The UK’s farming sector is shrinking at its fastest pace in years, with new entrants failing to keep up with the number of closures, according to Cynergy Bank’s latest Business Births and Deaths Index.
The accelerating contraction is also raising concerns about future food production and the resilience of the UK’s domestic supply chain.
Between July and September 2025, just 775 new agricultural businesses were created compared with 1,360 closures. This gives the sector a Cynergy Bank Business Health Score of 0.57 — the lowest of any UK industry.
For every 10 farms that shut, fewer than six are being replaced. Closures have outstripped openings every quarter since mid-2021, resulting in a net loss of 9,925 farms over that period.
The downturn has intensified since October 2024, when Chancellor Rachel Reeves announced changes to inheritance tax relief on family farms, due to take effect from April 2026.
The revised rules reduce relief available to agricultural holdings, prompting some families to sell or wind up operations rather than pass farms to the next generation.
Between October 2024 and September 2025, 6,270 agriculture, forestry and fishing businesses ceased trading — up from 4,805 the previous year and the highest total since quarterly ONS records began in 2017.
Nick Fahy, CEO of Cynergy Bank, said the findings underline the sector’s growing vulnerability. “With just half of closing agricultural businesses being replaced, the UK’s farming sector is facing unprecedented challenges,” he said.
“Rising costs, labour shortages, and recent changes to inheritance tax relief are driving an alarming rate of closures. This trend not only threatens the livelihoods of farmers but also the sustainability of rural communities and the wider economy.”
While agriculture continues to contract, much of the wider UK economy is still expanding. From July to September, 73,450 new businesses launched nationwide compared with 63,205 closures, leaving most industries with positive Business Health Scores.
However, the profile of closures is shifting: companies shutting down in Q3 employed an average of three people — up from 2.23 three years ago — and recorded one of the highest average turnovers on record at £309,000.
Cynergy Bank’s Business Health Score measures the ratio of business births to business deaths, offering a snapshot of growth or contraction across the economy.
Scores below 1 indicate decline, with more businesses closing than starting. The latest figures suggest the structural pressures facing the farming sector are deepening, with little sign of reversal in the near term.
