Category: Policy & Business

The UK has started publishing a series of ‘position papers’ on its approach to Brexit.  This, at least partly, is to counter the impression that it is ill-prepared for the negotiations compared to the EU.  It is believed that a dozen will be produced before October.  This is when a European Council Summit will decide whether there has been enough progress on the three key ‘divorce’ issues of citizens’ rights, Ireland and the Brexit bill, to move on to talk about the future trading relationship between the UK and EU.  The papers produced this month cover Customs arrangements and the Irish border.  Both papers tend to be somewhat vague on the detail of what is being proposed. 

The Customs paper reiterates that the UK will leave the existing EU Customs Union (CU) upon Brexit.  Confusingly, it then goes on to state that there should be a transition period before new arrangements come into force with ‘a new and time-limited Customs Union between the UK and the EU’.  Having a CU with the EU would limit the amount of upheaval and new procedures need at ports etc., but would also prevent the UK implementing trade deals with other countries.  It is unclear from the paper which is the Government’s priority because, despite its aspirations, the Government can’t do both. 

Longer-term, after the transition period, two options for a permanent customs arrangement are put forward.  Both are light on specifics and seem quite reliant on technological ‘fixes’ – worrying with the Government’s record on IT projects.  The first option would be for the UK and the EU to have a ‘normal’ customs border, but with the UK simplifying and streamlining where possible to make the arrangements ‘frictionless’.  The second option is a vaguely-defined ‘customs partnership’ which would see the UK ‘align’ its approach to that of the EU resulting in there being no need for a UK-EU customs border.  The paper itself states that this would be ‘unprecedented and challenging’.  Under both options the UK would be free to strike its own free-trade deals with other countries.  The paper can be found at https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/637748/Future_customs_arrangements_-_a_future_partnership_paper.pdf

On the issue of Ireland, in the position paper the Government commits to protect the Common Travel Area (CTA) between the UK and Ireland (which predates the EU) and to uphold the Belfast (‘Good Friday’) Agreement.  As part of the latter, it is affirmed that those in Northern Ireland will continue to be able to claim citizenship of Britain, Ireland, or both.  In terms of the border, the paper states a desire to have ‘no physical infrastructure’ whatsoever.  This suggest both people and goods will be able to freely cross the 310 mile border.  How this would be squared with leaving the Customs Union and having to police imports and exports is unclear.  The paper suggests that regulatory equivalence in agri-food measures should be maintained between the EU and UK to facilitate cross-border trade and minimise disruption to existing supply chains.  Although this would be welcomed by many in the Irish food industry, it may not go down well with Brexiteers wanting to escape ‘EU red-tape’.  It may also make agreeing trade deals with third countries more difficult.  The Irish paper can be found at – https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/638135/6.3703_DEXEU_Northern_Ireland_and_Ireland_INTERACTIVE.pdf

In a further development, the Times has reported that the UK will allow Visa-free access to EU citizens.  This would people to travel to the UK, live, and even look for work without restriction.  However, those wishing to take up jobs will be required to have a Government-issued permit.  The number of permits would be vary by sector.  Assuming the number of permits was adequate, this approach might serve to allay some of the fears the food and farming sector has around access to labour after Brexit.

The RPA is currently undertaking a mapping update, which for anybody involved in BPS applications will set ‘alarm bells’ ringing.  It can be thought of as a remote sensing inspection, but for a far larger proportion of those who claim the BPS.  Agents who’s clients have undergone remote sensing will know that it can cause a great deal of work as fields are incorrectly merged, split or otherwise altered and then have to be subsequently corrected.

The process is known as Proactive Land Change Detection (PLCD).  Under EU rules the RPA is required to make sure that none of its land data is more than three years old by 31^st October 2017.  Approximately 800,000 land parcels will be updated out of about 2.4 million held by the RPA.

Between 16^th August and the end of October the RPA will be publishing updates to the land data held on the Rural Payments Service.  Agents and applicants will be informed of any changes via the ‘Messages’ tab on the Rural Payments Service.  This will mean Agents will need to check their clients’ accounts for any messages notifying there has been a change.  It appears some changes maybe negligible, just minor boundary changes, with the area of the parcel not even changing.  Where you agree with the changes no action is required.  If you disagree with the updates an RLE1 and a sketch map will need to be completed;

• Write on the front of the RLE1 and on the sketch map ‘Unrequested change query‘ and which schemes the updates relate to i.e. BPS, CSS or ELS/HLS
• Complete the land parcel information in the RLE1 including the date when the change was made on the ground
• Mark any changes on a sketch map, including the SBI number and any evidence to support why you do not agree with the change.

From past experiences there will no doubt be lots of incorrect ‘corrections’ made by the RPA, which Agents will then have to spend ages reversing or, at the very least, checking.  The RPA has said it will review all RLE1s but it has said that it will be, ‘focusing on making payments, so may need additional time to review your RLE1 request’.  It seems very likely that the majority of RLE1 Unrequested Change queries will not be dealt with prior to the 1^st December payment start date.  Which will either mean applicants having to wait to be paid, or payments being made using incorrect data, even penalties being applied if areas are deemed to be wrong or Greening not satisfied.  With many still unresolved 2015 and 2016 payments this does not bode well for 2017 payments.  

The ban on the use of Plant Protection Products (PPPs) on Ecological Focus Areas (EFAs), and in particular, Nitrogen Fixing Crops (NFCs) has been confirmed and effectively will come into force this autumn.

The European Commission has published its updated greening rules for 2018.  This includes the complete ban on the use of PPPs on EFA fallow, EFA catch and cover crops and EFA nitrogen fixing crops.  The Commission has also confirmed the ban applies from the time of sowing the crop, even it this is before 1st January 2018, to harvesting.  The ban also applies to seed dressings.

This means for EFA Nitrogen Fixing Crops the PPP ban is for the entire growing period i.e for winter beans this will be from autumn 2017.  For EFA fallow the ban will be from 1st January to 30th June (confirmed fallow period, see below).  It now looks like it will no longer be possible to spray off fallow to control weeds, such as black grass, during this period which many have done in the past, although precise rules have not been made available yet.  For EFA catch and cover crops the ban will be for those planted in 2018, not those being established for BPS 2017 EFA requirements and it will be for the new periods being introduced from 2018 (see below).

The other main changes to the 2018 greening rules include:

• Field Margins – The EFA buffer strip option (available next to watercourses) has been extended to include field margins.  The minimum width will be 1m and the EFA value will be the same as that (currently) for buffer strips – every 1m in length is worth 9m² of EFA.  Although the devil can be in the detail, which we don’t have yet, we would expect, similar to buffer strips, the cross compliance strip can be used, therefore for those looking for some EFA to replace their NFC, hedges and field margins are looking promising.
• Catch & Cover Crops – These must now be maintained for a minimum of 8 weeks.  The existing cover crop period already adheres to this and will remain from 1st October to 15th January in the following year.  But the catch crop period will be extended so that it runs from 20th August to at least 14th October.  This applies to crops grown in the 2018 scheme year.
• Crop Diversification –  It will be possible to claim for very small areas (less than 0.01ha) of different crops next to each other as one mixed crop area.  Individually these would be less than the minimum parcel area of 0.01ha and would not be eligible.
• EFA Hedges – The definition has been extended to include trees in a line.  The EFA value remains the same – every 1m of hedge is worth 10m² of EFA as long as you have management of both side.
• EFA Nitrogen Fixing Crops – In addition to pure stands and mixtures of NFC, under the new rules mixtures of NFCs and other crops will be allowed, as long as over 50% is made up of NFCs.  This rule will apply to those crops sown in autumn 2017.  This should give some more flexibility, particularly to those who grow ‘pasture legumes’ such as clover, lucerne, sainfoin and trefoil.

The RPA has also confirmed that the Cropping Period for Crop Diversification will remain from 1st May to 30th June in England.  In addition the EFA fallow period will remain as 1st January to 30th June.  The RPA has only produced a summary of the changes, but more detailed guidance will be available in due course, but obviously some of these changes will affect cropping plans this autumn.

A number of farming organisations have come together to issue a joint statement calling on the UK Government to provide short-term certainty for the industry as we approach Brexit.  The organisations are calling for an initial transition period through which the ‘UK retains unfettered access to European markets, remaining within the Customs Union’,  with these arrangements being in place until the implementation of a Free Trade Agreement between the EU and the UK.  They also say they are committed to working with the UK, Welsh, Scottish and Northern Irish Governments to establish a ‘new and better agriculture and land policy’.  The organisations are also calling for:

• Maintenance of the UK’s high standards of quality, welfare and provenance
• A fully functioning immigration system
• Governments to work together and with them, to establish a collaborative policy framework and budget.

The full statement can be found at: http://www.tfa.org.uk/wp-content/uploads/2017/08/17-August-04-FINAL-Farming-Industry-Joint-Statement.pdf

The organisations include; British Poultry Council, Country Land and Business Association, Country Land and Business Association (Wales), National Beef Association, National Farmers Union, National Farmers Union of Wales, National Farmers Union of Scotland, National Federation of Young Farmers Clubs, National Pig Association, National Sheep Association, Royal Association of British Dairy Farmers, Scottish Land and Estates, The Soil Association, Tenant Farmers Association, Tenant farmers Association (Wales) and Ulster Farmers Union.

The second application window for the Farm Business Grant scheme in Wales opened on 2nd August and will close on 29th September 2017.  The grant provides 40% towards the cost of specific capital investments which have been identified to improve the economic and environmental performance of agricultural holdings.  There is a list of capital items available with standardised costs.  The minimum grant is £3,000 and the maximum grant is £12,000.  In total £40m worth of funding is available over 4 years, but only one application will be allowed per business over the lifetime of the scheme.

The next window for applications is due to run from 2nd January 2018 to 2nd March 2018.  Further scheme guidance and a list of capital items available can be found at http://gov.wales/topics/environmentcountryside/farmingandcountryside/cap/ruraldevelopment/wales-rural-development-programme-2014-2020/farm-business-grant-scheme/?lang=en

One of the best-known names in rural land agency has been acquired by a French bank.  Strutt and Parker, founded in 1885, is to be taken over by BNP Paribas Real Estate, a subsidiary of the banking giant.  The deal is set to complete in September, although no details of the price being paid have been released.  S & P is the second biggest player in the UK rural market and third in residential, with 60 offices.  Paribas has previously had little exposure to these markets in the UK, being focused on commercial property.  The Strutt and Parker brand will be retained for the rural, residential, development and planning teams, whilst all activities in commercial property will come under the BNP Paribas Real Estate brand.

The EU is starting the process of setting its budget for the period after 2020, and is grappling with the issue of a Brexit-sized hole in its finances.  As part of this process the EU Commission has published a ‘reflections’ paper setting out five broad options (see https://ec.europa.eu/commission/publications/reflection-paper-future-eu-finances_en).  The majority of the options point towards there being lower funding for the CAP, and support being more targeted where it is seen to have the most benefit.  This might be in remote areas, small farms, or tools that specifically address issue such as market volatility.  With a guarantee of funding for farm support in place until (possibly) 2022 in the UK, it perhaps slightly ironic that support levels in Europe might fall more quickly than here as a result of Brexit.

The rate of Pillar Transfer in England will remain at 12% for 2019 and 2020.  The DEFRA Secretary, Michael Gove, confirmed this in a statement to the House of Commons on the 20^th July.  It appears that the statement is referring to EU budget years, as the possibility of a rise in the Pillar Transfer rate was previously indicated for the 2018 BPS year and beyond.  Those with long memories may recall that, at the start of the BPS, it was possible to transfer some funds from Pillar 1 (BPS) to Pillar 2 (Rural Development).  The rate chosen in England was 12% of BPS funds, in order to allow greater funding of programmes like the Countryside Stewardship under Pillar 2.  But there was an option to increase the rate to 15%.  This has not been taken up.  Perhaps it is not that surprising with all the other changes in farm support going on, plus fairly limited uptake of the CSS, that putting extra funds into Pillar 2 is not seen as a priority right now.  The statement can be found at – http://hansard.parliament.uk/Commons/2017-07-20/debates/17072054000019/Inter-PillarTransferRateInEngland#contribution-99878721-0616-41BB-98A2-D4FC213E7224

The Government has announced a further £200m of funding under the Rural Development Programme for England (RDPE).  This includes ‘for the first time under the current scheme … significant amounts of funding to on-farm businesses to invest in new infrastructure such as new buildings and machinery’.  This appears to widen the scope of grant funding from what has been available in the past – but no details are yet available.  Also for the first time, the RDPE will be used to support rural broadband.

The £200m is made up of the following elements;

• £30m for rural broadband.  This is to provide connections of up to 30Mbps or faster where they would otherwise not be available.  The funds are in addition to existing broadband schemes
• £45m for rural businesses, including those in tourism and food production.  Although not specifically stated, this seems to be addition funds for the Growth Programme, as overseen by Local Enterprise Partnerships.
• £120m for farm productivity under the Countryside Productivity Scheme (CPS).

The CPS is now open for applications for water resource management and improving forestry productivity.   The minimum grant under both of these headings is £35,000, with grants up to 40% of eligible cost.  Therefore the projects being funded are likely to be quite large.  In terms of water, the following are eligible for funding – reservoirs (above or below-ground), abstraction points, pump or pipework to fill the reservoir; irrigation pump, controls and underground water distribution main; water metering equipment; best practice application equipment such as boom or trickle irrigation; software and sensors to optimise water application.  The deadline for applications is the 3^rd April 2018.  More details can be found at – https://www.gov.uk/guidance/countryside-productivity-scheme

Funds for broadband, rural business support, on-farm food processing, arable and horticultural productivity, resource efficiency and animal health & welfare will be made available later in the year.  It remains to be seen what spending will be eligible under the category of ‘arable and horticultural productivity’ but no doubt farmers will be very interested if there is funding for buildings and equipment.

Neil Parish, MP for Tiverton and Honiton, has been re-appointed the Chairman of the Environment, Food and Rural Affairs Committee in the new Parliament.  The Committee scrutinises the work of DEFRA and will have a substantial task ahead as the country negotiates Brexit.  Mr Parish beat challenges from Zac Goldsmith and Bill Wiggin.