At a glance
The Farming Profitability Review is a six-month, England-only review led by Baroness Minette Batters and commissioned by Defra. Its job is to ask a blunt question:
“How can farms in England make a proper profit from farming, while still delivering on climate and nature?”
A few key framing points:
- It focuses on farms that produce an agricultural yield, as defined in the Agriculture Act.
- It treats farms as businesses and homes, noting that nearly half of English farms are tenanted.
- It looks at profit after all costs, not just gross output or support.
The headline picture:
- In 2023/24 the average English farm made a small net loss on agriculture itself.
- A large share of farm business income comes from public payments and, for many, diversification out of agriculture.
- Around 30% of farms in Great Britain made an overall loss in 2023/24; in some sectors it was closer to 40%.
- A “middle band” of farms, managing 57% of England’s farmed area and producing 65% of output, is especially exposed, with viability leaning on support, agri-environment schemes and diversified income.
To respond, the Review sets out a “New Deal for Profitable Farming” built around:
- Valuing farming properly in GDP and national accounts.
- An Active Farmer test for schemes funded from the Farming Budget.
- A new SOILSHOT: Food, Nature and Soils Transformation Fund and SOILSHOT+NATURE taskforce to bring private finance into soils and nature on productive farms.
- Fairer supply chains and a stronger British food brand.
- New structures,Great British FARM Advisory Board, Sustainable FARM Service, Agri-Growth Hubs and Farm Environmental Delivery (FED) Groups.
- Planning reform, a National Planning for Food Infrastructure Blueprint, extended permitted development rights and more proportionate regulation.
From our perspective at Dudley Peverill Associates (DPA), this is a serious, data-backed attempt to put profitable farming back in the middle of policy. It won’t fix everything, and some ideas carry risks, but it’s a document that should be taken seriously.
What the Review actually says
Scope, purpose and starting point
Batters was asked to look at farming in England, not the entire rural economy. Her brief was to:
- Advise on farm profitability.
- Feed into the Food Strategy, Farming Roadmap, Land Use Framework and wider economic and climate goals.
The focus is on farm businesses producing an agricultural yield. Diversification appears in the narrative, but the central question is “Can farms earn a living from farming, and what needs to change?” This manifests in two guiding principles:
- Farms are businesses that produce an agricultural yield.
- Farm income is what’s left after all expenses, enough to fund family living and reinvestment.
Batter’s repeats a line now familiar in government:
“Food security is national security.”
The Review argues this must be backed by a long-term plan for food and farming that sits alongside climate and nature policy, not apart from it.
The current position
The Review’s diagnosis is clear:
- Farming contributes about £10.5 billion in GVA and over 400,000 jobs, underpinning around £150 billion in GVA and 4.2 million jobs across the agri-food economy.
- The UK produces about 65% of the food we buy, down from 78% in 1984.
- In 2023/24, the average English farm lost money on agriculture, once all costs were included. Support payments and, in many cases, diversified income fill the gap.
- According to analysis by Strutt & Parker, a farm typically needs more than £250/ha profit, roughly £34,500 for 140 ha, to be economically sustainable. About half of all farms sit below that line.
The “middle-performing” farms, farming most of the land and producing most of the food, often depend on:
- Diversification
- Agri-environment schemes
- Direct payments
The Review isn’t anti-diversification, but its brief is to get back to whether farming itself can credibly pay its way.
The main elements of the Review
Valuing farming properly
The initial contention is that farming has been historically undervalued because only a 0.6% “primary production” slice of GDP is counted, despite farming underpinning a much larger share of the economy. As such, the Review proposes:
- Asking ONS to reassess agriculture and horticulture in GDP, including primary and secondary processing
- Bringing natural capital measures into economic decision-making
- Commissioning an independent assessment of the full value of farming-related activity, from allied industries and research to green energy, recreation and tourism
In short, Batters believes economic policy should reflect the actual economic footprint attributable to farming, not just farmgate numbers.
Volatility, Active Farmer and SFI
On volatility, the Review points specifically to:
- Rising fixed costs (labour, machinery, energy, taxation)
- Repeated shocks (COVID-19, Ukraine, price spikes)
- An English Farming Budget of roughly £2.4 billion since 2007, with no inflation link
To improve resilience, it recommends:
- A simplified SFI scheme, linked intrinsically to food production, to include:
- Soil baselining
- Circular protein crops, pulses and oilseeds
- Herbal leys and cover crops
- Specific upland options
- An Active Farmer Principle for environmental and farming schemes, to ensure funding goes to individuals actually farming or doing clearly defined ancillary activities
The proposed Active Farmer test would require that a claimant:
- Undertakes agricultural (as defined by the Agriculture Act 2020) or ancillary activities on agricultural land (including processing farm products or managing land for nature or climate)
- Has at least 3 ha of eligible land in England, or 550+ standard labour hours
- Has exclusive occupation and management control of the land for at least ten months a year
This principle is simple; however, its implementation will matter for joint ventures, contract farming and more complex estate and diversified structures.
SOILSHOT+NATURE
The Review accepts that public money alone cannot fund all the environmental delivery now expected of the agricultural sector. It proposes:
- A SOILSHOT Food, Nature and Soils Transformation Fund, to put soils and resilience at the centre of profitable farming.
- A SOILSHOT+NATURE Taskforce, under Defra, to design a new, British Standards Institution (BSI)-backed funding model.
Three distinct pillars underpin this proposal:
- Standardised baselines for carbon, soil, water and biodiversity.
- Commercial research into recovering and re-using nutrients from wastes.
- A whole-farm approach to soil fertility, emissions and resilience.
Alongside this, it proposes making a Taskforce on Nature-related Financial Disclosures (TNFD) mandatory for corporate businesses. The logic is seemingly straightforward. If large food, finance and retail companies must report nature-related risks, they will seek credible, metric-based projects in their supply chains, which puts farms and estates in a stronger position to supply clearly defined ecosystem services as part of a working farm business.
The overall aim appears to be to bring private finance into soil and nature on productive, food-producing farms, not to push farming off land for stand-alone offsetting initiatives.
For diversified estates, this opens the door to models where food production, soil improvement, biodiversity, carbon and diversification sit on the same land base, provided the metrics and contracts are workable.
Governance, advice and collaboration
To make this deliverable, the Review suggests new “plumbing”:
- A Great British FARM Advisory Board (GBFAB) to bring farmers, supply chains and government together, set sector missions and run a national “balanced scorecard” for British sourcing, imports and exports.
- A Sustainable FARM Service, aligning existing bodies like AHDB, TIAH and the UK Agri-Tech Centre, like Teagasc in Ireland, around:
- A single portal
- Clarity over research priorities
- Better alignment of advice, training and on-farm best practice
- Agri-Growth Hubs, usually at regional or river-basin scale, to connect farmers with processing, local food, tourism and economic planning
- National roll-out of Farm Environmental Delivery (FED) Groups, voluntary, farmer-led groups at catchment scale, across all 93 English catchments
These are the networks where core farming, environmental schemes and diversified activity (processing, visitor uses, workspace) can be “stacked” in a strategic manner, rather than fragmented, as often seen today.
Supply chains, trade and the British food brand
On markets and fairness, Batter’s advice covers:
- Extending and strengthening the Groceries Code Adjudicator, with lower thresholds and more intermediaries in scope
- Better market monitoring to show where margin sits in the chain and how imports compare
- A new Food and Drink England body to champion English food, support local processing and small abattoirs, and tie food to tourism, health and economic growth
Underneath this sits a clear concern about competition. The Review is very open that recent trade deals will increase pressure on UK farmers, and that imports produced to less stringent standards risk undercutting domestic production if we are not careful. It could be seen to be calling for core standards for imports, stronger safeguard clauses in trade agreements, better use of the Trade and Agriculture Commission and tighter controls on when “British” branding can be used. In other words, it recognises that levelling the playing field on standards and labelling is just as important to farm profitability as anything happening inside the farm gate.
The Review also tries to separate assurance from brand. It points to schemes such as Red Tractor, Lion and organic as important proof points behind British claims, and even suggests that use of British branding should, in future, be underpinned by independent accreditation. But it also accepts, between the lines, that this only works if consumers actually recognise and value what sits behind the logos. From our side, that is the unresolved challenge: British farmers are carrying the cost and complexity of higher standards and assurance, but we are still some way from having a simple, emotional “Brand Britain” story that cuts through with the average shopper.
Perhaps this can be resolved by the reviews’ support for increasingly integrated and local supply chains, showing how farm-branded products, regional brands and local procurement could underpin profitability. We see this as an explicit acknowledgement of the role of diversification towards added value processing, hospitality and retail. It also ties food into health and wellbeing, arguing for whole foods, including more UK-grown fruit and veg, to be a core measure in a ten-year health plan.
People, tenancies, tax and skills
Key points from Batters on these matters include:
- Labour and skills
- Implement John Shropshire’s labour review
- Extend the Seasonal Worker Visa Scheme to nine months
- Strengthen agricultural and food education, from schools to higher education and professional training
- Tenancies
- Strengthen the role of a Tenant Farming Commissioner
- Update tenancy valuations to reflect investments providing environmental value where appropriate
- Use tax relief policy (income tax relief for landlords and stamp duty for tenants) to encourage longer, more productive tenancies
- Tax and investment
- Make productivity grants more accessible and proportionate to the scale of all farm businesses
- Review capital allowances, including whether full expensing should apply more widely to farm structures
- Explore soft loans (0%) for new entrants, young farmers and business expansion via the British Business Bank
The Review also acknowledges that forthcoming changes to Agricultural Property Relief and Business Property Relief from Inheritance Tax sit in the background of all of this. Batters is explicit that her terms of reference do not allow her to make proposals on IHT, but she still records it as one of the most significant concerns raised during the review, with many farmers worried that changes could disincentivise investment. For us, that reads as an important constraint of the Review: it recognises a major long-term risk to confidence but cannot, by design, do much more than flag it.
Planning, regulation and infrastructure
Planning, regulation and infrastructure
On planning and regulation, the Review is blunt:
- It calls for a National Planning for Food Infrastructure Blueprint, reflected in the National Planning Policy Framework, so food production and supporting infrastructure are explicitly recognised
- It recommends extending permitted development rights (PDR) through
- Raising the 1,000 m² cap for livestock buildings where this improves welfare and environmental performance
- Allowing PDR for on-farm reservoirs and wind turbines
- Removing duplicated slurry-related conditions where environmental permitting already covers them
- It urges a more outcomes-focused, risk-based regulatory regime, including a clearer path for biological crop protection products (in line with the Corry review) and more proportionate treatment of small abattoirs by the FSA
Our take as rural project and diversification consultants
Stepping back, our view is that the Farming Profitability Review is directionally right but inevitably incomplete. It is honest about the numbers, it puts food production back near the centre of policy and it tackles trade, standards, tax and infrastructure in a joined-up way. But at 150-plus pages it is easy for the core messages to get lost, and there are areas, inheritance tax, diversification, and the practicalities of competing with lower-standard imports, where Batters clearly sees the problem but is either constrained by her brief or can only go so far in a single document.
Where we think the Review lands well
Food production back in the middle
We welcome the clear view that domestic food production is strategically important and should not be slowly swapped for imports or one-off environmental deals. For us, diversified rural businesses still need a viable farming core to make long-term sense and to safeguard our landscape and rural heritage.
A realistic view of the “middle 50%”
The focus on mid-performing farms fits what we see. It opens up more honest conversations about:
- True profit from farming
- Where diversification supports the farm business and where it risks becoming a distraction or further liability
- How to use schemes and nature finance without losing sight of the farm accounts
Nature finance tied to working farms
SOILSHOT, SOILSHOT+NATURE, TNFD and FED Groups are all framed around productive farms and localised catchments, not just land banking and offsetting. We believe this is more compatible with long-term farm business resilience and with complex, diversified estates.
More transparency in the supply chain
Stronger Groceries Supply Code of Practice (GSCOP) and Groceries Code Adjudicator (GCA) powers, plus Food and Drink England, won’t transform farmgate prices overnight, but they should help with fairness, provenance and the case for local processing and branded products. In an era of food-centred health concerns, this could be vital for health and wellbeing.
Where we’d keep a watching brief
Planning reform, an opportunity with environmental strings
If done well, planning reform and extended PDRs could unblock a lot of the projects our clients struggle with, from livestock housing and slurry storage to reservoirs, allowing outdated infrastructure to be liberated for diversification and optimal utilisation. If done badly, there is a risk of:
- Poorly designed or sited buildings in sensitive locations
- Local consumer conflict and mistrust
- Missed chances to integrate infrastructure with nature recovery, access and well-planned diversified uses
The Review is explicit that better welfare and environmental outcomes are the aim. The challenge will be carrying that through into detailed policy and local decisions.
Active Farmer, fair principle, complex reality
Targeting support for active farmers is hard to argue with. But we know many farming businesses rely on joint ventures, contract farming, and multi-entity structures, and that small to medium-sized holdings often blend horticulture, woodland, non-agricultural diversification and environmental work.
The Review explicitly allows ancillary activities like processing and nature management to count. Despite this, the implementation will need to be flexible enough not to penalise well-run, modern, diversified structures where farming remains a core pillar.
Climate adaptation, present but not packaged
Extreme weather, water stress and soil health are prevalent within the document. What we don’t yet see is a single, integrated adaptation roadmap. In practice, the methodologies for how these factors are improved at scale will be just as important as the respective payment rates.
Diversification, currently essential in practice, yet deliberately scoped out
The Review keeps its formal focus on farming profitability, which is understandable. At the same time, it openly recognises that diversified income currently underpins many middle-band farms.
For us, the takeaway is not “stop diversifying” or of an “anti-diversification” rhetoric, but:
- Keep farming viable where that is a core aim
- Be transparent about how far diversified income is doing the heavy lifting
- Choose diversification that strengthens the farm and estate, including wider macro environmental, social and economic issues, not just plugging short-term margin gaps
What this really means in practice
For us, the real value of the Farming Profitability Review is that it gives farms and estates a clearer framework to plan against. It doesn’t hand anyone a ready-made strategy, but it does sharpen three questions every serious rural business now needs to answer: how profitable is the farming core in its own right; what role environmental schemes, nature finance, tax incentives and assurance frameworks play in supporting that; and which diversification or rural projects genuinely strengthen the overall business rather than just filling short-term gaps.
Our Conclusion on the Review
Stepping back, the Farming Profitability Review does two important things we agree with.
First, it is honest about the numbers. It accepts that many farms are not making enough from agriculture alone, and that the “middle band” farming most of the land is often held together by a mix of support, schemes and diversified income. That’s uncomfortable, but it’s very close to what we see in real situations. You can’t make good decisions about farming, schemes or diversification if you are not clear where profit is actually coming from.
Second, it puts farming back in the middle of the conversation. Food production is treated as strategically important, not just another land use. The Review argues for farming to be properly valued in GDP and natural capital terms, and for support and nature finance to be anchored to real, active farms through tools like the Active Farmer test, SOILSHOT / SOILSHOT+NATURE, FED Groups and the wider FARM governance proposals. For most of our clients, who are trying to balance farming, environmental delivery and other rural enterprises on the same holding, this would be a welcome shift.
There are risks. Planning reform could either unlock much-needed investment in buildings, water and energy or trigger poor design, local conflict and a backlash. The Active Farmer idea is fair in principle, but will be hard to apply cleanly across farms engaged in joint ventures, contract farming agreements and complex estate structures. Climate adaptation and diversification both run through the evidence but are not pulled together as stand-alone themes, even though both will shape decisions for the next decade.
Overall, though, we read the Review as a net positive. It doesn’t pretend everything is fine. It treats profitable farming as something worth planning for, not an optional extra. And it points towards a future where the strongest rural businesses will be those that can combine a viable farming core, credible environmental delivery and well-chosen diversified enterprises, rather than chasing any one of those in isolation.
If you’ve read this far, you’re probably already weighing up what the Review means for your own business – where farming profit actually sits, how schemes and nature finance fit in, and which diversification and rural projects are worth backing.
That is exactly the space we work in. At Dudley Peverill Associates we:
- prepare estate masterplans that view your business holistically, joining up farming, environment and diversified income
- help structure and appraise diversification and rural projects, from commercial to retail, added value to tourism and natural capital, to renewables.
- support funding and practical delivery through our Rural Project Consultancy, Funding & Finance and Construction Project Management departments