Energy bills for farm businesses are to be cut by around half from October 1 for six months, thanks to a new UK Government scheme.

The scheme will fix the wholesale gas and electricity prices for businesses across the economy and follows a £150bn package to reduce the cost of energy for domestic homes.

The support for business is initially planned to last only six months but it is understood the scheme will be reviewed after three months with an indication that a more targeted approach may be taken for ‘vulnerable businesses’.

The government intervention will offset the cost of wholesale prices, which are what energy suppliers pay for gas and electricity in bulk before they distribute it to business customers. The package will fix all non-domestic energy customers at £211 per MWh for electricity and £75 per MWh for gas. Those rates will be the base cost, not what farmers will actually pay, as there may also be other add-ons, such as standing charges to be added.

The government said the scheme would apply to companies which had agreed fixed deals at higher prices on or after April 1. Those on variable and flexible tariffs will also be eligible. Companies do not need to contact suppliers as the discount will automatically be applied to their bills, with savings seen from October but received from November.

Read more: Farmers face a four fold rise in electricity prices

NFU Scotland president Martin Kennedy said: “NFU Scotland has welcomed the publication of details on how hard-pressed food and farming businesses are to benefit from Government measures to cap crippling electricity costs and we will share these with our members to gauge the impact.

"This important intervention must be seen as the first step taken by the UK Government, on behalf of all hard-pressed consumers, to providing essential support to underpin domestic food production, tackle inflation and the ongoing food security crisis. Electricity is just one of the increased input costs that is driving farmers and crofters to restructure businesses and reduce production.

“Our recent survey on electricity prices identified that, for nine out of ten farming families, electricity supplied to the farmhouse comes as part of the business, so previous and future domestic price caps have provided absolutely no benefit or relief so far," he noted.

"That survey also identified that some businesses faced electricity bills set to increase by tens of thousands this autumn, threatening their livelihoods. Once energy suppliers issue new contracts based on the cap, we will be better placed to know the real benefits.

“Under the proposals, energy prices will still be going up, but the package announced will limit that increase for six months and provide a short-term degree of cost certainty and stability. For the cap to be judged as effective, it must give all farming and food businesses confidence to go on, or food security will continue to be undermined and prices at the shop shelf will continue to climb.”