Last week's budget announcements - including scrapping inheritance tax relief for farms worth more than £1m - will have "dire ramifications" for small farming communities, writes Eastern Powerhouse chairman James Palmer.

The recent budget, and its implications for the agricultural industry, has been met with substantial criticism from farmers and rural communities alike.

Approximately 70pc of the East of England is farmland, making it one of the most agriculturally intensive regions in the UK.

Family farms make up the majority of all farms in the UK, and the East of England is no exception, with family-run farms dominating the landscape of small to medium-sized operations.

Yet the impact of decisions to increase the national living wage and National Insurance contributions, combined with the new inheritance tax, represents a grave misstep with far-reaching implications that could devastate the livelihoods of small farmers and their families.

As a former small farmer who had to leave the industry due to policies implemented during the Blair government, I see history repeating itself.

This is not just a personal concern; it reflects a broader trend that has serious consequences for rural communities.

I have friends and family who still farm and struggle to make a living. The prospect of having to find upwards of £400,000 upon their parents' passing is simply not possible. Without adequate support and resources, they are likely to lose not only their land but their entire business.

The repercussions of such policy decisions extend well beyond individual farms. When I sold my farm in 2003, there were approximately 40 small farmers in our local area.

Today, almost none remain. The once-thriving town of Soham, which supported these farmers with numerous local businesses, has transformed into little more than a dormitory community serving the larger cities of Cambridge and London.

The consolidation of small farms into larger agribusinesses has further exacerbated the situation. These corporations have imported a significant portion of their workforce from Eastern Europe, often paying low wages and failing to invest in the local economy.

This shift has not only diminished the agricultural diversity of the area but has also eroded the community fabric that supported small farmers for generations.

The rise in the national living wage and insurance contributions are immediate concerns - costs that are impactful right now.

If a grower employers 500 people in a glasshouse business, they will now face an additional £1m in costs starting April 2025. They may have been expecting something in the region of a 3-4pc increase, but not a 7pc National Insurance hike.

There is a national imperative to increase domestic production given increasing levels of international volatility and the threat this raises for the UK’s food security. But these measures introduced by the budget suggest the UK government either does not understand the consequences or is just not interested in UK food production.

For those independent farmers who have managed to survive, the financial strain is overwhelming.

Many have taken out substantial loans against the value of their land, hoping to continue operating amidst plummeting profits. Since the late 1990s, profits have declined sharply, and the previous government's negligence has only worsened the situation.

With the impending tax changes, land values are expected to drop significantly as hedge funds and pension funds rush to sell before the new legislation takes effect.

As small farmers exit the industry, consumers will inevitably feel the impact. Prices for agricultural products are poised to rise in local shops as fewer farmers are able to meet demand.

The ripple effects of these decisions will be felt by communities far and wide, altering not just the landscape of agriculture but the very fabric of rural life.

The ramifications of these decisions are dire.

Without immediate action and support for these farmers, we risk losing not only the livelihoods of individuals but also the diverse agricultural communities that have historically sustained us.

It is vital that we recognise the importance of family farms to our food security and our historical heritage and that we create a future where small farmers can thrive rather than be driven out of business.

James Palmer is chairman of Eastern Powerhouse, a business-led, membership body aiming to drive economic growth and investment in the East of England.