Agricultural Policy Monitoring and Evaluation 2024

27. United Kingdom

Main findings

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 2023 while new domestic agricultural policy measures were phased in.

The Producer Support Estimate (PSE) amounted to 18% of gross farm receipts in 2021-23, well below the 30% measured for the European Union in 2000-02. While the largest item in the PSE is decoupled payments (42%), Market Price Support (MPS) makes up a significant share as well (41%), in particular for livestock products such as beef and poultry, which are subject to tariffs and tariff rate quotas (TRQs). Payments based on input use account for approximately 8% of producer support.

Support for general services (General Services Support Estimate, GSSE) was 2.3% of the value of agricultural production in 2021-23, below the OECD average of 3.3%. Expenditures on agricultural knowledge and innovation systems account for about half of the GSSE and have declined in recent years. Expenditures on inspection and control services make up one-third of the GSSE, while expenditures on marketing and promotion of farm products represent 8% of the GSSE.

The Total Support Estimate (TSE) for agriculture represented 0.3% of Gross Domestic Product (GDP) on average in 2021-23, about half the OECD average.

Key recent policy changes

England introduced higher payments and more grants, along with around 50 new environmental actions under the integrated Sustainable Farming Incentive and Countryside Stewardship scheme. An additional 34 new Landscape Recovery projects were launched across England, along with an expanded grant offer for investments in productivity and innovation, slurry infrastructure, and improving the health and welfare of farmed animals. Increased funding was provided to both the Farming Equipment and Technology Fund and the Improving Farming Productivity Fund.

The Agriculture and Rural Communities (Scotland) Bill was introduced to the Scottish Parliament in September 2023, establishing the provisions for the future payments framework. The Scottish Government also published the Agricultural Reform Route Map, which sets out the process for transitioning to a new agricultural support framework and provides information on how to prepare for these changes from 2025 onwards.

The Agriculture (Wales) Act was passed in the Welsh Parliament in 2023 and establishes Sustainable Land Management as the overarching framework for future support to agriculture in Wales. A new Sustainable Farming Scheme starting in 2026 will pay farmers for delivering sustainable land management outcomes, such as water quality, biodiversity, and animal health.

Northern Ireland’s Department of Agriculture, Environment and Rural Affairs (DAERA) launched or started piloting several schemes in 2024, including the Carbon Footprinting Project, the Farming for the Generations programme (pilot), and a new suite of Knowledge Transfer and Innovation programmes. The government also introduced the Beef Carbon Reduction Scheme in January 2024, which aims to improve the efficiency of the beef sector and reduce livestock GHG emissions.

The third National Adaptation Programme (NAP3) was published in July 2023, and addresses 61 risks and opportunities identified in the third UK Climate Change Risk Assessment. NAP3 includes dedicated responses to risks from climate change to domestic agricultural productivity and UK food availability, safety, and quality.

The United Kingdom concluded several Free Trade Agreements (FTAs) in 2023-24, 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 signed its accession protocol 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’s agricultural sector faces challenges in fostering sustainable productivity growth. Total factor productivity (TFP) growth has been nil over the past decade, and the growth in agricultural production was almost entirely driven by increased use of intermediate inputs and (to a lesser extent) increases in primary factors. While nutrient balances have been declining over the past few decades, nitrogen and phosphorus surpluses remain significantly higher than the OECD average. At the same time, agriculture’s share in total GHG emissions has been rising, reaching 10% in 2022.

• New programmes, including England’s Environmental Land Management schemes; Scotland’s Preparing for Sustainable Farming programme and Farm Advisory Service; and various grant schemes to encourage sustainable farming practices in Wales and Northern Ireland could contribute to progress towards sustainable productivity growth. 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 also essential for supporting sustainable productivity growth. England’s Farming Innovation Programme and Scotland’s Environment, Natural Resources and Agriculture Research Programme support 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 help to advance progress on sustainable productivity growth.

• 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.

• Agriculture needs to achieve ambitious emissions reductions to contribute meaningfully to the United Kingdom’s target of reaching net-zero emissions by 2050. 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.

Development of support to agriculture

Figure 27.1. United Kingdom: Development of support to agriculture

Table 27.1. United Kingdom: Estimates of support to agriculture

Million USD

	2000-02	2021-23	2021	2022	2023p
Total value of production (at farm gate)	..	39 601	37 485	39 379	41 939
of which: share of MPS commodities (%)	..	72.76	72.81	76.54	68.92
Total value of consumption (at farm gate)	..	42 930	41 225	41 456	46 109
Producer Support Estimate (PSE)	..	8 054	9 801	6 956	7 406
Support based on commodity output	..	3 277	4 292	2 458	3 082
Market price support¹	..	3 277	4 292	2 458	3 082
Positive market price support	..	3 288	4 314	2 466	3 082
Negative market price support	..	-10	-22	-8	0
Payments based on output	..	0	0	0	0
Payments based on input use	..	654	781	587	595
Based on variable input use	..	563	651	519	521
with input constraints	..	0	0	0	0
Based on fixed capital formation	..	82	114	62	70
with input constraints	..	0	0	0	0
Based on on-farm services	..	9	16	6	4
with input constraints	..	0	0	0	0
Payments based on current A/An/R/I, production required	..	730	659	712	819
Based on Receipts / Income	..	0	0	0	0
Based on Area planted / Animal numbers	..	730	659	712	819
With input constraints	..	336	552	350	107
Payments based on non-current A/An/R/I, production required	..	7	17	4	0
Payments based on non-current A/An/R/I, production not required	..	3 126	3 817	2 980	2 580
With variable payment rates	..	0	0	0	0
with commodity exceptions	..	0	0	0	0
With fixed payment rates	..	3 126	3 817	2 980	2 580
with commodity exceptions	..	0	0	0	0
Payments based on non-commodity criteria	..	257	226	217	328
Based on long-term resource retirement	..	107	162	67	92
Based on a specific non-commodity output	..	98	63	51	181
Based on other non-commodity criteria	..	52	1	99	55
Miscellaneous payments	..	3	9	0	0
Percentage PSE (%)	..	17.99	22.80	15.85	16.01
Producer NPC (coeff.)	..	1.09	1.13	1.07	1.08
Producer NAC (coeff.)	..	1.22	1.30	1.19	1.19
General Services Support Estimate (GSSE)	..	914	865	946	930
Agricultural knowledge and innovation system	..	451	461	452	441
Inspection and control	..	335	282	373	351
Development and maintenance of infrastructure	..	52	43	47	66
Marketing and promotion	..	75	79	74	71
Cost of public stockholding	..	0	0	0	0
Miscellaneous	..	0	0	0	0
Percentage GSSE (% of TSE)	..	10.27	8.11	11.97	11.15
Consumer Support Estimate (CSE)	..	-3 997	-5 270	-3 044	-3 677
Transfers to producers from consumers	..	-3 339	-4 426	-2 510	-3 082
Other transfers from consumers	..	-719	-970	-589	-597
Transfers to consumers from taxpayers	..	3	2	3	3
Excess feed cost	..	59	124	52	0
Percentage CSE (%)	..	-9.19	-12.78	-7.34	-7.97
Consumer NPC (coeff.)	..	1.10	1.15	1.08	1.09
Consumer NAC (coeff.)	..	1.10	1.15	1.08	1.09
Total Support Estimate (TSE)	..	8 971	10 668	7 906	8 338
Transfers from consumers	..	4 058	5 396	3 099	3 679
Transfers from taxpayers	..	5 631	6 242	5 396	5 256
Budget revenues	..	-719	-970	-589	-597
Percentage TSE (% of GDP)	..	0.28	0.34	0.26	0.25
Total Budgetary Support Estimate (TBSE)	..	5 693	6 376	5 448	5 256
Percentage TBSE (% of GDP)	..	0.18	0.20	0.18	0.16
GDP deflator (1986-88 = 100)	..	260	246	258	277
Exchange rate (national currency per USD)	..	0.78	0.73	0.81	0.80

.. 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 (2024), “Producer and Consumer Support Estimates”, OECD Agricultural policy monitoring (database), https://data-explorer.oecd.org/.

Policy landscape

Main policy instruments

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.

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 (DAERA) 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 nation free to develop its own strategy to reach the target. Scotland, Wales and Northern Ireland have released separate Net Zero Strategies that detail how they will contribute to the UK’s Net Zero target.

England

England is moving away from direct area-based payments that were in place under the CAP to payments for actions that boost sustainable food production while delivering positive outcomes for the environment, animal health, and reducing GHG emissions. As part of its seven-year Agricultural Transition Programme 2021-28, Defra has continued to implement its farming reforms made up of ongoing payments under the Environmental Land Management (ELM) schemes (Countryside Stewardship, Sustainable Farming Incentive, and Landscape Recovery schemes), and one-off productivity and innovation grants to help farmers invest in new technologies and more sustainable farming systems.

The ELM schemes are delivered through a combination of scheme payments and one-off grants, and 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 have been co-designed with farmers, land managers and other key stakeholders through tests and trials and are being implemented and adapted through ongoing dialogue. As of 1 June 2024, there were 59 700 live agri-environment agreements across more than 41 400 farming businesses in England.

• The Sustainable Farming Incentive scheme pays farmers to take actions that support food production, farm productivity and resilience, whilst protecting and enhancing the environment. There are currently 23 actions on offer under the new scheme, including on soil health, moorland, hedgerows, integrated pest management, farmland wildlife, buffer strips, and low input grassland.

• The Countryside Stewardship scheme pays farmers, land managers and foresters for more locally targeted actions relating to specific locations, features and habitats, including woodlands and water courses. The scheme supports a range of enhanced environmental outcomes, from restoring habitats to creating woodlands to managing flood risk. The scheme provides Mid Tier agreements for the majority of farmers and land managers, and Higher Tier agreements for more complex environmental management in high priority areas. Capital grant items for boundaries, trees and orchards, water quality, and air quality are also available under the scheme along with a range of other capital grants. There were over 35 000 live Countryside Stewardship agreements in place across England as of April 2024.

• 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 through bespoke 20+ year agreements. Funding is awarded based on competitive application rounds focused on the delivery of specific environmental outcomes.

Support for R&D is a key focus of the new domestic agricultural policy. This includes the Farming Innovation Programme (described in detail below) and the Future Farming Resilience Fund, which was launched in 2021 and 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 50 000 (USD 62 000) 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 621 000) 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 former 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 the new Agriculture and Rural Communities (Scotland) Act 2024 comes into force.

The Scottish Government’s Vision for Agriculture was published in March 2022 and outlines a long-term vision to transform support for farming and food production and to make Scotland a global leader in sustainable and regenerative agriculture. The Vision is aligned to the key objectives of the EU CAP and ensures Scotland will have a robust and coherent framework to underpin future agricultural support from 2025 onwards, and to deliver climate mitigation and adaptation, nature restoration, and high-quality food production.

The Agricultural Reform Route Map was published in June 2023 and then updated in June 2024, providing further clarity on how the Scottish Government intends to deliver the ambitions set out in the Vision. The Route Map sets out the process for transitioning to a new agricultural support framework with information on important dates, the measures being considered now, when current schemes will transition or end, the support available, and how to prepare for these first changes from 2025 onwards. In the future, at least half of all funding for farming and crofting will be targeted towards outcomes for biodiversity gain and a drive towards low carbon approaches to improve the resilience, efficiency, and profitability of the sector. There will be no cliff edges in support as the Scottish Government has committed to maintaining direct payments beyond 2026.

The Agriculture Reform Implementation Oversight Board (ARIOB) was established in 2021 and incorporates relevant recommendations from farmer-led groups to reduce agricultural emissions, support the production of sustainable high-quality food, address the twin climate and biodiversity crises, and design new systems and approaches. The government provides financial support for farmers and crofters to carry out carbon audits, soil testing and nutrient management planning, establishing a clear baseline and options for action for all who participate.

The Scottish Government continues to deliver on the Update to the Climate Change Plan 2018‑2032, which sets out a broad range of policies and actions for reducing agricultural emissions to net-zero by 2045. 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 outlines a range of measures, including: the development of new agricultural support measures; providing advice and guidance and 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 has continued in Wales and will remain in place until 2026, providing stability and certainty to farmers following the United Kingdom’s transition out of the European Union. The Agriculture (Wales) Act 2023 was passed in the Welsh Parliament (the Senedd) on 17 August 2023. The act provides powers to amend legislation derived from the European Union and establishes Sustainable Land Management (SLM) as the overarching framework for future support to agriculture in Wales. The four SLM objectives included in the act 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.

Following a series of consultations on the future of agricultural support in Wales among farmers, rural communities and environmental groups, the Welsh Government announced the development of a new Sustainable Farming Scheme starting in 2026 to pay farmers in return for delivering actions which meet the sustainable land management outcomes, such as water quality, biodiversity, and animal health. A preparatory phase of activity will run in 2025 to help calculate an appropriate payment methodology for the scheme. It will also include an updated economic assessment, as well as any further and alternative proposals to achieve additional carbon sequestration within the scheme.

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 five-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. 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, animal health, and breeding), and waste and manure management. 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.

The Welsh Government 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 climate change adaptation via the adoption of viable alternative species and varieties of plants and trees.

• A new Organic Support Payment was introduced to succeed the Glastir Organic Scheme, providing payments to fully certified organic farmers in 2024.

• 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 Farming Connect advisory service supports 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.

Northern Ireland

A simplified Basic Payment Scheme has continued in Northern Ireland and is planned to remain in place until the end of 2024, providing stability and certainty for farmers.

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 long-term 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 54 policy decisions were announced, based on four key outcomes (increased productivity, environmental sustainability, improved resilience, and an effective functioning supply chain). The decisions are contributing to the design of new domestic agricultural policies, as well as targeted support measures under the Farm Support and Development Programme.

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 relating to the periods 2023-2027, 2028-2032 and 2033-2037. DAERA is required to produce five-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.

Innovation for sustainable productivity growth

The United Kingdom has committed significant funding to increasing productivity, enhancing the environment, and supporting the agriculture and food sectors in achieving the net zero targets. The UK Government views R&D as essential to identifying, developing, and scaling up technologies that will transform agriculture and horticulture into productive, sustainable, and low-carbon industries that can help to meet the challenges of climate change. The UK Government has invested extensively in farmer-led innovation to boost productivity sustainably, and to bring together farmers and research communities to address food system challenges.

England

The Farming Innovation Programme is a GBP 270 million (USD 336 million) grant scheme that was launched in October 2021 and aims to strengthen agricultural innovation and productivity while enhancing environmental sustainability, improving food security, and enabling more effective adaptation to climate change. The programme provides funding to develop new, innovative methods and technologies that benefit farmers in England such as feed additives, vertical farming, robotics and automation, novel breeding, genetic technologies, and alternative proteins.

Defra’s Farming Innovation Investor Partnership aims to provide later stage investment to agri-tech businesses that are developing and implementing new technologies. The scheme combines grant funding from Defra with equity funding from private investors and is open to businesses that can demonstrate the potential to grow and generate revenue through farm-focused innovations which solve the challenges of productivity, sustainability, and net-zero emissions.

Defra’s Follow-on Fund provides further support to projects previously in receipt of funding that have not yet been able to commercialise their outputs. Funding is provided through a competitive process for up to 30% of the total project costs, and funded projects can range between GBP 100 000–GBP 300 000 (USD 124 000–USD 373 000) and can last for up to one year.

As part of the 2013 Agri-Tech Strategy, UK Research & Innovation (UKRI) established four independent Agri-Tech Centres. Three of those bodies (Crop Health and Protection, the Centre for Innovation in Livestock, and Agri-EPI) merged in April 2024 to form the UK Agri-Tech Centre, with the objective of improving co-ordination and bringing renewed focus on accelerating the late-stage development and adoption of agricultural innovations.

The Genetic Technology (Precision Breeding) Act 2023 provides a new proportionate regulatory regime in England for organisms produced through precision breeding technologies such as gene editing, where the genetic changes could have arisen through traditional breeding. The act covers precision bred plants and animals, as well as food and feed produced from precision bred plants and animals. It aims to ensure that precision bred products are regulated proportionately to risk and will introduce simpler regulatory measures to enable these products to be released for field trials and brought to market more easily.

Scotland

The Environment, Natural Resources and Agriculture (ENRA) Research Programme is a large-scale multidisciplinary programme that invests nearly GBP 50 million (USD 62 million) per year into a portfolio of strategic research to ensure that Scotland maintains its position at the cutting edge of advances in agriculture, natural resources, and the environment. The programme supports national science facilities such as the Langhill Breeding Herd and the Dairy Research and Innovation Centre at Scotland’s Rural College (SRUC) Crichton Royal Farm. The programme also directly supports Scotland’s academic research institutes and provides funding for research areas to address Scotland’s specific challenges, including GHG reductions for agriculture and livestock, feeding and breeding strategies for climate-resilient livestock, vaccine research into animal diseases, and data-driven innovations for improved sustainability of ruminant production systems.

Scotland has five Centres of Expertise that work at the interface between policy and research on water, climate change, animal disease outbreaks, plant health, and knowledge exchange. The centres draw on the expertise of researchers from the Scottish Environment, Food and Agriculture Research Institutes (SEFARI), universities, government agencies, and research organisations.

The Scottish Government has provided approximately GBP 7.5 million (USD 9.3 million) in funding since 2015 to support 52 projects under the Knowledge Transfer and Innovation Fund. The fund supports projects that focus on improving biodiversity or reducing GHG emissions and has provided financing for nearly 20 NGOs to undertake vocational training, skills development, and knowledge transfer. Projects are typically delivered through workshops, training courses, coaching, information dissemination actions, and farm visits.

The Farm Advisory Services have a budget of approximately GBP 5 million (USD 6.2 million) per year and provide crofters, farmers, and land managers with access to advisory and consultancy services. These include support for the development of integrated land management plans, specialist advice, mentoring for new entrants to farming, and carbon audits. In addition, farmers also have access to knowledge transfer services (events, publications, videos, podcasts, and online tools), and discounted general advisory and one-to-one consultancy services.

Wales

The government of Wales has provided a package of support worth over GBP 200 million (USD 249 million) during the transitional period ahead of the introduction of the Sustainable Farming Scheme. From 2026 onwards, the Sustainable Farming Scheme will support climate change resilience through measures such as benchmarking and soil testing to enable targeted management decisions, agroforestry, the creation and management of woodlands, an enhanced biosecurity and animal disease surveillance system, and the development of an Animal Health Improvement Cycle.

Northern Ireland

DAERA has developed the Ruminant Genetics Programme in partnership with Sustainability Ruminant Genetics Ltd. The programme aims to drive improvements in the productivity and environmental performance of the ruminant livestock sectors. The first phase of this programme is currently underway and will provide farmers with the data and evidence to make better informed breeding decisions to advance genetic gain in dairy and beef animals.

DAERA has collaborated with Defra to include a Northern Ireland element within the Defra Dairy Demonstrator Research Call, which launched in November 2023. This project provides funding for researchers, industry, and farm business clients to formulate and test livestock concentrate diets which reduce GHG emissions, ammonia emissions, and phosphorus losses to the environment. Findings from this project will help to inform knowledge transfer programmes to farmers, while supporting policy developments on the future use of methane-reducing feed additives and the impact of dietary changes on ammonia and phosphorus losses.

DAERA is also planning to deliver a Livestock Dietary Emissions Challenge Fund, which will enable the testing of livestock concentrate diets on commercial farms. This programme helps to inform knowledge transfer programmes to farmers, while supporting policy development on the future use of methane-reducing feed additives and the impact of dietary changes on ammonia and phosphorus losses.

The GBP 37.6 million (USD 46.7 million) Soil Nutrient Health Scheme is the largest baseline soil sampling programme ever undertaken in Northern Ireland. The scheme runs from 2022 to 2026 and aims to improve productivity and sustainability in the farming sector, by providing farmers with information on soil nutrient levels, and baseline estimates of carbon stored in their soils, hedgerows, and trees. This will help farmers to more accurately match nutrient applications to crop needs, thereby increasing efficiency, reducing excess run-off to watercourses, improving sustainability, and contributing to the climate change agenda. The scheme is being delivered by the Agri-Food and Biosciences Institute and is being rolled out on a zonal basis throughout Northern Ireland.

Recent policy developments

Domestic policy developments in 2023-24

England

The Sustainable Farming Incentive and Countryside Stewardship schemes have continued to develop, with almost half of farmers in England currently participating. Farmers can pick and choose from a menu of over 100 environmental actions, including actions on soil health, moorland, hedgerows, integrated pest management, farmland wildlife, buffer strips, and low input grassland.

Under the Landscape Recovery Scheme, 22 projects are currently underway which aim to restore over 600 km of rivers and protect and provide habitats for at least 263 species. In 2024 there were 34 new landscape recovery projects across England, receiving a share of GBP 25 million (USD 31 million) in funding through round two of the scheme. The projects involve over 700 farmers and landowners working together to sustainably manage and restore over 200 000 ha of land (including 35 000 ha of peatland, more than 20 000 ha of woodland including some temperate rainforest, and more than 160 protected sites).

Defra announced a number of updates to its farming reforms in early 2024. These include:

• A 10% increase in the average value of agreements in the Sustainable Farming Incentive and Countryside Stewardship driven by increased payment rates, with uplifts automatically applied to existing agreements.

• Around 50 new environmental actions under the integrated Sustainable Farming Incentive and Countryside Stewardship offer that farmers can get paid for across all types of farm businesses, including actions for agroforestry and new agricultural technologies such as robotic mechanical weeding.

• Enhanced payments for “creation” and “maintenance” options to improve the long-term incentives for farmers to create habitats and ensure they are rewarded for looking after habitats once they have created them.

• Premium payments for actions with the biggest environmental impact or combinations of actions that deliver benefits at scale.

• More grants for productivity and innovation including supporting farmers to test and trial new technology.

• Free advice and support for farmers to manage transition and access scheme and grant funding.

In February 2024 additional measures to support farming were announced. These include:

• Doubling the management payment for the Sustainable Farming Incentive so those with existing agreements receive up to an extra GBP 1 000 (USD 1 243) and extending it to Countryside Stewardship mid-tier for the first year of agreements starting by March 2025.

• A grant offer totalling GBP 427 million (USD 531 million), which invests GBP 220 million (USD 273 million) in productivity and innovation in farming, GBP 116 million (USD 144 million) in slurry infrastructure, and GBP 91 million (USD 113 million) in improving the health and welfare of farmed animals. The first of these schemes is an enhanced GBP 70 million (USD 87 million) round of the successful Farming Equipment and Technology Fund and an increase to the Improving Farming Productivity Fund from GBP 30 million (USD 37 million) to GBP 50 million (USD 62 million) – which covers robotics, automation, and rooftop solar to build on-farm energy security.

Scotland

The Agriculture and Rural Communities (Scotland) Bill was introduced to the Scottish Parliament on 28 September 2023. This legislation aims to deliver the key ambitions set out in the Scottish Government’s Vision for Agriculture and will enable a payments framework that incentivises a drive towards low carbon approaches to improve the resilience, efficiency, and profitability of the sector. The bill has been designed to provide an adaptive support framework for farmers and crofters that can respond to future social, economic, and environmental changes. It enables tailored provisions to be produced and adapted as required. The future payments framework will be based around four tiers:

• Tier 1: “Base Level Direct Payment” – a universal, entry-level payment for undertaking agricultural activity while meeting minimum essential standards in relation to sustainable farming activities, protecting the environment, animal health and welfare, and ensuring Fair Work. These standards will help to make businesses more efficient. Existing cross-compliance conditions will be maintained as a minimum in the new support framework and will apply across all tiers but may be delivered differently.

• Tier 2: “Enhanced Level Direct Payment” – a universally accessible payment that supplements Tier 1. This is for applicants delivering Base requirements and undertaking further activity that delivers outcomes for nature and climate improvement, including recognition of wider land management.

• Tier 3: “Elective Payments” – a competitive or non-universal (criteria-dependent) range of payments for targeted actions and undertakings on particular habitats, and for defined species, to deliver nature and climate outcomes included in the Vision for Agriculture.

• Tier 4: “Complementary Support” – provision of support for continuing professional development, advice, knowledge exchange, and linkages to wider land management support from Scottish Government officials and/or public partners.

The existing framework of support will continue to provide stability to farmers and crofters in 2024, and there will be a phased transition approach to introduce new conditionality on the present Basic Payment Scheme (BPS) from 2025. The Tier 2 Enhanced Level Direct Payment will launch in the following years, followed by the Tier 3 Elective Payments and Tier 4 Complementary Support. This will allow the BPS to evolve into the future Tier 1 Base Level Direct Payment.

The Preparing for Sustainable Farming programme helps businesses prepare for future changes in the policy framework with support for conducting carbon audits and soil sampling, support for animal health and welfare interventions, and access to herd data for Suckler beef producers through MyHerdStats. Support is available for farmers to deliver a list of animal health and welfare interventions.

The Scottish Government established a Food Security Unit in 2023 following a report from the Short-life Food Security and Supply Taskforce, which was established to monitor supply chain disruptions in the immediate wake of the war in Ukraine. The Food Security Unit will oversee the legacy activities of the taskforce, monitor food system resilience, and engage widely with government and industry to improve responsiveness to potential future shocks and crises.

Wales

A set of transitional rural grant schemes are being implemented in 2024, providing capital to farmers to improve efficiency and environmental performance. These include:

• The Agricultural Diversification Scheme to encourage the establishment of new agricultural enterprises.

• Growing for the Environment, which provides financial support for growing and using crops that improve the environmental status of a farm business.

• The Habitat Wales Scheme, an area-based agri-environment scheme.

• The Horticulture Development Scheme, a capital grant scheme for existing commercial horticultural producers.

• The Nutrient Management Investment Scheme, providing financial support to improve the economic and environmental performance of farm holdings.

• Organic Support 2024, a payment for existing eligible organic agriculture producers who maintain full organic certification.

• Small Grants – Efficiency, a capital scheme helping farmers improve the technical, financial, and environmental performance of their business.

• Small Grants – Environment, a financial contribution towards capital investments on individual parcels of land.

• Small Grants – Horticulture Start Up, funding to encourage and support new commercial horticultural enterprises in Wales.

• Small Grants – Yard Coverings, a capital scheme to help farmers improve their business performance.

Northern Ireland

The Beef Carbon Reduction Scheme began in January 2024. The scheme aims to improve the efficiency of the beef sector and reduce livestock GHG emissions, thereby contributing to meeting the Climate Change Act (Northern Ireland) 2022 targets. The scheme will support progressive reductions in the maximum age at slaughter over a four-year period. Farmers slaughtering clean finished cattle at or below the target age for each year of the scheme will receive a payment of GBP 75 (USD 93) for each eligible animal slaughtered.

Several schemes and projects are being piloted or launched under the Farm Support and Development Programme in 2024. These include:

• The Carbon Footprinting Project, which will provide each farm business in Northern Ireland with a baseline whole farm carbon footprint. Data obtained from the project will be used to provide knowledge transfer to farmers to support them in reducing on-farm emissions, to inform future policy development on carbon mitigation strategies, and to update assumptions within the Northern Ireland part of the UK GHG inventory.

• A pilot of the Farming for the Generations programme, which will encourage longer term planning for farm businesses based on a three-phase approach including planning for succession, development of the successor, and maintaining support for both generations. The programme will also include knowledge skills development and explore the provision of appropriate incentives to facilitate generational change.

• A new suite of Knowledge Transfer and Innovation programmes to help farm businesses maximise the benefits of the new Farm Support and Development Programme and make informed development decisions in the management of their farm businesses.

Policies to facilitate climate change adaptation in agriculture

The third National Adaptation Programme (NAP3) was published in July 2023, and addresses all 61 risks and opportunities identified in the third UK Climate Change Risk Assessment. NAP3 includes dedicated responses to risks from climate change to domestic agricultural productivity and UK food availability, safety, and quality. Defra is currently delivering a range of measures to improve resilience and adaptation to climate change across the farming sector, including actions to improve soil health and water resources, increase tree planting on farms, and greater investment in innovation.

The consultation on the third Scottish National Adaptation Plan (SNAP3) ran until 24 April 2024. The draft SNAP3 sets out the Scottish Government’s approach to delivering adaptation across Scotland and responds to the UK Climate Change Committee’s Climate Change Risk Assessments. It includes a range of actions that can further build the agricultural sector’s resilience to climate change, including financial support as well as the provision of guidance and advice on adaptation. Responses from the consultation will help to inform and develop the final Adaptation Plan, due in autumn 2024.

Trade policy developments in 2023-24

The Australia-United Kingdom Free Trade 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 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 16 July 2023, the United Kingdom signed its accession protocol 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 agreement is expected to enter into force in the United Kingdom in the latter half of 2024 once the UK and existing Parties have completed ratification.

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 terms of the accession to CPTPP, tariff liberalisation for sensitive goods will be phased in over time and there will be permanent protections (small permanent quotas) for imports of beef, pork, chicken, and sugar to the United Kingdom from CPTPP members.

Under the Australia and New Zealand FTAs tariff liberalisation for sensitive goods will also be phased in over time, and the UK’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 Australia and New Zealand FTAs and CPTPP accession. This protection will last for a product’s tariff liberalisation period plus five years to allow domestic producers time for readjustment.

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, which was subsequently renewed until March 2024 alongside the signature of the UK-Ukraine Digital Trade Agreement. In February 2024 the United Kingdom announced that it will extend tariff-free trade with Ukraine until 2029, aiming to provide Ukrainian businesses and exporters with greater economic support and certainty. This latest agreement will see tariff-free trade extended on all goods for five years, except for eggs and poultry which will be extended for two years.

Policy context

Key economic and agricultural statistics

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 58%, and the share of crop production is 42% (Table 27.2).

Table 27.2. United Kingdom: Contextual indicators

	United Kingdom		International comparison
	2000*	2022*	2000*	2022*
Economic context			Share in total of all countries
GDP (billion USD in PPPs)	1 563	3 679	3.9%	2.7%
Population (million)	59	68	1.4%	1.3%
Land area (thousand km2)	242	242	0.3%	0.3%
Agricultural area (AA) (thousand ha)	16 964	17 215	0.6%	0.6%
			All countries1
Population density (inhabitants/km2)	242	278	52	64
GDP per capita (USD in PPPs)	26 535	54 266	9 363	25 965
Trade as % of GDP	20.0	21.1	12.3	16.6
Agriculture in the economy			All countries1
Agriculture in GDP (%)	0.9	0.9	2.9	3.8
Agriculture share in employment (%)	1.5	0.8	-	-
Agro-food exports (% of total exports)	5.2	6.2	6.4	8.0
Agro-food imports (% of total imports)	7.8	9.1	5.8	6.9
Characteristics of the agricultural sector			All countries1
Crop in total agricultural production (%)	41	42	-	-
Livestock in total agricultural production (%)	59	58	-	-
Share of arable land in AA (%)	35	35	32	34

Note: *or closest available year.

1. Average of all countries covered in this report.

Sources: OECD statistical databases; International Labour Organization (ILO); UN Comtrade; World Bank, WDI; FAO database and national data.

Real GDP growth has ranged between 1.4% and 3.5% since the turn of the century, with the exception of the recession following the global financial crisis in 2008-09, and the significant contraction linked to the COVID-19 pandemic which started in 2020 (Figure 27.4). The easing of health measures and high level of pent-up consumer demand resulted in a sharp rebound with real GDP growth reaching 8.7% in 2021 and falling to 0.5% in 2023.

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 6.7% in 2023, driven by rising energy and food prices, supply chain bottlenecks, and strong consumer demand.

The United Kingdom is a net importer of agricultural and food products (Figure 27.5). Over the last two decades, the share of agro-food exports in total exports has increased to 6.2%, while agro-food imports now account for 9.1% of total imports. The composition of agro-food trade in 2022 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 (56%) are processed goods for consumption, followed by primary goods for consumption which account for 18% of imports.

Agricultural output growth averaged 0.8% per year between 2012-21, less than half of the global average (Figure 27.6). Total factor productivity (TFP) growth has been zero over the past decade, and production growth was almost entirely driven by increased use of both primary factors and intermediate inputs.

Environmental indicators point to improvements over the past two decades (Table 27.3). 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 is more than three times 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.

Table 27.3. United Kingdom: Productivity and environmental indicators

	United Kingdom		International comparison
	1991-2000	2012-2021	1991-2000	2012-2021
			World
TFP annual growth rate (%)	0.1%	0.0%	1.7%	1.1%
			OECD average
Environmental indicators	2000*	2022*	2000*	2022*
Nitrogen balance, kg/ha	107.0	86.1	32.1	28.2
Phosphorus balance, kg/ha	10.0	5.8	3.3	2.3
Agriculture share of total energy use (%)	0.8	1.0	1.7	2.0
Agriculture share of GHG emissions (%)	6.7	10.0	8.7	10.1
Share of irrigated land in AA (%)	0.8	0.4	-	-
Share of agriculture in water abstractions (%)	..	14.2	47.0	49.5
Water stress indicator	6.2	4.3	8.7	..

Note: * or closest available year.

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

Historical trends in agricultural policies

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 27.4. 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 23% in 2021 and then contracting to 16% in 2022-24 (Figure 27.7). 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.

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.