Serving the Farming Industry across the Midlands for 35 Years
• Similar profits over next 12 months • Little increase in cost of key inputs • More changes due to farm support Farm profits... Farm prospects ‘steady’ for 2025

• Similar profits over next 12 months

• Little increase in cost of key inputs

• More changes due to farm support

Farm profits will remain steady during the coming year – as overall output increases and key inputs look set to stay relatively stable, say experts.

“Overall, profitability is forecast to be little changed in real terms,” says James Webster-Rusk, senior analyst with Andersons farm business consultants.

Crop output is tentatively forecast to improve, says Mr Webster-Rusk. Dairy is benefitting from increased milk prices and returns for grazing livestock are expected to remain ahead of the long-term average.

“Overall, output is expected to rise in real terms in 2025, however costs are also forecast to increase. Many inputs are predicted to continue rising at or above inflation, including finance, wages and wider services.”

Relatively stable

But key inputs, such as fertiliser and feed, look set to be relatively stable during the next 12 months, says Mr Webster-Rusk, who examines the prospects for farm profitability during the year ahead in  the Andersons Outlook report for the year ahead.

That said, changes announced in the autumn Budget mean deductions to basic payments – now called delinked payments – will be much deeper than many analysts expected.

No farm will receive more than £7,200 in direct payments in 2025, This follows Defra confirmation that a 76% reduction will be applied to the first £30,000 of a payment, with no payment made at all above £30,000.

The government has also underlined its commitment to Environmental Land Management with a new and improved Countryside Stewardship Higher Tier (CSHT) scheme due to open in 2025.

Defra says the CSHT scheme will provide new quarterly payments designed to improve farm cashflows – alongside a rolling application window so farmers can apply throughout the year.

The CSHT will open through an initial controlled roll out to ensure everyone gets the necessary support, says Defra. Frustratingly, though, applications will initially be by invitation only – on a rolling monthly basis.

‘New Deal’

Defra has also unveiled 14 additional Sustainable Farming Incentive endorsed actions. These will be available from summer 2025 for farmers who make  improvements to grassland, heritage and coastal sites.

As part of its New Deal for Farmers, the government says it will set up a new British Infrastructure Council to steer private investment in rural areas including broadband rollout in our rural communities.

“We are also developing a 25-year farming roadmap, focusing on how to make the sector more profitable in the decades to come,” says Defra.

Organisers say they are planning further protests against the government’s plan to impose inheritance tax on farms

Government figures increasingly at fault

More farmers than expected will be affected by government’s autumn Budget changes to inheritance tax, suggests the latest analysis.

The Central Association of Agricultural Valuers recently suggested that 75,000 farmers could be affected by the decision to impose 20% inheritance tax on farm assets worth more than £1m from April 2026.

But a deeper analysis by CAAV secretary and adviser Jeremy Moody has unveiled another swathe of farmers will also be affected – because the new rules mean all assets must be accounted for at current market value.

Livestock farms

This change will have a particular effect on many livestock farms. “Market value would mean a potentially massive uplift over the [widely used] accounting value for a long-standing dairy herd, for example,” says Mr Moody.

“All of this means that yet more money will have to be found to pay the tax, whether by selling more land, more operational business assets, or foregoing more income and investment.

“It’s now clear that even more people will be affected.  This hurts the people it claims to protect and protects those it claims to hurt. It is time to drop this tax.”