Why UK farm businesses are being squeezed despite producing more
Farm businesses across the arable, horticultural, dairy and livestock sectors are being squeezed by rising input costs without a corresponding improvement in output prices. Whilst some are calling for a return to some form of support similar to the old Basic Payment Scheme, for tenant farmers that will simply lead to upward rental pressure providing no real benefit. What is needed is a more fundamental shift within the supply chain.
Rising fertiliser costs and falling wheat prices are crushing arable farm margins
Fertiliser prices provide a window into the problem for the arable sector at least. When the war in Ukraine began four years ago, wheat prices reached about £300 a tonne while fertiliser rose to roughly £900. For much of this year wheat prices have been nearer to £170 per tonne, only recently tipping over £200 per tonne whilst fertiliser has been hovering around £500 per tonne due to the conflict between the United States and Iran and the chokehold on the Strait of Hormuz. With exceptionally low yields this year, margins have gone and the ability to fund next year’s crop is significantly curtailed.
Why supermarket price pressure is hurting British farmers
In fresh produce, there are reports that most major retailers are pushing against price increases to primary producers despite the heavy cost inflation in getting product to market. The situation was not helped by a short-lived Government initiative attempting to convince supermarkets to help solve the cost-of-living crisis by pushing down food prices.
The Government cannot simply expect supermarkets to solve the cost-of-living problem. Indeed, supermarkets themselves are part of the problem we need to solve. Asking them to reduce food prices on their shelves ignores the fact that food is already relatively cheap and gives retailers further justification to suppress farm gate returns rather than reforming their own cost structures.
The real cost of cheap food and who captures value in the supply chain
A better response would be to examine where money is captured throughout the supply chain. With the Groceries Code Adjudicator now sitting within DEFRA alongside the Agricultural Supply Chain Adjudicator, Government has an opportunity to adopt a genuinely farm-to-fork approach.
The debate must move beyond restraining retail prices and consider whether value is distributed fairly between producers, processors and retailers. Retailers may point to returns of only around 2 per cent, but that reinforces the need to assess the whole chain rather than placing the burden on just farmers.
UK trade policy and the challenge of competing with imported food
Trade policy adds another layer of concern. For example, cheaper Australian beef has appeared on UK shelves at prices well below British produce, despite travelling around 10,000 miles before being refrigerated or frozen and shipped here. British farmers are expected to meet demanding welfare, environmental and employment standards while competing with countries where cattle can remain outdoors year-round and avoid winter housing costs.
The cost of high welfare and environmental standards in British agriculture
Those standards have a real price. Labour-intensive husbandry, such as checking sheep twice daily and three times during lambing, becomes harder to sustain when margins collapse. If domestic welfare rules are important to us, the cost of meeting them must be reflected in producer returns and in equivalent requirements for imports.
Food production, energy crops and the UK’s land use challenge
Questions also remain about land use, including the growing acreage of maize and other crops destined for anaerobic digestion rather than food. The Land Use Framework published earlier in the year, and the more recent Farming Roadmap are already looking like historic documents.
There needs to be clarity about the Government’s objectives. If agriculture matters to food security, rural employment, welfare and environmental management, policy must allow viable farm businesses to deliver those outcomes—and consumers must be given an honest account of what sustainable food production actually costs.
Why food security depends on sustainable and profitable farming
The recent drought measures for farming announced by the Prime Minister during his summer listening tour whilst welcome in the short term, must mark the beginning of a new conversation between the farming industry and the government about the long-term sustainability of UK agriculture in the context of driving food and environmental security. All the indicators suggest that this year will not be unique and we need to take a systematic approach to building farming resilience through reimagining policy on planning, environment, agricultural tenancies, and, most importantly, the supply chains within which farm produce is sold.
This blog was written by George Dunn, Chief Executive, Tenant Farmers Association. It is based on a piece, written for The East Anglian Daily Times, published online and in paper on 28 August 2026.
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Additional reading:
TFA News – New Land Use Framework – A Juggling Act of Land Use Objectives
TFA Blog #278 – The Land Use Framework Should Avoid Corner Solutions
TFA Lobbying #13 – TFA Writes to Farming Minister on SFI, Tenancy Reform and Farming Roadmap
TFA Blog #272 – MPs Scrutinise Fairness Within Retail Food Supply Chain
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