in October, up from 4.5 per cent in September. The rise has been driven by five products — beef, butter, milk, coffee and cocoa — where supply shortages globally have pushed up prices.

Across the Channel, growers say the situation is similarly dire. In France, where sugar beet is a flagship crop, producers describe a sector under existential pressure after global sugar prices plunged almost 50 per cent over the past year.

Concessions for South Africa, Mercosur countries in South America and traditional cane exporters have added to supply on a market where European consumption is flat or declining. The result, has been factory closures, with six sites shutting in France since the end of EU sugar quotas in 2017, with more expected if 2026 prices fail to recover.

Producers on both sides of the Channel emphasise a structural problem: Europe’s high environmental and labour standards, while politically popular, make production significantly more expensive than in major exporting nations. In Brazil and India, cane cultivation benefits from favourable climates, large vertically integrated estates and looser rules on pesticides and labour.

Concession on inheritance tax on farmers

Rachel Reeves has eased inheritance tax on agricultural property after pressure from farmers.  Probably more important than their demonstrations was pressure from Labour backbench MPs from rural seats.

As the chancellor made her budget speech on Wednesday, the Treasury announced changes it said could save farmers and business owners £30m next year when passing on property and £70m a year in the following four years. Farmers, who had driven tractors up to the doors of parliament, were protesting outside at the same time.

From April, farmers and small business owners who are married, are in a civil partnership or have deceased spouses, will be able transfer their inheritance tax allowance of up to £1m of full relief to each other if one of them dies without having used their allowance. The change means a farmer could leave their £1m allowance to their partner, and use their own £1m allowance, to pass on £2m of farmland to their children without paying inheritance tax.

Tom Bradshaw, the president of the National Farmers’ Union, said: “It’s good to see the government accepts its original proposals were flawed. But this change goes nowhere near far enough to remove the devastating impact of the policy on farming communities.”

He added that the change would help widowed farmers but “it does nothing to alleviate the burden it puts on the elderly and vulnerable” and urged the government to address this with further measures.

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.