The Meriden MP is a surprise appointment, squeezing out hopefuls such as Conservative Nick Herbert and Lib Dem Tim Farron.
She replaces outgoing labour minister Hilary Benn.
Commenting on the appointment, Lord Taylor of Holbeach said: "She worked for the British Sugar Corporation in the early days of her career so she has a background in the industry, which is important. Also, many of the issues do link up with the local government brief, which she held previously."
It is understood that parts of Defra's remit could move elsewhere, according to a source inside the department.
The energy and climate change post, given to Lib Dem Chris Huhne, could be expanded to include environment, though how that might work is not yet clear.
According to the source: "There will be long discussions with Defra, DECC and number 10, before the breakdown of responsibilities is known."