Farming Week: Budget Disappointment, Squeezed Margins and a Bluetongue Reckoning

Week ending 4 November 2026

This week's news has a familiar feel: a Budget that left the family farm tax untouched, input costs running ahead of what farmers are paid, and a worst-on-record bluetongue season now being picked over by MPs. There is also some genuine money on the table, with new Higher Tier options opening. I've flagged anything still emerging or confirmed only from a summary, and where sources disagree I say so. Please check the detail before you act on it.

The big story: the 28 October Budget

The Autumn Budget on Wednesday 28 October offered farmers little. The headline is what did not happen: the inheritance tax reforms in force since 6 April 2026 are unchanged. The first £2.5m of combined qualifying agricultural and business property gets 100% relief, and 50% relief applies above that. Unused allowances can pass between spouses, so couples can reach up to £5m. The government estimates about 85% of estates claiming agricultural relief will pay no extra inheritance tax in 2026-27 (a government estimate, reported by FarmingUK).

What farmers did get:

Red diesel: the temporary 3.7p-per-litre duty cut is extended to 1 July 2027. NFU president Tom Bradshaw called it "tinkering" that does little for cash flow.
Fertiliser tariffs: tariffs on selected imports are being cut, with the cuts coming into force on 26 November. The NFU doubts farmers will see meaningful savings, and it has raised concerns about the Carbon Border Adjustment Mechanism (CBAM), due in January 2027.
Capital allowances: the main first-year allowance rises from 40% to 50% for qualifying spending from 1 January 2027, but the main writing-down allowance falls from 14% to 12% from April 2027. The Annual Investment Allowance was not raised, though the NFU wanted it lifted from £1m to at least £5m.

What will cost you more, mostly from April 2027:

Property income tax rises to 24%, 44% and 49% in England, Wales and Northern Ireland from 6 April 2027. That matters for anyone letting cottages, yards or buildings.
Business Asset Disposal Relief: the lifetime limit falls from £1m to £500,000 from 6 April 2027. The CLA estimates a qualifying £1m gain could cost up to £30,000 more in Capital Gains Tax.
National Living Wage (21 and over) rises 3.9% to £13.21 an hour from 1 April 2027, which matters for labour-heavy dairy and horticulture units.
Pensions: the plan to bring most unused pension funds into inheritance tax from 6 April 2027 is still on track. NFU Mutual warns that families with farmland held in self-invested pensions could face extra liabilities.

The Tenant Farmers Association called it a "farm-blind budget", noting that its requests on inheritance tax for joint tenants and Stamp Duty Land Tax on tenancies were not included.

Two different fuel duty cuts: the 5p cut relates to road fuel, while the 3.7p cut relates to rebated fuel (red diesel). Both are being extended to next July. The fertiliser tariff cuts come into force on 26 November. Please check HMRC and GOV.UK guidance for the detail.

Margins: costs up, prices down

Defra figures released on 29 October show input costs rose 8.6% in the year to August 2026 while prices received fell 5.4%. The input price index overtook the output index in April, ending a run since December 2023 when output prices stayed ahead.

Biggest input rises: plant protection products up 47.6%, energy and lubricants up 23.3%, straight feedingstuffs up 19%, and fertiliser up 13%.

Output prices were mixed. Wheat is up 15.6% and barley up 11.6%, but potatoes are down 31.9%, milk down 17.3%, pigs down 14.7% and cattle and calves down 7.1%. Two cautions from Defra: these are price indices, not a measure of profit, and most input data are provisional. The plant protection figures could be revised by more than usual because of a methodology review.

Arable: sprays, fertiliser and what the numbers mean

For arable growers the squeeze is on the cost side. Better wheat and barley prices are being eaten by a 47.6% jump in crop protection costs and higher fertiliser. If you are budgeting for harvest 2027, the Budget's fertiliser tariff cut is worth a look, but with the NFU doubtful it will change much, don't build savings into your plans until you see actual merchant prices. Check AHDB directly.

Livestock: bluetongue under the microscope

On 3 November MPs on the EFRA Committee heard evidence on livestock disease preparedness. The latest government figures put 3,472 premises affected by bluetongue in the 2026-27 season, described as Britain's worst on record: 2,917 in England, 500 in Wales and 55 in Scotland. Farmers waited up to three weeks for test results this summer. The Pirbright Institute said turnaround reached 10 to 12 days at the peak and the backlog was cleared by the end of August. The NFU warned the sector's capability "just isn't there to deal with it on several fronts".

Also notable:

Shamonda virus, a midge-borne virus, was confirmed in cattle on two dairy farms in Powys and Shropshire in October, the first confirmed UK cases. It is not currently notifiable in Britain.
A government and industry review is expected later in November, ahead of the 2027 midge season. This is still emerging, so watch for the outcome.

Bird flu: H5N1 was confirmed at a Scottish Borders poultry farm near Biggar on 2 November, with 3km and 10km zones in place. England's first confirmed poultry outbreak of 2026-27 was at a free-range farm near Belford, Northumberland, on 19 October. No bird flu housing order or prevention zone is currently in force in England, but keep checking the Defra and APHA pages. Suspect cases: ring the APHA line on 03000 600 703 or your vet.

Dairy: a small rebound, then a processor cut

The average UK farmgate milk price was 38.45p per litre in September, up 4.8% on August but 15.6% (about 7p per litre) below September 2025. The AHDB says the recent rises are not well supported by commodity markets, and expects GB milk production to fall 2.2% in 2026-27. Freshways will cut its standard milk price by 7p per litre from 1 December, to 31p per litre. That is a single processor's standard price and not directly comparable with Defra's national average. Defra's monthly figures usually exclude retrospective bonuses. The next Defra figures are due on 26 November.

Schemes and rural policy

New Countryside Stewardship Higher Tier options. Defra opened expressions of interest on 3 November for three new options:

Wet grassland for wintering birds: £547 per hectare per year, five-year agreement.
Creating traditional orchards: £471 per hectare per year, 10-year agreement.
Maintaining existing orchards: £264 per hectare per year, five-year agreement.

You apply through an online expression-of-interest form on the Rural Payments service, one form per agreement topic. Natural England is expected to respond within 10 weeks, and an expression of interest does not guarantee funding. Defra has not given a hard closing date for these options, so check GOV.UK for updates. Land already invited to apply for Higher Tier, or with an existing agreement with more than nine months left, is excluded.

Wildlife proposals. Defra is proposing that 42% of English farms meet its wildlife-support criteria within three years, with eligible actions covering at least 7% of the agricultural area. These are proposals, not final policy.

On-farm water storage. A £15m on-farm water storage application system is reportedly due to open "very shortly", according to the Prime Minister at PMQs as reported by Farmers Guardian.

In Gloucestershire

Severn Trent STEPS 2026: applications close 11 December 2026. The scheme covers soil health, watercourse protection, inputs and livestock management, and is limited to Severn Trent priority catchments (about 60). Details at stwater.co.uk/steps.
Farming in Protected Landscapes (Cotswolds): the NFU county page says projects must be delivered by the end of March 2027, with up to £250,000 available this financial year. The page does not give a date for that information, so confirm with the Cotswolds National Landscape team before planning any work.
NFU Gloucestershire Annual Open Meeting: Thursday 12 November 2026. Details and invitations to follow.

Checklist for the week

Read the Budget small print against your own business, especially property income, BADR and capital allowances. Speak to your accountant before April.
Check your merchant's fertiliser and crop protection quotes against the Budget tariff news before committing.
If you have grassland or orchards, check Higher Tier eligibility and find the expression-of-interest closing date on GOV.UK.
Chase down bluetongue vaccination plans with your vet for next season. Report any suspicious signs promptly.
Poultry keepers: re-check biosecurity and the latest Defra and APHA bird flu guidance.
Dairy producers: check how the December milk price changes affect your contract. Note 26 November for Defra's next figures.
Gloucestershire: if you want to apply for Severn Trent STEPS, check eligibility and apply by 11 December.
Gloucestershire: if you have a Farming in Protected Landscapes project, confirm the March 2027 delivery date with the Cotswolds team.
Gloucestershire: put NFU Gloucestershire's Open Meeting on 12 November in your diary.

Closing note

This post is general information, not financial, tax or legal advice. Tax rules, scheme terms and disease controls change quickly, and several items above come from summaries. Check official sources and speak to a qualified adviser before you make decisions.

Sources

All 2026 sources.