April tax changes expected to increase apple prices and stifle orchard investment

From 6th April 2025, British apple and pear growers – along with many other businesses, including retailers – will be managing increases to employers’ National Insurance (from 13.8% to 15%) combined with a reduction to the threshold for employer’s NI, and a rise in the National Living Wage.

Andersons Farm Consulting has estimated that the combined impact of these costs will be a 7p increase in the median cost of producing a kilogram of apples (from £1.33 to £1.40).

Employment costs now account for half of the total costs of producing British apples and pears, and it is this high level of wage cost that makes the impact so significant for growers.

Ali Capper, executive chair of BAPL, explained: “Growers margins have been stripped to the bone, so these increases in the cost of producing British apples and pears will have to be passed on to retailers, who have already said they will have to pass on wage rises to consumers.”

Unfortunately, the end result is that shoppers will end up paying more for their fresh apples and pears.

‘Stop putting barriers in our way’

Ms Capper added that given the global climate crisis and increasing geopolitical volatility, food security should be a key priority.

“We have the ideal climate for growing apples and pears. Our farmers are ready and willing to grow more healthy, environmentally-friendly and delicious British apples and pears to help reduce our reliance on imports.

“We just need the government to recognise that and stop putting barriers in our way.”

While the immediate priority will be managing labour costs, the continued pressure on British apple and pear growers is also impacting confidence and longer-term investment plans.

In late 2024, following the budget announcements, BAPL asked its members how confident they were feeling about the future. Only 17% said they were feeling more confident than a year ago, with almost half (43%) saying they felt less confident.

A major consequence of lack of confidence is less investment in orchards. In another survey, growers and grower packers were asked about their fruit storage investment plans.

Four in five (81%) of growers said they were not planning on building any new storage facilities in the next five years.

Asked why they were cutting back on future investment, respondents said that low returns, lack of confidence and greater financial uncertainty caused by budget announcements were key reasons for the investment slowdown.

‘Genuine crisis of confidence’

The October budget created two challenges for growers – one on wages and the other on proposed inheritance tax (IHT) changes.

Ms Capper explained why the IHT changes are causing so much concern among British apple and pear growers.

She said: “Farm assets such as land, worker housing, cold storage and packhouses are capital employed and should not be taxed on the death of an individual. Instead, the government should use the capital gains tax route to tax the sale of business assets.

“Today, if growers follow government advice to try to mitigate the tax, they face huge bills for lawyers and accountants. That’s money that should be being spent on new orchards, renewable energy and automation. This is a tax that prevents investment and growth in businesses.”

The BAPL’s executive chair added that there is a “genuine crisis of confidence” in the British apple and pear indsutry.

“It really saddens me that as a direct result of government policy, growers feel unable to invest in the future. New apple and pear stores are expensive, but it’s an investment risk that our growers have been willing to take in the past – not any more. The industry is facing an investment crisis that risks the future supply of British apples and pears.

“I really hope that the government will take these warnings seriously. We urgently need policies that will shore up investment and growth in the sector before we start to lose more apple and pear orchards from the British countryside,” Ms Capper concluded.

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