Agricultural Policy Monitoring and Evaluation 2023

28. United Kingdom

Support to agriculture

The United Kingdom left the European Union (EU) on 31 January 2020. As a part of its transition from the EU Common Agricultural Policy (CAP), CAP-related support measures continued during 2022 while new domestic agricultural policy measures were phased in.

The Producer Support Estimate (PSE) was around 19% of gross farm receipts in 2020-22, well below the 30% measured for the European Union in 2000-02. While the largest item in the PSE is decoupled payments (46%), Market Price Support (MPS) makes up a significant share as well (35%), in particular for livestock products such as beef and poultry, which are subject to tariffs and tariff-rate quotas. Almost half of farm support comes through payments decoupled from current production, while 10% relates to payments based on input use.

Support for general services (General Services Support Estimate, GSSE) was 2.6% of the value of agricultural production in 2020‑22, below the OECD average. Expenditure on agricultural knowledge and innovation systems accounts for slightly over half of GSSE and has declined in recent years. Expenditures on inspection and control services account for one-third of GSSE, while expenditures on marketing and promotion of farm products account for 10%. The Total Support Estimate (TSE) for agriculture represented 0.3% of Gross Domestic Product (GDP) on average in 2020‑22, about half the OECD average.

Recent policy changes

Agricultural policy in the United Kingdom is devolved to the governments of Scotland, Wales, and Northern Ireland. The Department for Environment, Food and Rural Affairs (Defra) has responsibility for England’s agricultural policy. Defra also sets some standards and regulations at national level (e.g. animal health and welfare, veterinary services, and plant health), and represents the United Kingdom in international negotiations.

England introduced several improvements to its three main environmental land management schemes, which continue to be piloted and rolled out as part of the transition out from previous schemes under the EU CAP. New standards were introduced under the Sustainable Farming Incentive scheme in 2022 to pay farmers for environmental improvements in arable and horticultural soils, grassland soils, and moorlands. Improvements were introduced to the way the Countryside Stewardship scheme operates, including simplified processes and fairer and more proportionate inspections. Twenty-two projects covering over 40 000 hectares were awarded funding under the Landscape Recovery scheme, aiming to restore nearly 700 km of rivers and to protect and provide habitat for at least 263 species.

Several new grants were made available under the Farming Investment Fund, including small grants for equipment to improve farm productivity, slurry management and animal welfare and large grants to improve water management and enhance farm productivity and added value. Slurry Infrastructure Grants were established to help livestock farmers upgrade or expand slurry storage capacity for better water quality and reduced ammonia emissions. Pilots were launched to test different approaches to support new entrants to farming to provide more opportunities for new entrants to access land and finance, and establish successful and innovative businesses.

The CAP schemes continued in Scotland in 2022. The Scottish government published its Vision for Scottish Agriculture in March 2022 and held public consultations on the powers to be included in a proposed new Agriculture Bill to replace the CAP. In November 2022, the Scottish Government outlined their pathway and timeline for the future agricultural support framework to be phased in from 2025.

The Welsh government continued direct payments to farmers over the last three years at the same levels received under the Basic Payment Scheme (BPS). The Agriculture (Wales) Bill was introduced to the Welsh Parliament in 2022 and sets Sustainable Land Management as the overarching framework for future support to agriculture. The Sustainable Farming Scheme will be the main delivery mechanism for farm support as of 2025. The Farming Connect programme, launched in April 2023, will support knowledge transfer and encourage improved environmental performance until March 2025, when farmers transition away from BPS support.

CAP payments have also continued in Northern Ireland during the transition period. Northern Ireland’s Department of Agriculture, Environment and Rural Affairs (DAERA) published the Future Agricultural Policy Decisions for Northern Ireland in March 2022, including 54 decisions on future agricultural support. Some of the key decisions include continued provision of income support through a Farm Sustainability Payment, a Beef Sustainability Package, a Farming with Nature Package providing payments for habitat creation and biodiversity restoration, and Farming for Carbon measures to encourage low-emission practices. The Climate Change Act (Northern Ireland) 2022 sets a target of net-zero GHG emissions by 2050 for Northern Ireland, and interim targets including a 48% reduction in net GHG emissions by 2030, but no specific target for agricultural emissions.

The United Kingdom concluded several Free Trade Agreements (FTAs) in 2022-23, providing enhanced market access for a range of agricultural and food products. In addition to new FTAs with Australia and New Zealand, the United Kingdom concluded negotiations to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), providing tariff-free access or preferential tariffs for agricultural and food exports across the 11 countries in the trade bloc.

Assessment and recommendations

• The United Kingdom and its devolved governments’ strategies and planning documents provide a basis for supporting climate change adaptation. Moving beyond planning to policy implementation will be essential to strengthen adaptation and resilience in the agricultural sector. New programmes, including England’s Environmental Land Management schemes; Scotland’s Farming for a Better Climate programme, Farm Advisory Service and Agri-Environment Climate Scheme; and various grant schemes to encourage sustainable farming practices in Wales and Northern Ireland could contribute to progress towards enhanced climate adaptation. These initiatives will need to be carefully monitored to ensure the additionality and permanence of environmental improvements over the long run.

• Investments in R&D and innovation are essential for building farmers’ capacities to adapt to climate change and reduce GHG emissions. The Farming Innovation Programme supports the development of new technologies and collaborative research projects to increase productivity and sustainability. Research efforts should also be directed at facilitating long-term transformative change and the emergence of new and diverse income sources as complements to revenue from traditional farming systems. Examples include renewable energy generation and the development of market-based mechanisms to encourage emissions reductions, carbon sequestration, and biodiversity conservation.

• MPS remains high for some commodities, in particular beef, poultry, and sugar. These policies can contribute to higher food prices and discourage farmers from changing production in response to climate and environmental concerns. Phasing out these price distortions would advance progress on several policy objectives, including improving soil health and water quality, and supporting climate change adaptation.

• Agricultural policies continue to evolve at varying paces across the governments of England, Scotland, Wales, and Northern Ireland. However, the transition from CAP measures to new domestic schemes is creating short-term complexity for the sector. As CAP payments are phased out, new domestic policy measures have undergone pilot testing and fine-tuning prior to a larger-scale rollout. Much of the short-term policy challenge revolves around scaling up these schemes and ensuring sufficient incentives for farmers to adopt sustainable production practices at scale, while maintaining flexibility and predictability for farmers over the long-term. Some transitional assistance or extended social safety nets might be required to facilitate the process of structural adjustment.

• Agriculture needs to achieve ambitious emissions reductions to contribute meaningfully to the United Kingdom’s target of reaching net-zero emissions by 2050. A stronger policy response will be needed to tackle agricultural GHG emissions, particularly methane emissions from livestock, which represent 61% of the United Kingdom’s agricultural GHG emissions. Expanding the United Kingdom’s Emissions Trading Scheme to include agriculture could encourage deeper cuts in emissions while opening opportunities for farmers to earn additional revenues from afforestation and soil carbon sequestration. Technologies such as remote sensing and earth observation could strengthen monitoring, reporting and verification of land-use changes such as afforestation and peatland restoration. Ultimately, a combination of policy instruments including abatement subsidies, emissions pricing, standards, regulations, and demand-side measures may be required to create sufficient incentives for the adoption of sustainable farming practices and changes in land use.

Figure 28.1. United Kingdom: Development of support to agriculture

 

 

 

 

 

Note: Data for the UK not available individually for 1986-88 and 2000-02, when the UK was part of the European Economic Community (EEC12) and the European Union (EU15), respectively.

Source: OECD (2023), “Producer and Consumer Support Estimates”, OECD Agriculture statistics (database), http://dx.doi.org/10.1787/agr-pcse-data-en.

Figure 28.2. United Kingdom: Drivers of the change in PSE, 2021 to 2022

Note: % change of nominal Producer Support Estimate expressed in national currency. The producer price change and the border price change are not calculated when both negative and positive market price support (MPS) occur at the commodity level for the previous year. Note that negative MPS estimates for livestock products may arise in cases of aligned product prices if there is positive MPS for feed commodities.

Source: OECD (2023), “Producer and Consumer Support Estimates”, OECD Agriculture statistics (database), http://dx.doi.org/10.1787/agr-pcse-data-en.

Figure 28.3. United Kingdom: Commodity-specific transfers as a percentage of commodity gross farm receipts, 2020-22

Source: OECD (2023), “Producer and Consumer Support Estimates”, OECD Agriculture statistics (database), http://dx.doi.org/10.1787/agr-pcse-data-en.

Table 28.1. United Kingdom: Estimates of support to agriculture

Million USD

	2000-02	2020-22	2020	2021	2022p
Total value of production (at farm gate)	..	35 916	30 883	37 485	39 379
of which: share of MPS commodities (%)	..	73.51	71.17	72.81	76.54
Total value of consumption (at farm gate)	..	39 473	34 996	41 672	41 751
Producer Support Estimate (PSE)	..	8 028	6 789	10 511	6 784
Support based on commodity output	..	2 787	1 517	4 809	2 037
Market Price Support1	..	2 787	1 517	4 809	2 037
Positive Market Price Support	..	2 802	1 517	4 830	2 059
Negative Market Price Support	..	-14	0	-21	-23
Payments based on output	..	0	0	0	0
Payments based on input use	..	785	771	844	741
Based on variable input use	..	602	612	641	554
with input constraints	..	0	0	0	0
Based on fixed capital formation	..	172	153	187	175
with input constraints	..	0	0	0	0
Based on on-farm services	..	11	6	16	12
with input constraints	..	0	0	0	0
Payments based on current A/An/R/I, production required	..	714	646	662	835
Based on Receipts / Income	..	0	0	0	0
Based on Area planted / Animal numbers	..	714	646	662	835
with input constraints	..	499	594	552	350
Payments based on non-current A/An/R/I, production required	..	7	0	17	4
Payments based on non-current A/An/R/I, production not required	..	3 532	3 602	3 947	3 047
With variable payment rates	..	0	0	0	0
with commodity exceptions	..	0	0	0	0
With fixed payment rates	..	3 532	3 602	3 947	3 047
with commodity exceptions	..	0	0	0	0
Payments based on non-commodity criteria	..	175	180	225	121
Based on long-term resource retirement	..	99	68	162	67
Based on a specific non-commodity output	..	74	112	63	47
Based on other non-commodity criteria	..	2	0	0	7
Miscellaneous payments	..	27	72	9	0
Percentage PSE (%)	..	19.33	18.78	24.34	15.37
Producer NPC (coeff.)	..	1.08	1.05	1.15	1.06
Producer NAC (coeff.)	..	1.24	1.23	1.32	1.18
General Services Support Estimate (GSSE)	..	920	984	878	900
Agricultural knowledge and innovation system	..	471	559	459	395
Inspection and control	..	312	274	282	380
Development and maintenance of infrastructure	..	45	43	43	48
Marketing and promotion	..	93	108	94	76
Cost of public stockholding	..	0	0	0	0
Miscellaneous	..	0	0	0	0
Percentage GSSE (% of TSE)	..	10.37	12.62	7.71	11.70
Consumer Support Estimate (CSE)	..	-3 391	-1 578	-5 820	-2 777
Transfers to producers from consumers	..	-2 844	-1 506	-4 938	-2 089
Other transfers from consumers	..	-616	-95	-1 008	-743
Transfers to consumers from taxpayers	..	10	24	2	3
Excess feed cost	..	59	0	124	52
Percentage CSE (%)	..	-8.44	-4.51	-13.97	-6.65
Consumer NPC (coeff.)	..	1.09	1.05	1.17	1.07
Consumer NAC (coeff.)	..	1.09	1.05	1.16	1.07
Total Support Estimate (TSE)	..	8 958	7 796	11 391	7 687
Transfers from consumers	..	3 460	1 601	5 946	2 832
Transfers from taxpayers	..	6 114	6 290	6 454	5 598
Budget revenues	..	-616	-95	-1 008	-743
Percentage TSE (% of GDP)	..	0.30	0.29	0.36	0.25
Total Budgetary Support Estimate (TBSE)	..	6 171	6 280	6 582	5 651
Percentage TBSE (% of GDP)	..	0.21	0.23	0.21	0.18
GDP deflator (1986-88=100)	..	261	256	257	269
Exchange rate (national currency per USD)	..	0.77	0.78	0.73	0.81

.. Not available

Note: p: provisional. NPC: Nominal Protection Coefficient. NAC: Nominal Assistance Coefficient. A/An/R/I: Area planted/Animal numbers/Receipts/Income. 1. Market Price Support (MPS) is net of producer levies and excess feed cost. Market Price Support (MPS) is net of producer levies and excess feed cost. MPS commodities for the United Kingdom are: wheat, barley, oats, rapeseed, sugar, milk, beef and veal, sheep meat, pig meat, poultry and eggs. The method for estimating MPS changes between 2020 and 2021. Market Price Differentials (MPD) for the United Kingdom are assumed equal to those of the European Union for the years until 2020, while they are calculated from UK domestic and reference prices from 2021.

Source: OECD (2023), “Producer and Consumer Support Estimates”, OECD Agriculture statistics (database). http://dx.doi.org/10.1787/agr-pcse-data-en.

Description of policy developments

Overview of policy trends

The United Kingdom joined the European Economic Community in 1973, and for several decades its agricultural policies were shaped by reforms to the European Union’s Common Agricultural Policy (CAP). The 2009 CAP Health Check allowed Member States to adopt a selection of measures under their Pillar 2 funding. Subsequently, elective measures were also allowed under Pillar 1 of the CAP 2014-20. The United Kingdom nations’ choices of elective measures were broadly aligned in this context, while specific payments were sometimes chosen, such as the redistributive payment in Wales and voluntary coupled support in Scotland. The United Kingdom opted to transfer 10.8% of its broad-based direct payments envelope to targeted longer-term expenditure under Pillar 2.

On 31 January 2020, the United Kingdom left the European Union. The CAP defined support to agriculture in the United Kingdom until the transition out of the European Union in 2020. In 2020 there were extensive negotiations with the European Union over future trade and co-operation relations, the preparation and adoption of laws to govern agriculture in the United Kingdom after the withdrawal from the European Union, and bilateral trade liberalisation negotiations with third countries.

In 2021 new agricultural support systems were introduced in England and the devolved governments of Scotland, Wales, and Northern Ireland. While the overall policy framework over the transition period is similar across the four countries, their proposed timing and approaches to implementing the new policies vary substantially.

The three devolved governments and England are at various stages of development and implementation of their agricultural transition plans. Alongside the phasing out of the CAP measures, the devolved governments are taking a co-development approach with the sector and stakeholders to design and deliver their new domestic policy instruments.

Table 28.2. United Kingdom: Agricultural policy trends

Period	Broader framework	Changes in agricultural policies
1973-2020	European Union’s Common Agricultural Policy (CAP)	Coupled support phase (pre-1992) MacSharry Reform (1992-1999) Agenda 2000 CAP Reform (2000-2002) Fischler Reform (2003-2008) Health Check (2009-2013) 2013 reform (2013-2020)
Since 2020	Transition to new agricultural support system	Phasing out of CAP-style direct payments: Agriculture Act 2020 (England) Agriculture (Retained EU Law and Data) (Scotland) Act 2020 Agriculture (Wales) Bill 2022 54 policy decisions on Future Agricultural Policy for Northern Ireland New payments for farmers to provide environmental public goods

The PSE remained stable at around 19% from 2017 to 2020 before increasing sharply to 24% in 2021 and then contracting to 15% in 2022 (Figure 28.4). These fluctuations were mainly driven by changes in market price support (MPS) for livestock products, in particular beef and poultry which are subject to tariffs and tariff-rate quotas.

Figure 28.4. United Kingdom: Level and PSE composition by support categories, 2017 to 2022

Notes: A/An/R/I:Area planted/Animal numbers/Receipts/Income.

Payments not requiring production include Payments based on non-current A/An/R/I (production not required) and Payment based on non-commodity criteria. Other payments include Payments based on non-current A/An/R/I (production required) and Miscellaneous payments.

Source: OECD (2023), “Producer and Consumer Support Estimates”, OECD Agriculture statistics (database), http://dx.doi.org/10.1787/agr-pcse-data-en.

Main policy instruments

Agriculture is a devolved policy area under the Devolution Settlements for England, Scotland, Wales, and Northern Ireland. Following the United Kingdom’s departure from the European Union, Ministers of the UK Government, Scottish Government, Welsh Government and the Department of Agriculture, Environment and Rural Affairs in Northern Ireland agreed to develop a non-legislative framework for UK collaboration and co-operation on agricultural support. This builds upon commitments already developed between the parties to work together at a UK level. However, since agricultural policy is devolved, each nation retains the powers to create and implement specific countrywide legislation in relation to agriculture.

In 2019, the United Kingdom became the first major economy to legislate a binding target to reach net-zero emissions by 2050. Since then, it has progressively increased the ambition of its Nationally Determined Contribution (NDC), aiming to reduce GHG emissions to 68% below 1990 levels by 2030. In 2021, the Net Zero Strategy: Build Back Greener set out a pathway to reach the net-zero target, including sector-by-sector goals (GOV.UK, 2021[1]). Within this, emissions in the agriculture, forestry, and other land use (AFOLU) sector may need to fall by 17-30% by 2030 and 24-40% by 2035. The Sixth Carbon Budget (2033-37) models a balanced net zero pathway for agricultural emissions to fall from 54.6 MtCO₂eq in 2018 to 39 MtCO₂eq by 2035 and 35 MtCO₂eq by 2050 (Climate Change Committee, 2020[2]). Across the United Kingdom, responsibility to reduce GHG emissions in agriculture is devolved, with each country free to develop its own strategy to reach the target. Scotland and Wales both released separate Net Zero Strategies that detail how they will contribute to the UK’s Net Zero target.

England

Three environmental land management (ELM) schemes target improved outcomes relating to biodiversity, water quality, climate change adaptation and mitigation, air quality, natural flood management, coastal erosion risk mitigation, animal health and welfare, as well as access and heritage. ELM schemes are co-designed and developed with farmers, land managers and other key stakeholders through tests and trials.

• The Countryside Stewardship scheme is currently Defra’s primary agri-environment scheme, with over 30 000 participating farmers and land managers. Countryside Stewardship is made up of eight grants to achieve specific environmental benefits such as increasing biodiversity, improving habitat, expanding woodland areas, improving water quality, air quality and natural flood management. These include: Capital Grants; Higher Tier Capital Grants; Protection and Infrastructure grants; Woodland Management Plan grants; Woodland Tree Health grants; Implementation Plan and Feasibility Study grants; Higher Tier grants; Mid Tier and Wildlife Offers; and the Facilitation Fund. There are plans for expanding and refining the scope of the scheme, so that it pays for a wider range of targeted, specific actions at the right level of ambition to contribute to the environment and climate goals.

• The Sustainable Farming Incentive pilot was launched in 2021. Participants in the pilot can select Sustainable Farming Incentive standards to apply to eligible land and are paid according to the level of ambition chosen for each standard. The standards are a set of land management actions that help farmers to create greener landscapes and improve biodiversity, promote cleaner air and water, and guard against environmental risks such as climate change and flooding. More than 800 farmers are implementing the pilot scheme, providing feedback and insights that have helped to influence the scheme’s design and implementation. This includes feedback on the application system, simplifying guidance, making standards less prescriptive, communicating all mandatory requirements for land management actions, developing a template soil management plan, and providing payments on a more regular (quarterly) basis.

• The Landscape Recovery scheme provides funding for long-term, large-scale projects that help farmers and land managers to produce environmental and climate goods on their land. Defra awards agreements through competitive application rounds focused on the delivery of specific environmental outcomes. A first competitive round was held from February to May 2022, and further rounds are planned in 2023 and 2024.

Support for R&D is a key focus of the new domestic agricultural policy. The Farming Innovation Programme has a budget of GBP 270 million (USD 333 million) and provides farmers in England with funding to develop new, innovative methods and technologies. Since October 2021, Defra has committed over GBP 100 million (USD 123 million) to a series of competitive grants to fund collaborative research projects, stimulate agricultural and horticultural R&D, and develop transformative solutions. The Future Farming Resilience Fund, launched in 2021, helps farmers to navigate changes during the agricultural transition period. The Farming Investment Fund was launched in November 2021 and provides support for farmers to improve productivity and enhance the environment, via two key strands:

• The Farming Equipment and Technology Fund, which provides grants of up to GBP 25 000 (USD 31 000) for the adoption of sustainable technologies and practices, such as equipment to reduce soil compaction, minimum tillage, fostering regenerative farming, supporting animal health and welfare, and improved slurry application.

• The Farming Transformation Fund provides grants of up to GBP 500 000 (USD 616 000) based on a set of themes including Water Management, Improving Farm Productivity, Adding Value, slurry storage and improving calf housing. These grants are targeted at more complex higher-value investments with the potential to bring transformational improvements to business performance and the environment.

Scotland

The Agriculture (Retained EU Law and data) (Scotland) Act 2020 enables the continuation of CAP schemes beyond 2021, and allows Scotland to maintain policy stability until 2025. However, the powers of the 2020 Act only enable limited simplifications and improvements to the operation of CAP legislation and preclude substantive changes until a new Scottish Agriculture Bill is passed. A new Scottish Agriculture Bill is expected to be introduced in 2023 to replace the CAP with a legal framework to support the future Scottish vision for agriculture.

The Scottish Government continues to deliver on the Update to the Climate Change Plan 2018‑2032, published in 2020, which sets out a series of policies and proposals for agriculture to contribute to reaching net-zero emissions by 2045. It commits to a co-development approach, working with stakeholders and farmer-led groups to secure increased uptake of low emission farming measures through new schemes and approaches, the development of environmental conditionality and enhanced advisory support. A key underlying principle is that farmers should continue to receive regular and reliable income support, conditional on the delivery of emissions reductions and biodiversity improvements. The plan sets out a broad range of policies and actions for reducing agricultural emissions, including: the development of new agricultural support measures; providing advice and guidance for farmers who wish to retire; developing peer to peer knowledge transfer initiatives; supporting the dissemination of information and advice on climate change mitigation measures; strengthening policies on nitrogen use; reviewing the storage and application of silage, slurry and liquid digestate; exploring feed additive methane inhibitors and other methods for livestock GHG emissions reduction; exploring options for land use change to multi-faceted land use including forestry, peatland restoration and management and biomass production; supporting the integration of small woodlands; and increasing peatland restoration and management.

Wales

The Basic Payment Scheme (BPS) has continued in Wales and will remain in place until at least the end of 2023, providing stability and certainty to farmers following the United Kingdom’s transition out of the European Union. Following a series of consultations on the future of agricultural support in Wales among farmers, rural communities and environmental groups, the Welsh Government proposed the development of a new Sustainable Farming Scheme in 2025 to provide income support to farmers in return for delivering sustainable land management outcomes, such as water quality, biodiversity, and animal health.

The Agriculture (Wales) Bill was introduced to the Welsh Parliament (the Senedd) in 2022 and sets out the most important policy changes the agricultural sector has seen in decades, with the main goal of reducing greenhouse gas (GHG) emissions from the food system. The bill sets Sustainable Land Management (SLM) as the overarching framework for future support to agriculture and provides the basis for future support schemes. The four SLM objectives included in the draft bill are:

• To produce food and other goods in a sustainable manner.

• To mitigate and adapt to climate change.

• To maintain and enhance the resilience of ecosystems and the benefits they provide.

• To conserve and enhance the countryside and cultural resources and promote public access to and engagement with them, and to sustain the Welsh language and promote and facilitate its use.

The Welsh Government’s Environment (Wales) Act 2016 was updated in March 2021 setting a target of net zero emissions by 2050. The Act requires a system of 5-year carbon budgets and interim targets, which help to provide long-term predictability and ensure that regular progress is made towards the net zero target. Under Section 39 of the Act, Welsh Ministers must prepare and publish a report setting out their proposals for each budgetary period. The Net Zero Wales Carbon Budget 2 (2021-25) sets out an ambitious vision for mitigation action through a series of practices to reduce emissions from soils (e.g. leys and cover crops), livestock (e.g. diets, health, and breeding), and waste and manure management. In addition, measures have been introduced to release about 10% of agricultural land by 2050 to support tree planting across Wales. The farming sector is a major driving force to achieve these goals with the National Farmers’ Union of Wales (NFU Cymru) pledging to reach net zero emissions by 2040.

Northern Ireland

Pillar 1 of the EU CAP provided approximately EUR 327 million (USD 344 million) per annum of direct support to Northern Ireland farmers, all of which was paid out as decoupled support on a per hectare basis. Further measures were delivered under Pillar 2 of the CAP for the Northern Ireland Rural Development Programme. CAP payments have continued during the transition period following the United Kingdom’s exit from the European Union, through a series of measures including the Basic Payment Scheme, Greening Payment, Young Farmers’ Payment, and Regional Reserve. The budget for CAP Pillar 1 direct payments to farmers in Northern Ireland has been set at GBP 293.3 million (USD 362 million) per annum.

The Department of Agriculture, Environment and Rural Affairs (DAERA) launched the Future Agricultural Policy Framework Portfolio for Northern Ireland on 24 August 2021. The framework sets out the direction of future agricultural policy through four key targets: increased productivity, environmental sustainability, improved resilience, and supply chain functionality. DAERA launched the Consultation on Future Agricultural Policy Proposals for Northern Ireland on 21 December 2021. Based on these consultations the Minister has announced 54 decisions that will contribute to the design of new domestic agricultural policies, as well as targeted support measures.

The Climate Change Act (Northern Ireland) 2022 sets a target of net zero GHG emissions by 2050 for Northern Ireland, along with interim targets including a 48% reduction in net emissions by 2030. Section 23 of the Act requires DAERA to make regulations that set carbon budgets, with the first three carbon budgets for Northern Ireland (2023-2027, 2028-2032 and 2033-2037) due by December 2023. DAERA is required to produce 5-year climate action plans to set out the policies that Northern Ireland will implement to meet the corresponding carbon budget, as well as how the emissions reduction targets will be achieved.

Climate change adaptation policies in agriculture

England

The third Climate Change Risk Assessment, published in 2022, identified 61 risks and opportunities from climate change to the United Kingdom, including “risks and opportunities to agricultural productivity from extreme events and changing climatic conditions”. The government is developing its response to all 61 risks and opportunities for the third National Adaptation Plan (NAP3), to be published in 2023 and implemented over the next five years.

Defra has developed a range of measures to improve resilience and adaptation to climate change across the agricultural sector. The three environmental land management schemes provide support for land management practices such as actions to improve soil health and water resources, increase tree planting on farms, and restore coastal habitats to support flood and coastal erosion risk management. Defra also provides support for agricultural innovation through the Farming Innovation Programme, and Defra and Natural England have expanded the Catchment Sensitive Farming Initiative to support farmers in strengthening flood risk management and resilience.

The Farming and Countryside Programme (FCP) has set a target to increase the amount of water stored by the agriculture and horticulture sectors by 66% by 2050 to support food production and protect the environment. The programme offers grants to support on-farm reservoirs and investments in precise irrigation application equipment. It intends to support climate change adaptation by reducing peak flow demand and pressure on local water supplies during summer drought periods, and contributes to statutory Environment Act targets to reduce per capita use of public water supply in England by 20% by 2037‑38.

Scotland

Scotland published an update to its 2018-32 Climate Change Plan in December 2020, setting out six outcomes and a series of proposals for agriculture to help reach net-zero emissions by 2045. Some of the outcomes in the Climate Change Plan also contribute to climate change adaptation, such as the development of more productive and sustainable farming practices; information dissemination and knowledge transfer initiatives; support for precision farming and nitrogen-efficient crop varieties and fertiliser practices; measures to improve emissions intensities in livestock production; measures to reduce emissions from the use and storage of manure and slurry; and promoting carbon sequestration through increased planting of trees and hedgerows, and peatland restoration.

The Climate Ready Scotland: Second Scottish Climate Change Adaptation Programme 2019-2024 sets out policies and proposals for climate change adaptation in agriculture. Several programmes and initiatives help Scottish farmers adapt to a changing climate:

• The Farming for a Better Climate provides practical advice and support to help farmers move towards a sustainable, profitable, low-carbon future, adapting to a changing climate and securing farm viability for future generations.

• The Farm Advisory Service provides a one-stop-shop for farmers and land managers to obtain high-quality advice and information on climate change adaptation and mitigation. The service offers practical guides on farm practices that can help adapt to a changing climate, such as identifying and relieving soil compaction, using cover crops to prevent soil loss, water management and nutrient planning and use.

• The Agri-Environment Climate Scheme and the National Test Programme provide payments for land management and sustainable production practices that contribute to climate change adaptation and mitigation.

Various research programmes have been implemented to support climate change adaptation in Scotland’s agricultural sector. This includes the development of a free desktop app that provides climate change risk assessments for crop pests and diseases, field trials and modelling of indigenous crop pathogens to inform integrated pest management, spring barley yield maps to assess the potential for new areas to be exploited under climate change, and soil risk maps to identify areas vulnerable to erosion, compaction, leaching, and runoff.

Wales

The report “Prosperity for All: A Climate Conscious Wales” sets out the Welsh government’s national plan for climate change adaptation. Actions being taken include tackling land management practices that increase flood risk, promoting good soils and active nutrient management to increase the resilience of soils and water, engaging in research on the risks to ecosystems and agriculture businesses from climate change, and assessing future crop viabilities.

The Welsh Government also provides a range of programmes and support measures to encourage climate change adaptation in the agricultural sector:

• Grant schemes for the horticulture sector contribute towards new equipment that can improve productivity and encourage the adoption of viable alternative species and varieties of plants and trees in the face of climate change.

• A new Organic Conversion Scheme supports farmers as they transition their land away from the use of synthetic fertilisers and pesticides.

• The Growing for the Environment grant scheme encourages the cultivation of crops and pastures that provide an environmental benefit, such as mixed leys, cover crops, and protein crops.

• The Control of Agricultural Pollution Regulations aim to reduce the impacts of pesticides, fertilisers, and manure on water quality, ecosystems, and soils.

• The Red Meat Development Programme and the Dairy Improvement Programme support sustainable practices to improve livestock health and productivity.

• The Capability, Suitability and Climate Programme assessed a range of climate scenarios and the potential for a range of cropping options and undertook research to assess how grass growth might respond under future climate scenarios.

The Welsh government introduced the Agriculture Bill in the Senedd in September 2022, establishing Sustainable Land Management as the framework for all future agricultural support. A package of support worth over GBP 227 million (USD 280 million) will support farmers, foresters, land managers and food businesses during the transitional period to the introduction of the Sustainable Farming Scheme. This transitional support will encourage the adoption of low-carbon farming measures, land use change for wider environmental goals, and sustainable food and farming supply chains. Investments in infrastructure to enhance on-farm nutrient management will continue to be a priority, as will supporting small capital works providing environmental improvements, such as new or restored hedgerows. From 2025 onwards, the Sustainable Farming Scheme will support climate change resilience through measures such as agroforestry, the creation and management of woodland, an enhanced biosecurity and animal disease surveillance system, and the development of an Animal Health Improvement Cycle.

Northern Ireland

The Climate Change Act (Northern Ireland) 2022 received royal assent in June 2022 and commits Northern Ireland to net-zero GHG emissions by 2050 while requiring Climate Action Plans to be developed and published every five years by DAERA. A first Climate Action Plan for 2023-27 is currently being developed.

In March 2022, the DAERA Minister announced 54 policy decisions in relation to future agricultural policy in Northern Ireland. The Farming for Carbon measure includes several programmes to encourage climate change adaptation and mitigation, including low carbon emission farming practices, improvements in land use policy, and encouraging carbon farming. For example, the Beef Sustainability Package encourages farmers to improve productivity while reducing emissions, and a Ruminant Genetics Programme encourages the breeding of more environmentally efficient cattle. Applied research and knowledge transfer initiatives will promote the use of urease-inhibitor fertilisers and the optimal timing of fertiliser and slurry applications. Peatland rewetting is being progressed through the Northern Ireland Peatland Strategy, and the Northern Ireland Green Growth Strategy is helping to develop biomethane and hydrogen production from agricultural waste. The launch of a national Soil Nutrient Health Scheme will support large-scale soil sampling across approximately 700 000 fields during 2023-26, providing farmers with information to optimise the application of crop nutrients to their soils and increase soil carbon sequestration.

Domestic policy developments in 2022-23

England

Under the Sustainable Farming Incentive scheme, England launched several new standards in 2022 to pay farmers for environmental improvements relating to arable and horticultural soils, improved grassland soils, and the moorlands. In addition, six new sustainable farming standards will be introduced in 2023 including: the hedgerow standard, the integrated pest management standard, the nutrient management standard, the arable and horticultural land standard, the improved grassland standard and the low input grassland standard.

Improvements have been introduced to the way the Countryside Stewardship scheme operates, including simplifying processes and making inspections fairer and more proportionate. Currently efforts are focused on streamlining the application process, allowing farmers to manage their agreements more flexibly, improving access to high quality advice, and allowing for more frequent quarterly payments. The scheme will continue the offer currently available through the England Woodland Creation Offer once that scheme has closed. Tenants will benefit from improved access to the scheme and expanded access to higher tier options and agreements. Countryside Stewardship Plus will also be introduced, providing an extra incentive for land managers to collaborate across local areas to deliver bigger and better results. Furthermore, the Environmental Stewardship and Countryside Stewardship agreement holders will be extended up to five years beyond their current end date, providing greater flexibility for agreement holders to leave an existing agreement early if they are offered a place on another environmental scheme and to help ensure a smooth transition to new schemes.

Under the Landscape Recovery scheme, 22 projects were awarded development funding covering over 40 000 hectares. These projects aim to restore nearly 700 km of rivers and to protect and provide habitat for at least 263 species including water vole, otter, pine marten, lapwing, great crested newt, European eel and marsh fritillary. The Landscape Recovery scheme will be opened for further applications in 2023 and 2024, primarily focused on projects of at least 500 hectares targeting net zero, protected sites and habitat creation. This includes landscape-scale projects for creating and enhancing woodland, peatland, nature reserves and protected sites such as ancient woodlands, wetlands, and salt marshes.

Several new grants are now available under the Farming Transformation Fund (a strand of the Farming Investment Fund):

• Water Management grants are offered towards the costs of construction of on-farm water storage reservoirs filled by either peak flow surface water abstraction, borehole or rainwater harvested from buildings, and other on-farm water infrastructure (e.g. irrigation pumps, water metering equipment, software and sensors).

• Improving Farm Productivity grants were launched in January 2022 and encourage the use and adoption of innovative technologies such as robotic and automation equipment, on-farm renewable energy production, LED wavelength-controlled lighting, and the more efficient use of livestock slurries and digestate through acidification.

• Adding Value grants were launched in June 2022 and are designed to support farmers to process and add value to primary agricultural products. Support is provided for the purchase of equipment and machinery, constructing or improving buildings, and innovative technologies for adding value and processing.

The Slurry Infrastructure Grants were launched in December 2022 and help pig, beef and dairy farmers improve or expand slurry storage capacity to six months. The grant aims to help farmers improve the use of organic nutrients, leading to better water quality and reduced air pollution and GHG emissions.

In November 2022 Defra launched pilots to test different approaches to support new entrants to farming to provide more opportunities for new entrants to access land and finance, and establish successful and innovative businesses. These pilots have now finished and are being evaluated to inform next steps on a new entrant support scheme to be announced in the autumn of 2023.

Animal health and welfare is an increasingly important priority. The Animals (Penalty Notices) Act 2022 gives ministers powers to introduce penalty notices for a wide range of animal health and welfare offences in England, and more limited offences in Wales. In addition, Defra launched the Animal Health and Welfare Pathway in partnership with the livestock sector, academics, charities, and experts. Financial assistance to deliver improvements to animal health and welfare was expanded in 2023 with the launch of capital grants ranging between GBP 1 000–GBP 25 000 (USD 1 200–USD 31 000) to co-finance equipment and infrastructure to improve animal health and welfare in the pig, cattle, sheep, and poultry sectors. Funding is also provided for a vet-led team to carry out a yearly on-farm review of animal health and welfare, carry out diagnostic testing, review biosecurity and the use of medicines, and provide advisory services.

Scotland

The CAP schemes continued in Scotland in 2022, facilitated by the Agriculture (Retained EU Law and Data) (Scotland) Act 2020 which enables the continuation of CAP schemes until 2025. The Scottish Government published its Vision for Scottish Agriculture on 2 March 2022. From August to December 2022, a public consultation was held on the powers to be included in a proposed new Scottish Agriculture Bill to replace the CAP.

In November 2022, the Scottish Government outlined their pathway and timeline for the future of agricultural support in Scotland. According to this pathway, a new Scottish Agriculture Bill with a legal framework to replace the rolled over CAP, and the modernisation of agricultural tenancies, will be introduced in the autumn of 2023. The Future Support Framework is to be phased in from 2025 and will enable conditional payments under four tiers:

• Tier 1: a Base Level Direct Payment to provide income support to farmers, which could be made conditional on meeting climate, biodiversity, and business efficiency outcomes.

• Tier 2: an Enhanced Level Direct Payment, which offers additional measures to deliver outcomes relating to efficiencies, reducing GHG emissions and nature restoration.

• Tier 3: an Elective Payment, focused on targeted measures including nature restoration, support for species or habitats, support for organic production, and innovation and supply chain support.

• Tier 4: Complementary Support, to enable the delivery of continuous professional development, advisory services, support for tree planting, woodland management, supply chain support, peatland restoration and management, the agricultural transformation fund, support for areas of natural constraint, and voluntary coupled support for the beef and sheep sectors.

The landscape policies and practices are expected to further evolve in response to climate change with increasing support to woodlands, the restoration of peatlands, and land for growing biomass.

Wales

In July 2022, the Welsh Government published proposals for the Sustainable Farming Scheme (SFS), the main delivery mechanism for future farm support to be introduced in 2025. The proposals include actions to target reduced fertiliser and input use, benchmarking to improve business performance, and other measures to strengthen farmers’ resilience. The Sustainable Land Management Framework was set out in September 2022 as the overarching framework for future support for agriculture. Consultations and engagement with stakeholders have taken place regarding the new schemes, and the second phase of co-design is currently being analysed.

Ahead of the introduction of the SFS in 2025, the Welsh Government is continuing direct payments to farmers at the same level as received over the last three years, confirming a budget of GBP 238 million (USD 293 million) for the Basic Payment Scheme (BPS) in 2023 and an indicative budget of GBP 238 million (USD 293 million) for BPS 2024. From January 2022, two-year extensions (to December 2023) have been offered to Glastir Advanced, Commons and Organic contracts, representing a budget commitment of GBP 66.8 million (USD 82.3 million) over two years. The Welsh Government has developed proposals to deliver support during the period up to the introduction of the SFS, with funding delivered to farmers, land managers and associated rural sectors across the following themes:

• Farm scale land management: providing support for on-farm sustainable land management actions.

• On-farm environmental improvements: includes nutrient management, enhancing fuel and feed efficiency, embedding circular economy approaches and encouraging the use of renewable energy.

• On-farm efficiency and diversification: including supporting investments in new technology and equipment and enabling opportunities for agricultural diversification.

• Landscape-scale land management: delivering nature-based solutions at a landscape scale, through a multi-sectoral collaborative approach.

• Woodland and forestry: supporting 43 000 hectares of woodland creation by 2030 and supporting the creation of a timber-based industrial strategy.

• Food and farming supply chains: strengthening the Welsh food and drink industry and improving its reputation for environmentally and socially responsible supply chains.

The next Farming Connect programme began on 1 April 2023 and will continue through to March 2025. The programme helps to disseminate knowledge transfer activities and events to encourage improved environmental performance and the transition of farming businesses away from BPS support.

Northern Ireland

Following the launch of the Future Agricultural Policy Framework Portfolio for Northern Ireland in August 2021, a Consultation on Future Agricultural Policy Proposals for Northern Ireland ran from 21 December 2021 to 15 February 2022. DAERA published the Future Agricultural Policy Decisions for Northern Ireland in March 2022, and the Minister announced 54 policy decisions on future agricultural support. Decisions that are central to this future policy include:

• A Farm Sustainability Payment, which provides income support through area-based payments for plots larger than 5 hectares, with progressive capping of payments above GBP 60 000 (USD 74 000) per farm business.

• A Beef Sustainability Package with two parts: a suckler cow measure and a beef carbon reduction measure. Both measures provide headage payments and are aimed at increasing productivity, improving the efficiency of resource use, and driving down GHG emissions.

• A Farming with Nature Package, providing payments for habitat creation and restoration and biodiversity improvements to land managers with 3 hectares or more of eligible agricultural land (including land under conacre agreements and common land).

• Farming for Carbon measures which encourage low emission farming practices, such as: a Ruminant Genetics Programme to encourage more efficient cattle breeds, the use of urease inhibitor fertilisers, the optimal timing of fertiliser and slurry applications and the establishment of grassland swards with legumes and herbs to reduce fertiliser nitrogen use, peatland rewetting and sustainable management under the Northern Ireland Peatland strategy, and biomethane and hydrogen production from agricultural waste developed through the Green Growth Strategy.

• Investments in agricultural knowledge and innovation systems, and the development of supply chains. A Generational Renewal programme will encourage longer term planning for farm businesses, and DAERA will invest in the initiation of an industry-led Ruminant Genetics Programme.

Implementation of the Soil Nutrient Health Scheme continued with the opening of the application period for the second of four zones. The publication of soil nutrient results and training on their interpretation and use for Zone 1 applicants commenced in February 2023.

Domestic policy responses to Russia’s war of aggression in Ukraine

In response to the rising cost of fertilisers, the government is monitoring the security and stability of fertiliser and other supply chains and collaborating closely across government and devolved administrations as well as with industry. In May 2022 Defra hosted Fertiliser Industry Taskforce meetings with key industry figures including the National Farmers Union (NFU), the Agriculture and Horticulture Development Board (AHDB) and the Agricultural Industries Confederation (AIC), and devolved administrations, and continues to collaborate with industry on fertiliser price transparency.

In 2022 the Basic Payment Scheme payments were made in two instalments to support farmers by giving them greater liquidity. Other actions taken include changes to guidance on farmers using manures, increased grants for farmers and growers, and boosting R&D expenditure. AHDB published guidance, advice, and webinar recordings to help farmers cope with high fertiliser prices. AHDB also published reports commissioned by Defra, modelling the potential impact on arable and grassland yields of fertiliser price rises. Additionally, Defra is working with food retailers and producers to tackle high food price inflation (e.g. by maintaining “value range” food items, price matching and price freezing measures). Furthermore, the government is providing GBP 26 billion (USD 32 billion) in cost of living support payments to over 8 million households across the United Kingdom for 2023-24.

The Energy Bills Discount Scheme runs from 1 April 2023 to 31 March 2024, replacing the Energy Bill Relief Scheme which expired at the end of March 2023. This has three parts: a baseline discount for eligible business customers in Great Britain and Northern Ireland; a higher level of support for Energy and Trade Intensive Industries – including some food production and manufacturing businesses; and a Heat Network discount for heat networks with domestic end customers.

In March 2022, the Scottish Government established a Short Life Food Security and Supply Taskforce bringing together government and industry. The purpose of the Taskforce was to monitor and respond to any potential disruption to food security and supply resulting from the impact of the ongoing conflict in Ukraine. The Taskforce reported in June 2022 and delivered a series of recommendations to strengthen overall food security in Scotland. The recommendations covered business and supply chain support, future national food security structures, and reserved issues to be raised with the UK Government. All of the recommendations have since been delivered including the establishment of the new Food Security Unit within the Scottish Government. The Food Security Unit is currently focused on developing an evidence-based system to monitor risks or threats to the supply chain to help mitigate future shocks and impacts on food security.

Wales launched the Small Grants – Efficiency scheme in May 2022, providing grants of between GBP 1 000–GBP 12 000 (USD 1 200–USD 14 800) to support capital investments in new equipment and technology to increase technical performance, on-farm production efficiencies and resource efficiencies. Officials have engaged closely with the UK Agriculture Market Monitoring Group (UKAMMG) to monitor farm input costs, co-operating through the mechanism of the Provisional Common Framework for Agricultural Support. The Welsh Government has also provided advice to farmers using an online resource hub on the best application of fertiliser and fuel efficiency.

In Northern Ireland, a scheme worth up to GBP 1.6 million (USD 2 million) has been put in place to support pig producers who have been financially impacted by rising input costs. To assist farmers with cash flow, DAERA accelerated the issuance of direct payments worth GBP 293 million (USD 361 million), providing them starting 1 September 2022, six weeks earlier than previous years. In addition, the Rising Costs Industry Taskforce was established in April 2022. Led by the College of Agriculture, Food and Rural Enterprises with cross-industry representation, the taskforce provides advice and practical support to farmers on ways to manage rising costs, such as using fertilisers effectively.

Furthermore, the priority rating of 43 items eligible for grant aid through DAERA’s Farm Business Improvement Scheme (Capital) – Tier 1, Tranche 4 was increased to reflect their potential to assist in addressing the issues of higher feed, fuel and fertiliser costs as a result of the war in Ukraine. The items fall under several categories including precision farming, grassland management, energy efficiency, silage quality, feed efficiency, sward renovation or reseeding, and reduced feed costs.

Trade policy developments in 2022-23

The Australia-United Kingdom Free Trade Agreement was signed on 17 December 2021. Following ratification by the UK Parliament and Royal assent on 23 March 2023, the agreement entered into force on 31 May 2023. The agreement provides enhanced market access for UK agricultural and food exports. It will also ease the movement of skilled workers between Australia and the United Kingdom, and establishes enhanced technical collaboration on biosecurity, animal welfare and antimicrobial resistance.

The New Zealand-United Kingdom Free Trade Agreement was signed on 28 February 2022 and entered into force on 31 May 2023. The agreement removes customs duties for a range of food products, such as wine, honey, onions, kiwifruit, and a range of dairy products. Dairy and horticultural products will be 100% tariff free within seven years of the agreement’s entry into force. Trade in other products, such as beef and sheep meat, will be liberalised over a longer time frame of 10 years and 15 years respectively.

On 31 March 2023, the United Kingdom concluded negotiations to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a free trade agreement (FTA) including 11 members: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Viet Nam. CPTPP membership will improve trade opportunities with all countries in the bloc, including those with whom the United Kingdom has an existing bilateral trade deal. The negotiation outcome will be set out in a Protocol of Accession that is now undergoing legal review. This document and the market access schedules will be published at signature. The agreement provides the United Kingdom with tariff-free access for goods exports (including agricultural and food products) in several markets, as well as access to preferential tariffs for several protected products in certain CPTPP members. This includes increased cheese quotas in Canada, staged tariff liberalisation on dairy exports to Chile, access to tariff preferences for dairy and cereals exports to Japan, reduced tariffs for chocolate, sugar confectionery and whisky exports to Malaysia, access to preferential tariffs for dairy, chocolate and sugar confectionery, beef, pork and poultry in Mexico, staged tariff liberalisation on beef and poultry exports to Peru, and the elimination of tariffs on chocolate and pork exports to Viet Nam.

Under the Australia and New Zealand FTAs and the CPTPP tariff liberalisation for sensitive goods will be phased in over time. The United Kingdom’s most sensitive products such as beef and sheep meat will be subject to measures including tariff rate quotas (TRQs) and product specific safeguards. These measures will limit the volume of duty-free imports permitted and in the case of beef and sheep meat will be in place for 15 years. An additional general bilateral safeguard mechanism will also be in place for all products, providing a temporary safety net for domestic producers if they face serious injury, or the threat of serious injury, from increased imports as a direct consequence of the FTAs. This protection will last for a product’s tariff liberalisation period plus five years to allow domestic producers time for readjustment.

Trade policy responses to Russia’s war of aggression in Ukraine

In May 2022, an agreement in the form of an exchange of letters was reached between the United Kingdom and Ukraine, allowing for a temporary elimination of all customs duties on goods for a period of 12 months. The agreement was expected to increase exports of Ukrainian agricultural products to the United Kingdom, including flour, dairy products, poultry, and tomato paste. It was implemented by amending the Political, Free Trade and Strategic Partnership Agreement between the United Kingdom of Great Britain and Northern Ireland and Ukraine. In March 2023, in parallel to the signature of the UK-Ukraine Digital Trade Agreement, the United Kingdom pledged to extend the removal of tariffs on all Ukrainian products until March 2024.

Contextual information

Agriculture accounts for a relatively small share of the United Kingdom’s economy, representing less than 1% of GDP and total employment, which is significantly less than the OECD average. The share of livestock in total agricultural production is 60%, and the share of crop production is 40% (Table 28.3).

Table 28.3. United Kingdom: Contextual indicators

	United Kingdom		International comparison
	2000*	2021*	2000*	2021*
Economic context			Share in total of all countries
GDP (billion USD in PPPs)	1 563	3 352	3.9%	2.7%
Population (million)	59	67	1.4%	1.3%
Land area (thousand km2)	242	242	0.3%	0.3%
Agricultural area (AA) (thousand ha)	16 964	17 259	0.6%	0.6%
			All countries1
Population density (inhabitants/km2)	242	277	52	64
GDP per capita (USD in PPPs)	26 542	49 765	9 350	23 401
Trade as % of GDP	20.0	18.1	12.3	15.6
Agriculture in the economy			All countries1
Agriculture in GDP (%)	0.9	0.8	2.9	3.9
Agriculture share in employment (%)	1.5	0.9	-	-
Agro-food exports (% of total exports)	5.2	6.2	6.2	7.9
Agro-food imports (% of total imports)	7.8	9.4	5.5	7.2
Characteristics of the agricultural sector			All countries1
Crop in total agricultural production (%)	41	40	-	-
Livestock in total agricultural production (%)	59	60	-	-
Share of arable land in AA (%)	35	35	32	34

Notes: *or closest available year.

1. Average of all countries covered in this report.

Sources: OECD statistical databases; UN Comtrade; World Bank, WDI and national data.

Real GDP growth has remained steady over the past two decades, ranging between 1.4% and 3.5%, with the exception of the recession following the global financial crisis in 2008-09, and significant contraction linked to the COVID-19 pandemic which started in 2020 (Figure 28.5). The easing of health measures and high level of pent-up consumer demand resulted in a sharp rebound with real GDP growth reaching 7.5% in 2021 and remaining strong at 4.4% in 2022.

The unemployment rate was steady at around 5% in the early 2000s, and increased to more than 8% in the aftermath of the global financial crisis. Unemployment has been declining steadily since 2011 and reached a low point of 3.7% in 2022. In contrast, inflation rose to a multi-decade high of 8% in 2022, driven by rising energy and food prices, supply chain bottlenecks, and strong consumer demand.

Figure 28.5. United Kingdom: Main economic indicators, 2000 to 2022

Sources: OECD statistical databases; World Bank, WDI; and ILO estimates and projections.

The United Kingdom is a net importer of agricultural and food products (Figure 28.6). Over the last two decades, the share of agro-food exports in total exports has increased to 6%, while agro-food imports now account for more than 9% of total imports. The composition of agro-food trade in 2020 shows that the majority (74%) of exports are processed goods for consumption, while 14% of goods exported are processed for industry. In terms of imports, the majority (55%) are processed goods for consumption, followed by primary goods for consumption which account for 21% of imports.

Figure 28.6. United Kingdom: Agro-food trade

 

Notes: Numbers may not add up to 100 due to rounding.

Source: UN Comtrade Database.

Agricultural output growth averaged 0.8% per year between 2011-20, less than half of the global average (Figure 28.7). Total factor productivity (TFP) growth has been close to zero over the past decade, and production growth was entirely driven by increased use of both primary factors and intermediate inputs.

Environmental indicators point to improvements over the past two decades (Table 28.4). The nitrogen balance fell by around 20%, the phosphorous balance declined by about 40%, and the share of agriculture in water abstractions (14%) is significantly below the OECD average (50%). However, the sector’s share of total energy use and of GHG emissions grew over the same period and the nitrogen balance remains more than twice the OECD average. Agricultural GHG emissions have not fallen as quickly as other sectors (in particular energy), and now equate to about 10% of total GHG emissions in the United Kingdom, slightly below the OECD average.

Figure 28.7. United Kingdom: Composition of agricultural output growth, 2011-20

Note: Primary factors comprise labour, land and capital (livestock and machinery). Intermediate input comprises materials (feed and fertiliser).

Source: USDA Economic Research Service Agricultural Productivity database.

Table 28.4. United Kingdom: Productivity and environmental indicators

	United Kingdom		International comparison
	1993-2002	2011-2020	1993-2002	2011-2020
			World
TFP annual growth rate (%)	0.4%	0.1%	1.7%	1.1%
			OECD average
Environmental indicators	2000*	2021*	2000*	2021*
Nitrogen balance, kg/ha	107.0	86.1	32.2	30.4
Phosphorus balance, kg/ha	10.0	5.8	3.3	3.0
Agriculture share of total energy use (%)	0.8	1.1	1.7	2.0
Agriculture share of GHG emissions (%)	6.5	10.0	8.6	10.5
Share of irrigated land in AA (%)	0.8	0.4	-	-
Share of agriculture in water abstractions (%)	..	14.2	46.6	49.7
Water stress indicator	6.2	4.3	8.3	7.4

Notes: * or closest available year.

Sources: USDA Economic Research Service, Agricultural Productivity database; OECD statistical databases; FAO database and national data.

References

[2] Climate Change Committee (2020), The Sixth Carbon Budget: Agriculture and land use, land use change and forestry, https://www.theccc.org.uk/wp-content/uploads/2020/12/Sector-summary-Agriculture-land-use-land-use-change-forestry.pdf.

[1] GOV.UK (2021), Net Zero Strategy: Build Back Greener, https://www.gov.uk/government/publications/net-zero-strategy.