Farm profitability will drop by £1.19bn in 2026, according to business consultants Andersons – but all is not doom and gloom.
Andersons forecasts that Total Income from Farming (TIFF) will fall to £6.48bn next year as weaker global commodity markets, higher labour costs and rising fertiliser prices converge. But the decline would still leave profitability close to the long-term average.
Factors shaping 2026 are plain to see, says Andersons director James Webster-Rusk. Cereal prices are stubbornly low, milk prices are falling and it remains to be seen how long the recent surge in beef values can last.
Spring fertiliser
Fertiliser prices look set to rise again, influenced by the EU’s Carbon Border Adjustment Mechanism. Its impact is “already being seen in merchants’ spring terms, depending on the origin of the fertiliser”.
Cashflow planning and delayed capital expenditure are also likely themes. Andersons expects another modest contraction in 2027 as reductions in farm support continue and labour and fertiliser costs remain elevated.
Mr Webster-Rusk suggests the shift towards schemes such as the Sustainable Farming Incentive carries hidden pressures. SFI, he noted, “comes with a cost of delivery which will reduce overall returns to farming”.
Recent performance
The outlook for 2026 and beyond is sharper when set against recent performance. Andersons estimates farm profits in 2025 were broadly level with 2024 – a finding that “may come as a surprise to many” arable farmers, said Mr Webster-Rusk.
One reason is because a relatively small land base in sectors such as intensive livestock and horticulture generates a disproportionately large share of output, which perhaps distorts the view of how well, or not, the industry is doing”.
Beef has been the standout performer of 2025, with prices up 27% on the previous year generating an extra £1.1bn of revenue despite slightly lower output. Milk prices also remained strong through much of the year.
Turning point
Eggs and broilers have also fared well, buoyed by firm egg prices and increased poultry demand as red meat costs rose. But global supply trends suggest a turning point ahead – with dairy prices dropping in the last three months.
As the industry moves into 2026, Andersons stresses that falling profits should not be mistaken for a collapse. Rather, it sees a sector adjusting to tighter margins, elevated costs and shifting support structures.
This represents a recalibration more than a retreat, and one that will shape decisions well into the decade, said Mr Webster-Rusk.