Defra grants ‘vital lifeline’ in 2025

• Business resilience and preparation

• Seize opportunities where possible

• Stay abreast of policy moves

Getting to grips with government grants could prove to be a lifeline for farm businesses this year, say consultants.

The months ahead are set to herald opportunities as well as uncertainties – highlighting the need to focus on financial resilience and preparation, says Simon Britain, head of agri-consultancy and partner at Knight Frank.

“Making the most of the Sustainable Farming Incentive (SFI) and understanding the new higher tier stewardship opportunities will be a vital lifeline for rural businesses,” he explains.

Farmers should review their operations, understand their financial position and create coherent, achievable plans as the full impact of last autumn’s Budget becomes clear says Mr Britton.

Strategic partnerships with trusted consultants will also be key in understanding the implications of the government’s proposed changes to agricultural and business property relief – and planning for succession, he adds.

“Assess your financial resilience and align opportunities with your long-term goals. Be clear on your costs of production and stay on top of funding opportunities and policy changes to position your farming business for success.”

Think differently

Potential sources of farm revenue will increasingly include natural capital, says Claire Whitfield, a partner in Knight Frank’s rural team specialising in strategic consultancy and rural estate management.

“There is growing recognition that these initiatives can serve multiple purposes – enhancing biodiversity, addressing climate resilience, and offering new income streams for landowners,” she explains.

“For rural businesses, this represents an opportunity to align land use with both environmental priorities and income generation – encouraging farmers to challenge traditional approaches.

“The old paradigms of land use are shifting,” says Ms Whitfield. “Embrace the opportunities that diversification and natural capital projects present – there’s real value in thinking differently.”

Landowners should closely track government policy and legislation – and be prepared to recalibrate their plans based on any regulatory changes, suggests James Shepherd, a partner in Knight Frank’s rural consultancy team.

“The next six months are critical. Significant legislation or policy announcements relating to land use, development and natural capital markets, could either catalyse or constrain progress.”

Recent amendments to the National Planning Policy Framework could introduce significant opportunities for landowners, particularly those with land in high-demand areas or lower-quality greenbelt potentially opened for development.

That said, a cap on land values, the threat of compulsory purchase, stricter affordable housing requirements, climate-focused planning conditions, and increased scrutiny will require careful planning to fully capitalise on these changes.

“It’s a year where businesses must plan for change and can move beyond reacting to challenges and start shaping their own futures. Those who plan strategically and think boldly will find themselves ahead of the curve.”

Diversification

The faster phase-out of the Basic Payment Scheme and the reduced ceiling on the amount paid to recipients mean many farmers will be keen to secure alternative sources of income this year.

Despite farm input costs easing, margins in many sectors remain slim – prompting more growers and livestock producers to consider non-farm enterprises as a way of earning additional revenue.

Alice Keith, an associate in Knight Frank’s farms and estates team suggests diversification will remain a key theme throughout 2025. “Marginal land, which might not be suited to commercial agriculture, is brimming with potential,” she says.

“Biodiversity projects, tree planting and carbon offsetting, together with renewable energy schemes are all areas for consideration. These opportunities demand careful planning, but the returns can be significant.”

Tenant farmers have high hopes for commissioner

The government’s appointment of a Tenant Farming Commissioner can’t come soon enough, say industry leaders.

Due to be appointed in the coming weeks, the commissioner will be responsible for dealing with complaints concerning breaches of a code of conduct governing the relationship between landowners and farm tenants.

Tenant Farmers Association chief executive George Dunn said he hoped the commissioner would “hit the ground running” and be as successful as the equivalent commissioner in Scotland, who has been in place for some years.

A TFA survey showing that 30% of tenants felt bullied or harassed by their landlords – and 37% by their landlords’ agents – highlighted there was some very important work to do in England, added Mr Dunn.

The commissioner’s reach will include tenant farmers, landlords, land agents, solicitors and regulators to root out poor practice and unreasonable behaviour – and look to identify solutions in a collaborative, impartial and timely way.