How will the Budget affect farm shops?

Chancellor Rachel Reeves’ Autumn Budget continues to cause shockwaves throughout the farming sector, with particular worry over inheritance tax changes.

However, a number of other measures in the Budget are also problematic. 

Emma Mosey said Farm Retail Association (FRA) members are particularly concerned about minimum wage and national insurance increases.

We spoke to Emma about the likely impacts, what farm shop owners can do, and what support FRA is offering members…

Q. What are the key impacts for farm shops?

A. The Autumn Budget will have a significant impact on farm shops across the UK. The APR and BPR changes are a particularly devastating blow. 

This policy change will force many family-run farms and farm retail businesses to sell off land and assets to meet inheritance tax demands, leading to a significant loss of agricultural heritage and a decline in domestic food production.  

In terms of the other changes that will affect farm retail businesses:

• Minimum wage increases: While the FRA supports fair wages, the substantial increases in the minimum wage, particularly for younger workers, will place immense pressure on farm retail businesses with tight profit margins.
• Reduced business rates relief: The reduction in business rates relief for retail and hospitality businesses will directly impact farm shops and other farm-based retail outlets, increasing costs and hindering growth.
• Employer’s national insurance hike: The rise in employer’s national insurance contributions will further erode the profitability of farm retail businesses, potentially leading to job losses and reduced investment.

Q. How concerned are your members?

A. Our members are very concerned about this. We conducted a survey, and most are concerned about the minimum wage increases, then the APR and BPR relief changes. 

Q. Is there anything farm shop owners can do to mitigate this?

A. Farm shops have the advantage of disused buildings or space on the farm they could use to add additional revenue streams, though this might involve capital expenditure they don’t have.  

Beyond this, they will need to look at operational efficiencies and potentially trim down their workforces where possible.  

This is very difficult in family businesses with good cultures.  

They also might inevitably need to put up the prices of their goods, or encourage shoppers to spend more through loyalty schemes or by altering retail flow.

READ MORE: NFU boss meets with PM to discuss impact of IHT changes

READ MORE: Farmers’ protest will be the catalyst for change, organiser says

Q. What might be the wider impacts of the Budget?

A. In the longer term, the impact of APR and BPR reforms on the longevity of farming businesses is severely concerning.  

Going beyond their own farms, farm shop owners are concerned for small producers who provide much of the produce for their shops.  

The wider impact for food production and food security is seriously worrying.

Q. What changes would you like to see from the government? 

A. I would like to see a review of the APR and BPR changes before they are brought into force.  This needs to be done urgently.  

I would also like to see more support for small business, as was promised in the election lead-up.  

Despite running on a platform of supporting small businesses, promoting growth and reducing inflation, the government’s actions could just do the opposite.  

Many farm retail businesses are family-run by hard working people, which calls into question the government’s definition of a working person.

Q. What steps is FRA taking to support members?

A. We offer a network of support for farm shops and farmers markets to communicate with each other through this difficult period, and to share ideas of how to mitigate the challenges.  

We are offering a series of webinars in the lead up to the minimum wage increase in April.  

We also have our annual conference in March, where we will have panels with George Eustice, Wilfred Emmanuel-Jones and Guy Singh Watson, entitled Profit with Purpose: Let’s Grow with Integrity.

Read more business news.