Category: Policy & Business

Agri Environment Pledge Requested

A group of industry organisations has asked the DEFRA Secretary, Michael Gove, to make a pledge on agri-environment schemes. The bodies, including the NFU, TFA, CLA, RSPB and National Trust state that land managers are being put-off applying for the current Countryside Stewardship Scheme (CSS) as they have been promised something better after Brexit. The bodies are calling for Mr Gove to agree that those signing-up now will be able to move across to any new arrangments even if their 5-year terms has not ended.

EU/Mercosur Trade Deal

There will be no EU-Mecosur trade deal this year.  The negotiations with the group of South America countries has been held up on a number of points, not least in the quantities of beef, ethanol and sugar that can be imported tariff-free under the deal.  It is hoped that an agreement can be concluded early in 2018.

Brexit Progress

Trade Talks Can Start

EU leaders meeting on the 15th December rubber-stamped the deal that allows the Brexit talks to move to the next stage.  With the ‘divorce’ issues ‘significantly progressed’ (or more accurately in the case of Ireland, fudged), then the UK and EU can move on to discuss the future relationship.  In fact, Stage 2 of the talks may well focus on the ‘transition period’ being the most urgent matter, with a Stage 3 covering the long-term arrangements.

In terms of the next step, it appears that the talks may not start until the spring, as the EU-27 need to agree on a revised negotiating mandate. The next opportunity for this is a summit in late March.  Some informal discussions could well start before this however, as both sides are keen to press on. Even so, all this leaves very little time if an agreement (even if just on the transition period) is to be agreed by autumn 2018 in order to be ratified by EU Members by March 2019.

Divorce and Transition

Following the divorce deal, various prominent Brexiteers, not least the Brexit Secretary David Davis, suggested that it would not be honoured if no trade deal was forthcoming, especially on the payment of a financial settlement to the EU. Also, on the Irish border question, the UK Government has promised (at least) three things – no hard border, the UK to leave the Customs Union and no different treatment of Northern Ireland compared to the rest of the UK.  Only any two of these three things can actually be delivered.

The EU was quick to push back on the status of the deal, stating that a condition for moving onto Phase 2 was the translation of the Phase 1 deal into a legally enforceable agreement.

In terms of the transition period, Europe is clear that the UK must follow the full EU ‘acquis’ (i.e. body of rules and regulation) during this period. The UK Government has indicated this might be for two years’ duration.  This would mean continuing membership of the Customs Union, full freedom of movement of labour, plus the continued jurisdiction for the European Court of Justice.  During this period the UK would not be involved in the EU decision-making process.  These points are highly inflammatory to pro-Leave campaigners. The Conservative MP Jacob Rees-Mogg is quoted that the plans would turn the UK into a ‘vassal’ of the EU.  It is possible that the terms might be amended during the next phase of talks, but we would not bet on this.

The terms of the transition period will be influenced by what any final future trading relationship looks like. It may seem rather bizarre this far into the process, but the Cabinet is only now discussing for the first time what the UK’s preferred arrangement is for any final trade agreement. Getting agreement will not be easy with the different views in the Government (which is why it hasn’t been tried up until now).

Commons Vote

The Government lost its first vote in the Brexit process on the 13th December.  A number of Conservative MPs joined the opposition to insert an amendment in the EU Withdrawal Bill requiring that any final Brexit deal must be put before Parliament before it is implemented.  It is not clear how much this changes the dynamic of Brexit, but it certainly adds to the complexity of managing the process for the Government. It perhaps points to a slightly softer Brexit.

Effect on Farming

At the outset, it should be stated that an agreement, either on transition or a future long-term relationship, is still by no means guaranteed. The UK could still slip out of the EU on the 29th March 2019 with ‘no deal’ and all the upheaval that entails.  However, the events of the last couple of weeks make this slightly less likely.  Also, the transition deal that is being proposed, at least from the EU side, indicates there could be very little change for farming until 2021.  Trade in agricultural goods with the EU would carry-on much as it does at present – meaning little upheaval in markets and prices.  There would still be free movement of labour, so the issues of staff availability, especially in the fresh produce sector, may be postponed.  It also seems likely that the CAP, and thus the BPS would also continue to operate in the UK for the two years of transition.  Overall then, perhaps little change in the short-term.  But the reckoning will only have been delayed.  Businesses should still treat the next few years as a period to get themselves into the best possible shape to deal with the uncertainties ahead.  

English Grant Schemes

Countryside Stewardship Scheme

Similar to last year, delays are expected in issuing Countryside Stewardship Agreements.  Although the problem is not expected to affect as many potential agreement holders as the previous year, there are still going to be a significant number of Mid-tier Agreements due to commence on 1st January 2018 which will not have been sent to applicants by the end of December.  Natural England will write to those affected and will remind them that scheme rules have to be adhered to from 1st January if they intend to sign their contract offer.  Applicants are also reminded to check their Agreements carefully and that any mapping updates which may have taken place due to the RPA’s Proactive Land Change Detection (PLCD) are correct.

According to feedback, uptake for the scheme this year hasn’t been much better than in 2016, hence DEFRA offering the Streamlined options (see earlier article) in 2018.  It also looks likely that the application deadline next year will be brought forward (possibly to 31st July) to give Natural England more time to process applications so that we do not see delays in offers being made again next year.

Countryside Productivity Small Grants Scheme

The Countryside Productivity Small Grants Scheme is to be re-launched in 2018.  Currently there are no details on the funding available, but previously up to 40% was provided towards grants of between £2,500 and £35,000.  This time the scheme is expected to be similar to the Welsh Farm Business Grant Scheme which provides a set list of eligible items and the grant that is payable, making the application process a lot simpler.  Applications will be online, with potentially 3 to 4 rounds available next year, the first round could be open for applications as early as January 2018.

Other Grants Available

A reminder that other funding is also available through the LEADER programme and the Growth Programme.  See earlier article for further information on the Growth Programme. LEADER is delivered via Local Action Groups (LAGs).  Potential applicants have to make contact with their local LAG to ascertain what support there is.  Funding is usually available around the following themes:

  • increasing farm productivity
  • micro/small and start-up enterprises and farm diversification –  i.e butchery, farm shops, ice-cream parlours
  • rural tourism, cultural and heritage activity – e.g. ‘glamping’ projects
  • increasing forestry productivity
  • provision of rural services

Further information can be found at https://www.gov.uk/guidance/rural-development-programme-for-england-leader-funding

Brexit Breakthrough

Sufficient progress has been made in the Exit strand of the Brexit negotiations for the talks to move on to discuss future trading relationships.  This is the eventual outcome of a week of intense diplomacy ahead of a Summit of EU leaders on the 14th and 15th December.  The prospect of a ‘no deal’ Brexit has receded slightly with this announcement, but it is really only the end-of-the beginning, and it can be argued that the more difficult negotiation task still lies ahead.  Even getting to the point we are now at involved a degree of ‘fudge’ on a number of issues with a deliberate vagueness in some of the language and putting-off decisions on tricky details until later.

As previously outlined, the Exit talks focused on three main areas.  Below is a brief summary of what has been agreed in each of them

The ‘Divorce Bill’.  No figures have been included in the text of the agreement.  However, a methodology for calculating the bill has been detailed.  Most observers think this will end up in the range £35-£40bn.  The UK will not have to send a large cheque to the EU on the 29th March 2019 – the UK’s commitments will be honoured when they fall due.  Potentially some of them a number of years hence.  During any ‘transition period’ (previously indicated by Teresa May to be up to two years) the UK will continue to make full contributions to the EU Budget.  Given that the UK is paying-in during this period, it seems reasonable to suppose that we will also continue to benefit from EU funds during this period – including Common Agricultural Policy funding.  Whether that also means the rules of the CAP still apply during the transition period is therefore an interesting question.

Rights of EU/UK Citizens.  EU citizens who move to the UK under EU free movement rules before Brexit day will be able to remain.  They will have equal access to social security, health care, education and employment as UK citizens and will be able to apply for ‘settled status’ allowing them to remain on a permanent basis.  The rights will be lost if they stay out of the UK for more than five years.  There will be ‘reunification’ rights for spouses and children to come to the UK.  UK citizens in the EU will have reciprocal rights.  These rights will be enshrined in UK law, but will also be overseen by the European Court of Justice (ECJ) for eight years after the day of Brexit.  The jurisdiction of the ECJ was a large issue for some Brexiteers. 

The Irish Border:  This was the issue that nearly derailed the agreement.  The agreement reiterates that there will be no hard border on the island of Ireland (as the Irish Government demanded).  But also that there will be ‘no new regulatory barriers’ between Northern Ireland and the rest of the UK – a phrase seemingly put in to pacify the Ulster Unionists who could not accept earlier proposals for a special status for Northern Ireland.  In the event of no trade deal being agreed then there would be ‘regulatory alignment’ between the Northern Ireland and the EU to facilitate cross-border trade.  The hope is for a comprehensive EU/UK trade deal so this provision is never enacted.  However, to prevent either a hard border on Ireland, or divergence between the UK and NI, such a deal would have to align UK and EU standards pretty closely.  This would point towards a softer version of Brexit or this month’s agreement would have merely postponed difficult choices until later in the process.

The next stage of talks are likely to focus on the transition period after March 2019, as this is the most pressing.  Only later (stage 3?) will the final shape of the long-term EU/UK relationship start to become clear.  It is believed that the transition deal needs to be completed by autumn 2018 in time for it to be ratified by March 2019.

The full text of the ‘agreement’ can be found at – https://ec.europa.eu/commission/sites/beta-political/files/1_en_act_communication.pdf

Farming Rules For Water

The Government has announced new rules for farmers in England to tackle diffuse water pollution from agriculture.  The ‘Farming Rules for Water’ will be introduced from 2nd April 2018.  The rules aim to standardise the good practice that many are already undertaking by;

  • keeping soil on the land
  • matching nutrients to the crop and soil needs
  • keeping livestock fertilisers and manures out of the water

There are eight rules, five are about managing fertilisers and manures and the the remaining three about managing soils.  The rules surrounding fertilisers require applications to be planned in advance to meet soil and crop nutrients needs, this must take into account results of testing for N, P, K, pH and Mg (Magnesium) levels in the soil which must be carried out every 5 years.  The new rules also include minimum distances for the storage and application of manures and also require farmers to asses the soil conditions before applying to prevent the risk of run off.

The three soil management rules require farmers to take reasonable precautions to prevent soil erosion and runoff including preventing poaching by livestock.

According to DEFRA, the new rules fulfil obligations on diffuse pollution under the Water Framework Directive.  It is not exactly clear how they interact with the current NVZ and Catchment Sensitive Farming (CSF) rules, but DEFRA has said that compliance with ‘these other rules’ may mean that a farmer already complies with the Farming Rules for Water.  Following feedback from an earlier consultation the requirements have been revised so that they align more with current legislation.  Indeed, if farmers are adhering to SMR 1 (NVZs) and GAECs 4 and 5 it looks like they will already be compliant.  The rules are also ‘outcome focussed and risk based’ which is a new approach to regulation and is expected to be more widely adopted in future policy.  DEFRA has said that on leaving the EU, the UK will adopt an ‘holistic approach’ to protecting the water quality and these new requirements are the first steps.  This perhaps shows the direction of travel for future policy.

The rules will be introduced through an ‘advice-led approach’ with the Environment Agency providing the advice and help farmers require to adhere to the new rules.  More information can be found at https://www.gov.uk/government/news/new-farming-rules-for-water

CAP Reform Plans

The EU Commission has officially started discussions on the next round of Common Agricultural Policy (CAP) reform with its publication of a communication on ‘The Future of Food and Farming’.  As we have previously indicated, the ideas contained within it are not particularly revolutionary.  However, the plans do foresee quite a shake-up in how the CAP is delivered from 2021 onwards.  Instead of a prescriptive set of rules covering all Member States, each country will have far more freedom to decide how the over-arching aims of the CAP will be delivered in its territory.  As part of this, the current EU-wide Greening rules would be scrapped.

The proposal make a clear commitment to keep direct payments (i.e. the BPS) as the core component of the CAP.  There is likely to be greater convergence between the ‘per Ha’ rates farmers receive in different Member States.  The prospect of capping direct payments to prevent large sums going to the biggest farms is highlighted.  There would be some mechanism to take account of employment in the capping rules.

The plans also envisage more focus on attracting young entrants to the farming sector, a greater focus on research, innovation and ‘smart’ agriculture, and a wider role for risk management tools.  The full paper can be found at  – https://ec.europa.eu/agriculture/sites/agriculture/files/future-of-cap/future_of_food_and_farming_communication_en.pdf.  Full legislative proposals are likely to be published in the middle of 2018.

The reaction to the plans has been fairly muted – perhaps is recognition of the their fairly evolutionary nature.  There is some concern that, by giving Member States too much freedom, the CAP will be ‘renationalised’ and lead to distortions in competition.  green groups are unhappy that the plans are largely ‘more of the same’ and fail to address the environmental issues the EU faces.  They have concerns that subsidiarity will merely result in weakening what little environmental benefit the CAP currently has.  One big unanswered question is the funds available for the CAP.  With Brexit leaving a large hole in the EU budget, the CAP may have to operate with reduced funding.

Countryside Stewardship Changes

The Countryside Stewardship Scheme (CSS) is to get a number of improvements ahead of the 2018 application period.  These are designed to make it easier for farmers to access environmental funding.

‘Streamlined Packages’

Four ‘packages’ covering the most common farm types will be offered.  These will have a shorter applications form and simpler checks to make the application process quicker and easier.  They will also be non-competitive, so applicants are guaranteed an offer as long as they meet the minimum requirements.  The packages group together individual management options under a number of categories, with there usually being a requirement to pick a minimum number of options from each category. The four packages are;

  • Arable Offer:  11 options grouped under three categories; with a minimum of 3% of the farmed area under options
  • Lowland Grazing Offer: 7 options under three categories; with a minimum of 2% of the farmed area under options
  • Upland Offer: 8 options under two categories
  • Mixed Farming Offer: 14 options under three categories; with a minimum of 3% of the farmed area under options

The arable offer will be applied for online, through the Rural Payments system.  The other three will be paper-based.  Unlike other CSS agreements, options under the Arable Offer will not allow double funding – i.e. options chosen will not be eligible to count towards the EFA requirement under Greening. 

These changes make the CSS rather more like the old Entry-Level Stewardship scheme and are designed to boost uptake.  The ‘classic’ Mid-Tier and Higher-Tier agreements will continue to be on offer for those that wish to design more bespoke schemes.  It will be possible to have a mix of streamlined and classic Mid-tier elements on the same holding (but not the same fields).   Full details will be made available in scheme Handbooks which are due to be published in the New Year.  Although no precise date has yet been provided, the scheme is likely to open for applications sometime early in 2018 (probably 15th Jan).  For more details see – https://www.gov.uk/government/news/countryside-stewardship-detail-of-new-simplified-offers

Hedgerows and Boundaries Grant

This strand of the CSS will be open again in 2018, and has also seen changes.  The application will open earlier next year.  In 2017 it was the 1st Feb, so presumably it will be early in January, with the 15th looking most likely.  The total budget has been increased to £10m and the maximum for an individual grant rises from £5,000 to £10,000.  Applications can be made online.  The deadline for applications is likely to be 30th April.

More Rural Growth Funding

The Growth Programme under the RDPE is to receive an extra £45m of funding.  The DEFRA Secretary, Michael Gove, announced this in an address to the CLA Conference on the 28th November.  Applications are now open for the new round of funding.  As announced last month, the scheme will remain open for Expressions of Interest until 31st May 2018.

As the name suggests, the Growth Programme provides funding for projects in England which create jobs and help grow the rural economy.  There are three types of grant available;

  • Business development
  • Food processing
  • Rural tourism infrastructure

The funding is delivered through 37 Local Enterprise Partnerships.  Each one has set different priorities with not all of the grants being available in all regions.  It is necessary to look at the scheme handbooks to see what is being funded in a particular locality.  These can be found at – https://www.gov.uk/government/publications/rdpe-growth-programme .  In general, the Growth Programme tends to fund larger-scale projects with grants usually covering 40% of costs with a minimum grant of £35,000.  Those with smaller schemes can potential find funding under the LEADER scheme.

Brexit and Rural Scotland

A report has been issued into how Brexit will impact Rural Scotland.  Prepared by the National Council of Rural Advisors, it is an document ahead of a more detailed set of recommendations to Ministers in the spring.  The main areas of concern outlined (not surprisingly) are access to labour, trade, funding for rural areas, and regulation post-Brexit.  The report can be found at – http://www.gov.scot/Resource/0052/00528196.pdf