Farming Profitability Review: 2025 and beyond

Looking back on farm businesses financial results for 2025 it was an excellent year for some sectors of the industry, whilst others, such as arable, remained challenging with low prices, reduced subsidies and, of course, the weather! 

The long-awaited Farming Profitability Review by Minette Batters was published before Christmas. The report had 57 recommendations with emphasis on the importance of valuing farmers to safeguard national food security now and into the future. She recommends that DEFRA need to put farming at the centre of all that they do, to facilitate increased domestic production and consumption. Longer term she mentioned fairer deals in the supply chain, including regional collaboration, partnerships via the Great British Farm advisory board and a one stop shop for advice, skills and research. The overall theme is one of ensuring that there are profitable farming businesses now, and in the future. If you would like the full details, this can be found here.

Dairy farms overall had a very good year, milk price was high, and feed prices have been low on the back of low cereal prices. The average farm gate conventional price per AHDB topped at 46.56 pence per litre for October 2025. This led to many dairy farms making healthy profits that were well over £1,000 per cow, with some nearer £2,000 per cow. 

There are still ongoing concerns with the supply of labour, high machinery prices and cash needed to invest in capital projects. 

Recent milk price reductions for conventional production are causing concern for many in the industry. Cow prices from recent herd sales have remained buoyant due to those committed to producing milk and diluting their fixed costs. 

There is an oversupply of milk globally. In September 2025, per AHDB, production was up 4.1% compared with September 2024, which equated to 34.1 million litres a day. Time will tell how low the milk price will go this time around but there is already talk of it going below 30 pence per litre, which is below current breakeven price for many dairy farmers, so careful planning will be necessary. 

Beef prices have continued to increase with the liveweight cattle price currently around the £4 per kg. Those rearing their own beef saw the best margin as store cattle were increasing in price in line with finished prices, therefore impacting the margin for those rearing on purchased calves or stores. 

UK beef supply remains tight. The UK cattle herd size was 1% down in 2025 compared to 2024, which equates to 120,000 head so there are no signs of the beef price falling any time soon, unless significant amounts of foreign beef are imported. Beef supply in the southern hemisphere is also tight so hopefully there will be less incentive to ship it around the world. 

Lamb prices remained over £7 per kg deadweight from mid May until September 2025 and then recovered in November but still not as high as the summer peak. According to Agriculture and Horticulture Development Board (AHDB) the number of sheep as of June 2025 was down 3.8% to 13.3 million, of which the breeding female flock was 6.43 million, the lowest level for 15 years. 

With the current tight supply of lamb, early lambers are hoping that prices will stay strong for the Easter market and beyond to keep it financially worthwhile. 

Poultry continues to fly with the demand for chicken and eggs very strong indeed. Producers are keen to expand as much and as quickly as they possibly can but planning issues have prevented this for some. Demand shows no signs of slowing down and the outlook for this sector looks very good.

Pig prices had been over £2/kg since 2022 but have recently dropped to below this leaving very little, if anything, in it for producers. 

Cereals have had another poor year with prices remaining on the floor, with the current spot price for feed wheat around £172 per tonne. The future feed wheat price for November 2027 is approx £180 per tonne, so there are no signs of the price increasing significantly any time soon. With direct subsidies falling off a cliff, we will have to see what the new sustainable farming incentive agreements (SFI) will bring in 2026 and beyond. 

Farmers need to continually measure their outputs and costs to manage their cashflow as well as possible. Running forecasts will help you see where and when cash will be needed. This includes planning for future tax payments for 2027 and beyond.