UK agriculture: facing new global and old local hurdles

The outbreak of the Iran war put an end to any nascent optimism in the UK economy. While business confidence was on track to move into positive territory after a dour Q4 2025.

For the UK agricultural sector, rising fuel and fertiliser bills, directly as a result of the conflict, are just the latest in a litany of challenges it has faced over the last half decade. In recent years, the sector has been affected by:

• fluctuating commodity markets;
• inflationary shocks;
• climate change;
• regulatory effects such as the post-Brexit removal of certain subsidies; and
• the uproar around Inheritance Tax reform

Inflation in agriculture is particularly high

Coupled with a longstanding struggle with powerful food retailers and a sense of animosity between the central government and farmers, all have conspired to make the sector even more difficult to navigate.

According to the Andersons Centre, annual agricultural inflation currently sits at 7.6%, rising at its fastest rate since Q1 2022, just as output prices are falling by 6.5% year-on-year.

“Farmers have been here before, but this time it seems to be coming at the industry all in one go,” says Jack Deal, partner at Scrutton Bland, an accountancy and advisory firm covering the East of England.

These setbacks have come thick and fast, pushing up input costs and forcing many farms to postpone any notion of capital investment in the business, while they weather this multi-faceted storm. Basic survival takes precedence over growth. “This period is a bit of a reset,” Deal adds. “And many will be looking at whether to continue in farming or not.”

Joint ventures offer a solution

Deal points to some flashes of optimism within these trying times. “Some farms do have good ideas and are optimistic. There is a movement towards experimentation and pivoting among farmers, but they tend to do this at scale. Diversification at scale is a lot easier.”   

To that end, smaller farms – 500 hectares or less – are becoming less dismissive of the idea of joint ventures, where they can create the space to experiment, share the costs and any profits that emerge from their partnerships.

“There are lots of conversations about reducing the length of the supply chain, which would be a massive change to the British food system. For example, how to grow more crops that end up within a five-mile radius, rather than the global market. But this is beyond every single farmer [that operates alone],” Deal says.

Reviving the Great British export

At the same time, the UK government aims to increase support for farmers who still aspire to sell overseas.

Westminster is working with the EU on a new food trade agreement to ease the path for UK farmers and food producers to trade there.

The Sanitary and Phytosanitary (SPS) agreement, scheduled for ratification by mid-2027, aims to simplify border checks on agricultural and food products moving between the territories, including goods traded with Northern Ireland.

According to the Department for the Environment, Food and Rural Affairs (DEFRA), UK exports of food and agricultural goods to the EU have fallen by 22% since 2018, equating to almost £4bn in lost trade over the period.