Farming: Financial Sustainability

Greg Smith Excerpts

Wednesday 24th June 2026 Westminster Hall

[Robbie Moore (Keighley and Ilkley) (Con)]

It is a pleasure to serve under your chairmanship, Mr Turner. I thank the hon. Member for North Northumberland (David Smith) for securing this important debate.

I welcome the Minister to his place. His natural passion and enthusiasm for this vital sector is evident in the zero parliamentary mentions he made of farming prior to his appointment, despite his having been elected in 2017. Nevertheless, I wish him all the best. For the good of the sector, I hope that he gets out and engages with the farming community more than his predecessor, the hon. Member for Wallasey (Dame Angela Eagle).

This debate is about financial sustainability for the farming sector. Over the past two years, this Labour Government have continually pulled the rug out from under our farmers. We have had the sudden and unannounced closure of the SFI scheme, the rapid acceleration of delinked payments, the introduction of the family farm and family business tax, the jobs tax and, soon, the fertiliser tax. The result? Record farm closures under this Labour Government, and greater food insecurity than we have seen before.

Our farmers are fed up, worried and increasingly concerned about the future of their farming businesses and their livelihoods. I know that because, unlike the Government, the shadow DEFRA team and I have been out and about, travelling up and down the country, attending agricultural shows and speaking to farmers across the United Kingdom. We have been to the Royal Highland Show, the Royal Cornwall Show, the Royal Cheshire Show, the Lincolnshire Show, the Essex Country Show, the Balmoral Show in Belfast, and Cereals—just to name a few. The locations may vary, but the same theme comes out again and again: devastating cash flow challenges as a result of the fiscal decisions made by this Labour Government.

Unlike in other professions, income from agriculture can be volatile. Farm businesses are price takers, and the determinants of the prices they receive are out of their control. By the time the crops or livestock reach the market, prices may have dropped, but goods must be sold anyway. Income schemes such as the SFI are so important—but not in the Government’s eyes, with their chop-and-change approach. Under this Government, the schemes are not providing any reassurance or support to the majority of farmers. Last year, the Government closed applications for the SFI scheme with no warning, and yet again they have announced a budget that does not meet farmers’ requirements.

[Greg Smith (Mid Buckinghamshire) (Con)]

Would my hon. Friend agree that another uncertainty is coming down the path? The Climate Change Committee is asking farmers to reduce livestock numbers by up to 40%. That would devastate and make unviable so many farms—complete madness.

--- Later in debate ---

[Stephen Morgan]

I thank my hon. Friend for his reminder of the Conservative party’s record of failing rural Britain. I am very happy to take away the action he suggested. If we are to deliver our road map successfully, it will require lots of cross-Government working, and I am very committed to making that happen.

Let me address the fertiliser issue; I appreciate that major input costs are real source of worry for farmers. We are very conscious of the increases in fertiliser prices that have occurred because of the middle east conflict, and we are working actively to monitor the impacts on the agricultural supply chains. We have regular communication with domestic fertiliser suppliers, commodity traders and farming stakeholders, including the National Farmers Union, and we have been clear that we are committed to ensuring that markets function fairly.

We continue actively to monitor developments in the middle east, as well as other impacts on our food and farming sectors, including through ongoing engagement with industry leaders. My Department is aware that there are signs of some pressures easing but that prices still are above pre-conflict levels.

We recognise that these costs continue to be a significant issue for farmers; that issue was raised with me on my first day in this role, when I met with the NFU. The pressures that it is imposing are absolutely worth considering further. Whether through more effective use of technology or the adoption of more sustainable farming practices, we can better equip our farmers and growers to produce good food in a more resilient way, and this Government stand ready to help farmers to do that.

[Greg Smith]

Does the Minister accept that it is a choice made by this Government—maybe not by DEFRA, but by the Treasury—to bring in the carbon tax from 1 January? The Government cannot change events in the middle east, but they could choose to delay or scrap that tax.

[Stephen Morgan]

I remind Members that we currently have a good supply of fertiliser and are keen to support domestic production. The Government are live to the other issues that the hon. Gentleman raises; I will take them back to the Department, and am happy to write to him on his concerns.

The Government are also sharing information and guidance to support farmers to diversify sources of nutrients to reduce reliance on artificial fertilisers and strengthen long-term resilience by managing more effectively. DEFRA’s new nutrient management planning tool is already supporting our farmers by matching nutrients to crop and soil needs. That enables farmers to make the most of nutrient sources and to reduce their reliance on artificial fertilisers. More than 500 farms have used the tool since it was launched.

DEFRA has launched a consultation and call for evidence to inform how the Government modernise fertiliser production and the regulations around it, which will further improve future fertiliser supply options. We will continue to work with farmers to ensure that they become more resilient, through our innovation funds and equipment grants or our continued shift from area-based subsidy to environmental land management schemes.

Another issue raised in today’s debate was about fuel. Farmers have told the Government how important manageable fuel prices are to the financial sustainability of the farming sector and food security, and we have listened. While the shadow Minister, the hon. Member for Keighley and Ilkley (Robbie Moore), worries about his selfies for social media, we are focused on taking decisive action to support farmers by slashing the fuel duty rate on red diesel from 10.18p to 6.48p per litre—its lowest rate in 20 years. That means that red diesel now benefits from an 88% tax discount, saving farmers more than £300 million a year.

We have also extended the 5p fuel duty cut until the end of this year, keeping taxes at a 16-year low and saving the average driver £120. My Department will continue to work actively with others to monitor developments in the middle east, including their impact on the supply and price of red diesel. We are committed to ensuring that the market functions fairly, and will continue our discussions with industry leaders, including the NFU and farming stakeholders.

There are real, recent issues that need to be addressed; I have heard from the stakeholders I have already met that additional pressures are affecting farmers. The Government are well aware of the impact of climate change -related extreme weather on the financial sustainability of farms in recent years—this week’s heatwave is a reminder of that. We are committed to working with farmers to deliver long-term solutions to the risks associated with extreme wet or dry weather, and to increase profitability, because farmers being able to run profitable businesses is good for the whole economy and vital for food security. That is why we are investing in farming schemes and grants to make farming more resilient to economic and environmental shocks, and to safeguard our long-term food security.

We have allocated a record £11.8 billion over this Parliament to sustainable farming and food production. Overall, farmers and land managers will benefit from an average of £2.3 billion a year through our farming and countryside programme.