Scottish farmers and crofters face another year of flat funding after the Scottish government set out its 2026–27 budget, prompting warnings from industry bodies that support is failing to keep pace with rising costs.
NFU Scotland said the budget largely maintains existing levels of direct support, offering short-term certainty but little long-term reassurance for producers.
NFU Scotland president Andrew Connon said: “The Scottish government has delivered a budget that essentially flatlines vital direct support payments. That will give some certainty and security.”
However, he said the settlement fell short of what the sector needs. “Scottish farmers and crofters deserve a budget that recognises their indispensable role in delivering high-quality food, climate and nature outcomes, and supporting rural communities,” he said.
The Scottish government confirmed more than £660m in support for farmers, crofters, land managers and rural communities. Of this, £540m has been allocated to direct support schemes.
A further £170.5m will go towards key programmes including the Agri-Environment Climate Scheme and the Agricultural Reform Programme, alongside £26m for the Agricultural Modernisation Fund.
Additional funding includes £4.4m for crofting agricultural grants and £1.3m for skills development in regenerative and sustainable farming.
While NFU Scotland welcomed the return of the £26m modernisation funding, it warned that flat cash settlements across schemes such as the Basic Payment Scheme, Greening, Less Favoured Area Support and Voluntary Coupled Support amount to a real-terms cut.
With input costs still elevated, the union said static budgets reduce the value of support available to farmers year on year. It also said modest increases to agri-environment funding did not reflect the scale of investment required to meet climate and nature ambitions.
NFU Scotland acknowledged that the budget sets out spending plans for agricultural support to 2028–29, following the UK government’s spending review, and said this longer line of sight was welcome.
Connon said: “Farming and crofting are long-term industries. Without a stable, multi-annual investment framework, delivering on food security, climate, nature, and rural livelihoods becomes far more challenging.”
The union said it would keep pushing for stronger multi-year funding commitments, protection of farm support budgets, full delivery of capital schemes, pragmatic regulation and continued engagement on UK-wide tax reforms affecting family farms.
Those concerns were echoed across the wider rural economy by Scottish Land & Estates, which said the budget offered little confidence to rural businesses being asked to invest and adapt.
Stephen Young, director of policy at Scottish Land & Estates, said: “There appears to be little for Scotland’s rural businesses to get excited about in this budget, with the rural affairs portfolio once again facing a real-terms cut.”
He said some measures offered only short-term relief. “While the Scottish government has taken some steps in relation to non-domestic rates, these measures amount to little more than a sticking plaster on a system that is widely acknowledged as not working as it should,” he said.
Young warned that proposed reliefs could still leave many rural firms facing higher costs and greater uncertainty, which he said was likely to discourage investment in the short to medium term.
He said it was positive that Pillar 1 agricultural payments would remain broadly static and welcomed the £26m for the Agricultural Modernisation Fund, but stressed that meaningful engagement with industry would be needed to ensure the funding delivers tangible outcomes.
Scottish Land & Estates also welcomed increased funding for woodland grants, peatland restoration and the Nature Restoration Fund, describing the £26m allocation for nature restoration as an encouraging step.
Both organisations said the coming months would be critical in determining whether the budget’s commitments translate into meaningful support for farming, land management and rural businesses on the ground.
