A 164-year-old dairy farm’s managing director has issued a stark warning about the impact of Rachel Reeves’s recent Budget on rural communities and cheese prices. Richard Clothier, who leads Wyke Farms in Somerset, Britain’s largest independent cheese producer, has signalled inevitable price increases to counterbalance rising labour costs following the Chancellor’s £25bn National Insurance (NI) raid.
The situation is particularly dire for Wyke Farms, which witnessed its pre-tax profits halve to £3.5m in the year to April 2024, despite achieving an £11m increase in sales to £160.3m. Mr Clothier described the Chancellor’s NI increase as “the cup of water that’s broken the dam,” emphasising the compounded effect on businesses already grappling with wage inflation.
Rural businesses face unique challenges in this economic climate, with Mr Clothier highlighting the specific difficulties in attracting workers to countryside locations. The requirement for higher wages to remain competitive, coupled with the nature of food manufacturing operations running 24/7, places additional strain on rural enterprises.
The dairy market’s volatility adds another layer of complexity to the situation. Wyke Farms, which matures its cheeses for up to two years, must navigate market fluctuations while planning production far in advance. Today’s vintage cheddar production won’t reach consumers until early 2027, making market weakening particularly impactful on business operations.
Industry leaders are raising concerns about the broader implications of increased employer NI contributions, warning of potential inflationary pressures across the sector. The measure, introduced to address an alleged £40bn gap in Britain’s finances, could trigger a fresh wave of price increases throughout the supply chain.
The situation is further complicated by Ms Reeves’s overhaul of inheritance tax relief for agricultural properties. While aimed at ultra-wealthy landowners, farmers warn this could force family businesses to close if unable to meet tax obligations, potentially threatening Britain’s food security at a critical time.
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