Rising wages across the wider economy are putting labour costs back in the spotlight for farmers and landowners.

Strutt & Parker says although many farming and land-based businesses are under financial strain, rising private and public sector wages and increases in the National Living Wage mean employers are under pressure to keep pace.

Minimum pay levels for farmworkers are still set by official pay review bodies in Northern Ireland, Scotland and Wales.

However, in England the AWB was disbanded in 2013, leaving employers with no formal figures on which to base their annual pay reviews, which traditionally take effect from 1 October.

Nick Watson, head of private client for Strutt & Parker, says: "The challenge for farming businesses is going to be balancing tight margins with the reality that wages are rising elsewhere. This comes at a time when we expect farm profits to be significantly lower than in the past, due to the phasing out of Basic Payments, extreme weather, lower commodity prices, and high input costs. But our analysis of pay awards across the private and public sector highlights increases in wages of at least 3% and the clients we are talking to are recognising they may need to stay in line with this trend if they are to remain competitive and to treat their employees fairly.

"Of course, when considering appropriate rates of review employers should take into account other factors, including the value of other benefits provided such as accommodation, bonuses and opportunities for career progression.

"When free accommodation is provided the employer can add an accommodation offset to the employee's wages to reflect this benefit. However, this offset is much lower than the actual cost or value of the housing provided."

From April 2025, the accommodation offset has been set at £74.62/week (£10.66/day), which is the equivalent of £1.87/hr if the employee is contracted to work a 40-hour week.

Mr Watson adds: "While wages matter, they're not the only consideration for employees. Research consistently shows that people are more likely to stay when they feel respected, listened to, and given fair opportunities. Fostering that kind of working environment can be one of the most effective ways to attract and retain staff."

Inflation has been rising over the past year with the Consumer Prices Index (CPI) reaching 3.8% in July. The National Living Wage also increased by 6.7% on 1 April 2025, rising from £11.44/hr to £12.21/hr.

The agricultural pay bodies in Wales and Scotland agreed pay increases ranging from 6.8% and 9.9% for Craftsman rate workers, which also took effect from 1 April 2025.

Meanwhile, public sector pay awards are ranging from 3.3% for civil servants to 4.5% for the armed forces, with private sector pay evidence pointing to increases of between 3% and 4.8%.

Looking ahead, the Low Pay Commission has already suggested that the NLW may need to increase to £12.71/hr (a 4.1% rise) in April 2026. 

"The wages of lower paid farm workers must at least match the NLW rate of £12.21/hr and it may be sensible to change their wage review date to 1 April to tie in with the Government's annual review of the NLW," says Mr Watson.