British farmers have missed out on more than £500 million as inflation erodes the core agricultural budget, according to the Conservative Environment Network (CEN).
The farming and nature budget has failed to keep pace with rising prices since 2021, leaving it worth far less in real terms than it was five years ago.
Budget shortfall analysis
Had the core pot been protected from inflation, analysis suggests it would now stand at more than £2.8 billion. Instead, ministers have allocated around £2.3 billion.
Government figures show the main farming budget is set to shrink in cash terms too, falling every year to £2.25 billion by 2028-29.
Impact on farmers and food security
The CEN said the squeeze had heaped strain on hard-pressed farmers, threatening food security and pushing up prices at the tills.
Dillon Smith, the group's head of policy, said: "The core farming and nature budget has been steadily squeezed by inflation since 2021.
"This means that farmers have missed out on the equivalent of £511m of funding, had the budget been protected in real terms – at a time when there has been such a strong case for increasing it."
He said the cuts made it harder to restore nature, "which is essential for protecting rural communities from flooding and drought".
Mr Smith added: "This is unacceptable given the challenges farmers and nature face. In a year in which heatwaves have had a devastating effect on crop yields, and with a wet winter likely on the way, this is at its heart an issue of boosting our food security and national resilience."
Government response
He pointed to the chaos over the Sustainable Farming Incentive (SFI), saying: "The shambolic nature of the most recent SFI application window, which shut after only six hours, shows how much demand there is from farmers to support the restoration of nature."
He said: "It is high time that the Government makes good on its rhetoric and stops letting this budget be eroded further."
The Department for Environment, Food and Rural Affairs insists it is investing more than £2.7 billion a year in sustainable farming and nature recovery.
But that headline figure includes £450 million a year for separate nature schemes such as tree planting and peatland restoration, which was bolted on to the total.
CEN analysis suggests that the core Farming and Countryside Programme, which pays farmers directly, is worth £2.32 billion this year, before dropping to £2.27 billion next year and £2.25 billion the year after.
A Defra spokesperson said: "We are backing our hard-working farmers with the largest nature-friendly budget in history, committing £11.8 billion to be fully spent on sustainable farming and food production over this Parliament.
"We remain alive to any challenges facing the sector and recently boosted funding by £65 million to help farmers manage drought pressures, protect crops and strengthen resilience for the future."
