A new deal for farmers is needed to secure their livelihoods and help them lead the battle against climate change and nature losses, a think tank has urged.

A report from the IPPR (Institute for Public Policy Research) warned that the farming sector is key to tackling the nature and climate crises, through the way land is managed, but agriculture is a leading cause of wildlife loss and contributes 10% of the UK’s greenhouse gas emissions.

The sector is also facing multiple challenges and changes, from Brexit and the transformation of subsidies to new technology, an ageing workforce, recovery from the pandemic and more extreme weather driven by climate change.

The Government is changing the subsidy system in England post-Brexit from payments largely for the amount of land farmed, to one where farmers are paid for public goods, such as helping wildlife, planting hedgerows and managing the soil better to store carbon.

The IPPR report said the new financial support schemes must be developed so they are accessible to the majority of farmers but have sufficient incentives to progress and meet more ambitious environmental targets.

It warned there is a clear risk that most funding and effort will be directed towards the “sustainable farming initiative” part of the scheme, which will be an accessible entry point for farmers but could just support “business as usual” on farms.

Public money should not be used to fund farms that are not delivering a benefit to the public, the IPPR said.

The report also called for support for rural communities with more investment in housing, clean transport options and ensuring superfast broadband connections.

More young people and those from more diverse backgrounds should be supported into farming by encouraging community ownership of farms and land-sharing schemes when existing owners retire, it said.

And it backed widespread calls for new trade deals to set higher standards for animal welfare and preservation of nature and protect British farmers by not allowing unfettered access to UK markets for food produced to lower standards.

Luke Murphy, head of the IPPR Environmental Justice Commission, said: “Farmers will need to play a vital role if the UK is to reach net-zero, but right now farms are making the climate crisis worse.

“If farming is to be at the vanguard of the battle against climate change and for the recovery of nature, then responsible farming must be profitable, it has to offer good livelihoods for farmers and workers, and for farms of different types and sizes.

“To see this realised, the Government must step up to support current and future farmers through the many changes they are facing.”

Fraser Hugill, a farmer and independent farm adviser, based in North Yorkshire, said: “My take-home message from the report is a need to make better connections between farmers and consumers so our supply chains reward nature and climate friendly farming.

“Government must provide a fit-for-purpose environmental scheme that supports greener, more equitable farming that is not undermined by exporting our environmental responsibilities to other parts of the world.”

An Environment Department (Defra) spokesperson said: “Our landmark plans for a renewed agricultural system will incentivise sustainable farming practices, profitable food production and reward farmers for producing public goods such as better air and water quality, thriving wildlife or measures to reduce flooding and tackle the effects of climate change.”

The spokesperson said the sustainable farming incentive was the first of three schemes to be piloted and co-designed with the sector – with the local nature recovery and landscape recovery schemes set to follow later this year – which together represented a set of investments to deliver on farming, environment, climate and welfare goals.

A National Farmers’ Union spokesperson said British farming already delivers “a huge amount of public good for the nation” from safe, traceable and nutritious food to countryside access and looking after landscapes.

The NFU also wants the industry to reach net zero emissions by 2040, and production is already very sustainable, the spokesperson said.

“It’s crucial that the Government’s future agricultural policy supports all of these activities and incentivises farmers to go even further to increase their resource efficiency, invest in net zero measures and enhance their environmental delivery.”

The pilot for the sustainable farming incentive, which will be the entry point for farmers, must be used to ensure the scheme is engaging, simple to enter and deliver, and operates effectively alongside productive food production, the NFU said.

“The Government can also support Britain’s farmers through its trade policy. It can open and expand markets abroad for our farmers to sell their world-renowned products but, as the report notes, it also needs to ensure that British farmers are not undercut by trade deals allowing food imports that fail to meet the expectations placed on our own producers,” the spokesperson added.