The first issue would be whether an action in negligence could be brought against the Farms Inspectorate at all. This might (in rare cases) be precluded because the matter is not justiciable by the court: see X v Bedfordshire CC. The courts must consider several different factors in determining whether they are precluded from hearing the case, including (most importantly) the terms of the legislation setting out relevant powers and responsibilities. On the facts, we are not told what the terms of the Farms Act 200 are, and so cannot discern any inconsistency between those terms and judicial entertainment of actions. Similarly, it is difficult to assess the terms of any statutory discretion that the FI has. However, the alleged failure appears not to be related to a matter of wide policy-making, but rather confined to a simple operational matter. Courts would likely find the matter justiciable. Then the question would be whether there is a duty of care in negligence. Assuming that there is foreseeability of harm and proximity of relationship (arising from the payment of levies, the control exercisable by the FI and certain undertakings to investigate), the issue might boil down to one of policy (or fairness, justice and reasonableness). Of the policy matters mentioned in Street Chapter 5, Section 4(B), only the spectre of resource-diverting litigation costs appears to go against the recognition of a duty of care. But the Supreme Court in N v Poole BC has signalled its aversion to policy-based reasoning in such cases. This means that the no-duty argument is quite weak.
Chapter 5 Guidance on answering the questions in the book
Duty of care IV: public authorities