NFU SCOTLAND URGES CHANCELLOR TO ADDRESS FISCAL POLICIES IMPACTING AGRICULTURE  

NFU Scotland has warned that UK Government tax decisions are putting the future of Scottish farming and food production at risk.

In a formal letter to Chancellor, Rachel Reeves MP, NFU Scotland President Andrew Connon has expressed deep concerns about the fiscal measures announced on 30 October, which are already having a damaging impact on food security, agricultural investment, and the viability of rural businesses across Scotland and the wider UK.

The Union has already set out these concerns to the UK Government but due to the urgency of the situation is now calling for urgent talks with the Chancellor’s team to discuss practical changes that would reduce the negative impact on primary food producers – while still enabling the Government to meet its objectives around public services and economic growth. With growing global uncertainty and rising inflation, NFU Scotland believes swift action is vital to protect the future of UK food production and rural communities. The UK Government aims to improve public finances, and NFU Scotland understands that tax rises are necessary for rebuilding public services and stabilising finances. However, without changes, the following issues are inevitable:

• Decrease in UK food production, leading to inflationary pressures for consumers and affecting numerous businesses connected to farming.
• Stalled and declining agricultural economic investment, causing long-term contraction of the rural economy and the decline of rural communities.

While economic growth is a key aim of the UK Government, current policies related to employer National Insurance Contributions (NICs), double-cab pick-up tax, the Carbon Border Adjustment Mechanism (CBAM), and Inheritance Tax (IHT) changes are reducing economic activity and causing a lasting decline in agricultural production.

Independent research by CBI-Economics involving over 4,000 businesses and farms across the UK reveals alarming trends:

• 49% of farms have paused or cancelled investments.
• 34% have deferred or reduced investment.
• 14% plan to sell off assets or parts of the farm.
• 10% have downsized farming operations since the Budget.
• 21% plan to downsize before April 2026.

These policies exacerbate the challenging conditions facing farmers, posing serious concerns for the future of farm businesses and the wider rural economy.

To secure food production, food security, and farm business viability, NFU Scotland calls on the UK Government to:

1. Delay the increase to National Insurance Contributions (NICs) paid by employers for agricultural businesses: This change will add significant costs throughout the supply chain, raising serious questions about British food security and impacting food supply and prices.
2. Delay implementation of the Carbon Border Adjustment Mechanism (CBAM): Engage with the sector to discuss its impact on farm businesses, as the CBAM will increase fertiliser costs, putting further pressure on farm viability.
3. Exempt double-cab pick-up vehicles used by agricultural businesses from increased tax: Treating these vehicles as cars for tax purposes from April 2025 imposes additional costs on farming operations where pickups are essential.
4. Consider an alternative proposal to changes to Agricultural Property Relief (APR) and Business Property Relief (BPR) for family farm businesses: NFU Scotland urges the UK Treasury to adopt a taxation approach that supports family farm businesses, food security, and rural communities without compromising necessary tax revenue.

NFU Scotland remains committed to working with the UK Government to ensure the sustainability and growth of the agricultural sector.

“Farmers across Scotland are already pulling back investment, cutting jobs, and in some cases, being forced to walk away from their businesses,” said NFU Scotland President Andrew Connon. “We understand the pressure on public finances, but if the Government wants economic growth, it must start with food security and the rural economy.”