Category: Policy & Business

Farmers in Wales and Scotland looks set to bear the brunt of squeezed budgets in the develoved administrations.  In both countries, rural funding has been raided to pay for spending in other areas – notably health and social care.

Wales

The 2024-25 sees the budget for agriculture cut from £449m to £419m – a 7% drop in current prices at a time when inflation is high.  The Welsh Government has stated that funding for the BPS at £238m will be protected, as will money for the new Habitat Wales scheme.

Scotland

The Scottish farming sector has bencome used to its budget being raided.  £33m had already been deferred from the 2022-23 agricultural budget and the Scottish Government recently decided to take a further £28m from the 2023-24 budget.  These funds were the extra money allocated to Scotland as a result of the Bew Review (see https://abcbooks.co.uk/spending-review-2/ ).   There have been promises that the whole £61m will be returned in the future, but most commentators seem skeptical of this.  It is now proposed that the budget for 2024-25 will be reduced by £33m – from £739m to £706m.  Again, it has been promised that BPS and LFASS spending will be maintained (at current prices, not real terms).  This cut will affect the more ‘discretionary’ areas of spending – for example, a lower budget for AECS.

The Welsh Government has provided more details on its proposed Sustainable Farming Scheme (SFS) and opened a consultation on its plans.

Overall Structure

The three-tier structure for the SFS which has been long-proposed, is retained.  This comprises;

• Universal Actions – to be undertaken by everyone in the SFS
• Optional Actions – additional payments available for doing more than the Universal Actions
• Collaborative Actions – working with other land managers to deliver public goods at scale

Universal Actions

The Universal Actions under the SFS will be available from 2025.  The document sets out 17 Universal Actions (UA) which all farmers entering the scheme must abide by;

• UA1: Benchmarking – all farms will be required to complete an annual self-assessment focusing on some Key Performance Indicators (KPIs).  This information will have to be entered onto a Welsh Government online portal
• UA2: Continuous Professional Development – a minimum of six online CPD modules will need to be completed each year by Partners within the business
• UA3: Soil Health Planning – 20% of a farms soils must be tested each year plus nutrient accounts being completed annually
• UA4: Multispecies Cover Crop – on all land which would otherwise be left bare post-harvest for a period of more than 6 weeks
• UA5: Integrated Pest Management – all farms using Plant Protection products (PPP) must produce an IPM plan
• UA6: Managing Modified Peatland – certain farming practices are prohibited on modified peatland (i.e. peat which is not classed as a semi-natural habitat)
• UA7: Habitat Maintenance – all semi-natural habitats must be managed to benefit wildlife
• UA8: Create Temporary Habitat on Improved Land – features such as fallow margins, headlands, grass strips, herbal leys, cover crops etc. must be established where the farm does not have 10% of its area in Habitat land (see scheme rules below)
• UA9: Designated Site Management Plans – for SSSIs
• UA10: Ponds and Scrapes – farms need to manage or create water features (at least two ponds totalling 0.1Ha on farms under 80Ha; minimum of two ponds totalling 0.2Ha on farms over 80Ha)
• UA11: Hedgerow Management – all hedges to be thick and dense stockproof barriers.  1m buffer strip for sprays and fertiliser from base of hedge
• UA12: Woodland Maintenance – maintain existing woodlands to optimise benefts for livestock, wildlife, and business diversifcation
• UA13: Woodland Creation – tree planting including shelter belts, agroforestry and orchards.  Required if the farm does not have 10% of its area in woodland in line with the scheme rules (see below)
• UA14: Historic Environment – maintain and enhance any historic features on the land
• UA15: Animal Health Improvement Cycle – working with a vet to improve livestock health
• UA16: Animal Welfare – complete competency training and carry out lameness and body condition scoring to improve livestock welfare standards
• UA17: Biosecurity – establish protocols to prevent disease entering or leaving the farm

Slightly confusingly, the document also sets out two Scheme Rules and a Universal Code alongside the Actions.  The Scheme Rules require that 10% of the farm must be in ‘habitat’ for the benefit of wildlife.  In addition, 10% must also be under tree cover.  Under the Scheme Rules;

• habitat land covers any semi-natural habitats plus ponds, hedgerows etc.
• where there is woodland, the ground layer of the wood can count towards the habitat percentage whilst the trees contribute to the tree cover requirement
• if there is not enough existing habitat, new temporary habitats can be created under UA8
• woodland, scattered groups and individual trees will count towards the 10% tree cover requirement.  Orchards and agro-forestry will also be eligible
• The minimum tree cover requirement must be met by the end of 2029
• in calculating the requirement, it is acknowledged that some areas are ‘unplantable’ – these include land under tenancies where the agreement excludes tree planting; permanent features such as tracks, yards & ponds; and high-quality habitats such as peatland.  These areas will be removed from the calculation

The Univeral Code for Habitats applies to any land where the vegetation comprises less than 25% of sown agricultural species.  There is a list of managment practices which are prohibited.

There will also be a requirement for all farms joining the scheme to undertake a carbon assessment.

Payments

The SFS will operate on a calendar year basis.  There will be an annual declaration of land (probably by 15th May).  Advance payments for the Universal Actions are envisaged in October, with a balance in December.

There will be four categories of payment, depending on land use;

• land in existing woodland being maintained
• woodland creation
• habitat (either maintaned or created)
• all other land (i.e. farmed area)

There may be capping of payments (as under the BPS) for large recipients of support.

No details on actual payment rates have been released as the Welsh Government is waiting to find out the budget settlement for 2025 onwards.  The methodology of calculating payments will effectively be ‘income foregone’.   

Phasing and the BPS

Farmers will be able to choose to continue with the BPS, or move onto the SFS.  Once they have opted for the SFS they cannot go back to the BPS.  BPS payments, including Redistributive and Young Farmer Payment will be phased down over the Transtion Period 2025 to 2029 as set out in the table below;

BPS capping will also be adjusted to fit in with tapering down of payments.

For those that choose to go into the SFS, there will be a safety-net during the Transition so that their SFS payment is at least the same amount as their BPS would have been.  Measures will be put in place to prevent the BPS claimant population and individual BPS claims increasing in size during the Transition.  This will mean, from 2025;

• farmers who choose to participate in SFS will surrender their entitlements
• the National Reserve will be closed; new entrants will be directed to the SFS
• the transfer of BPS entitlements will be restricted to those who transfer and / or lease entitlements with the land and farmers currently leasing in entitlements for land they currently claim under BPS
• the two-year entitlement usage rule will be removed.

Optional & Collaborative Actions

These will not be available in 2025, the document indicates they will be introduced later, but does not specify a precise date.  In the meantime, a number of existing schemes will continue.  These include;

• Small Grants – Yard Coverings
• Small Grant – Environment scheme
• a range of Woodland schemes to create new and manage existing agro-forestry and woodland areas
• Integrated Natural Resources Scheme and the National Peatland Action Programme
• the Sustainable Innovation Scheme – helping to join up supply chains
• Nutrient Management Investment – helping to ensure water is protected from pollution
• Animal Health and Improvement Cycle – a Pilot will help improve on-farm animal health and welfare measures

This is to be the final consultation before the scheme is launched.  If most Government consultations are anything to go by, there is likely to be little difference between the proposals set out here and what is finally enacted. 

Details can be found at – https://www.gov.wales/sustainable-farming-scheme-consultation .  Responses to the Consultation need to be made by the 7th March.

Readers may be aware of the ’30 by 30′ commitment – the pledge by Government that 30% of the nation’s land will be ‘protected’ for biodiversity by 2030.  Each part of the UK has signed-up to this international commitment.  They key question has been what counts towards the 30%.  In England, Defra has answered this question with a recent publication – see https://www.gov.uk/government/publications/delivering-30by30-on-land-in-england.

Perhaps surprisingly, existing Protected Landscapes, i.e. National Parks and National Landscapes (previously AONBs), will not automatically count towards the target – this is because biodiversity is not specifically protected under these designations.  Under the current criteria just 8.5% of England is currently counted.  This is mainly SSSIs, Nature Reserves and the Public Forest Estate.  Defra has mapped-out a further 26.8% of England that may be potential ’30by30′ areas, including the Protected Landscapes, plus Nature Recovery projects.  Other areas such as Landscape Recovery and BNG sites could also add area (but haven’t been mapped).  However, it appears that Protected Landscapes will be expected to contribute significantly towards the target.  This will require some additional biodiversity management to be undertaken.  The document stresses that this should be voluntary, but landowners in these areas will be worried that extra restrictions may be placed on land use in order that this target can be met.  

 

 

Natural Resources Wales (NRW) has confirmed the second stage of the Enhanced Nutrient Management approach has been laid before the Senedd.  This only relates to the total nitrogen limit from livestock manures for the whole holding; all other measures under the Water Resources (Control of Agricultural Pollution) (Wales) Regulations 2021 remain in place or are subject to the relevant trasition period.  The Enhanced Nutrient Management approach will be implemented from 1st January 2024 and run until 31st December 2024 and will mean farms with 80% or more grassland will be able to apply up to 250kg per hectare of nitrogen from livestock manures during 2024.  Under the new regulations (the Water Resources (Control of Agricultural Pollution) (Wales) Regulations 2023), where producers expect to exceed the 170kg per hectare limit in 2024, they must email NRW by 31st March 2024 with an accompanying enhanced nutrient management plan for the holding.

The first stage, which moved the implementation date (again) of 170kg per hectare holding limit of nitrogen from livestock manure from 31st October 2023 to 1st January 2024, was completed back in October.

The Rural Payments Agency (RPA) has confirmed as of 4th December 97% of BPS 2023 claimants had received their payments.  As readers will be aware for most this will have been a balance payment, worth about 50% of the claim, with the advanced payment having already been received earlier in August.  Payment statements will also be sent out during December and should be checked carefully.  This is the last payment under the ‘old’ system, as from 2024 payments will be delinked, (see our latest article on delinked payments https://abcbooks.co.uk/delinked-payments/) although Defra has said it will continue with the system of making advanced and balance payments in August and December for the remainder of the Agricultural Transition – until 2028.

In terms of actual payments, the gross rates remain the same as in 2022 (and 2021), but the effect of the Agricultural Transition will see farmers continue to receive less each year.

The table below summarises this year’s rates plus those for the past two years.  It gives the gross amounts for 2022 and 2023 and also net amounts, which allow for the lowest Agricultural Transition ‘band’ (20% reduction in 2022 and 35% in 2023).  Larger payments will see higher reductions.  The % reductions have been increased again this year and are for the amount received:

• Up to £30,000 – 35%
• £30,000 to £50,000 – 40%
• £50,000 to £150,000 – 50%
• Over £150,000 – 55%

Defra has published guidance for the Improving Farm Productivity Grant.  This can be found at https://www.gov.uk/government/publications/improving-farm-productivity-grant-round-2-applicant-guidance.  The second round is due to open in January (see our article earlier this month https://abcbooks.co.uk/farm-grants-2/) and will also include grants for the installation of solar equipment for the first time.  Other key features of Round 2 include:

• grants for both robotic and automated innovative equipment to aid crop and livestock production
• the minimum grant for equipment under these headings has been reduced to £25,000; the maximum remains at £500,000.  The grant will continue to cover up to 40% of the cost of the eligible items
• for the installation of solar equipment the minimum grant will be £15,000 with a maximum of £100,000.  The grant will cover up to 25% of the cost of eligible items
• it is possible to apply for both automated & robotic equipment and solar equipment but the total maximum grant cannot exceed £500,000
• Round 1 included grants for slurry acidification equipment.  This is not available under Round 2. (slurry equipment is now fund under the Slurry Infrastructure Grant).

The Online Checker is expected to open in January and be available until March.

Defra has announced that the SFI applications portal will close between 27th December 2023 and 1st January 2024.  This is to allow for annual updates to be undertaken.  For any unsubmitted SFI applications, it also means the information completed so far will be lost and a new application will need to be restarted when the system, re-opens in January.  Those who are unable to submit an application because they are waiting for help/advice from the RPA will be contacted by the Agency to try and reconcile these in time.  Everyone else is being encouraged to submit their application before the end of the year.  All unsubmitted applications will be withdrawn from the system after midnight on 31st December 2023 so that the updates can take place.  In addition, farmers or their agents will not be able to start a new SFI application after midnight on 26th December 2023.  All applications started, must be submitted by 31st December otherwise all the work done so far will be lost.  The portal will then re-open on 2nd January 2024 to start new applications.

There is no information on what the annual update includes; we are expecting an announcement on the SFI (and CS) including new options available in 2024, but there is no indication that these updates are to do with this.  We will endeavour to keep readers informed of any new announcements.

Cross Compliance rules end at midnight on 31st December 2023 in England. However, as most rules are already part of domestic law, this will have limited practical impact on farmers and land managers.  Farmers will have to continue to comply with existing legal requirements in the areas of environment, animal & plant health, animal welfare and public health.  These rules are set out in the Rules for Farmers and Land Managers which can be found at https://www.gov.uk/guidance/rules-for-farmers-and-land-managers.  Defra has said compliance will be monitored by the existing Statutory Bodies and ‘regulated in a fair, proportionate and consistent way’.

The end of cross-compliance only applies in England due to the de-linking of payments.  It continues in all other parts of the UK.

However there are a small number of cross-compliance rules which are not covered in English law.  These are:

• certain rules regarding hedgerows and other field boundaries
• watercourse buffer strips
• soils

Hedgerows and Other Field Boundaries

With regards to hedgerows, legislation already covers such things as disturbing birds nests and not removing hedgerows without consent from the Local Planning Authority.  Not included are some management practices which will be familiar to farmers:

• 2m buffer strips from the centre of hedge
• not cutting during bird-rearing season.

However, readers will recall Defra is currently consulting on these (see our article in July https://abcbooks.co.uk/hedgerow-protection/ ) and a response together with future guidance is expected shortly.  With regards to other field boundaries, such as stone walls, earth and stone banks, these could be protected via Conservation Areas or if they have been created or maintained through a Stewardship option these will have to remain in place and will be subject to the terms of the Agreement.

Watercourse Buffer Strips

In terms of Grass Buffer Strips, once cross-compliance ends, there will no longer be a requirement to maintain a green cover on land either;

• within 2 metres of the centre of a watercourse
• from 1 metre on the landward side of the bank

However, use of grass buffer strips continues to be one of the actions farmers can take to prevent water pollution and meet the Farming Rules for Water.  The Farming Rules for Water see (https://www.gov.uk/government/publications/applying-the-farming-rules-for-water/applying-the-farming-rules-for-water) prevent the use of manure and fertiliser close to a watercourse.  Farmers must take all reasonable precautions to prevent pollution from land management and cultivation practices, such as spraying pesticides.

Soils

Under the Farming Rules for Water farmers continue to be required to take reasonable precautions to prevent manure, fertiliser and soil getting into watercourses – known as diffuse water pollution.   More advice on how to prevent this can be found at https://www.gov.uk/guidance/rules-for-farmers-and-land-managers-to-prevent-water-pollution#prevent-erosion-manage-livestock-and-soil.

A series of announcements on ‘Protected Landscapes’ in England were made ahead of the COP28 Climate Summit in the UAE.  This was then followed by further policy initiatives outlined at the CLA’s conference, held at the end of November.  Below is a summary;

New National Park

The Environment Secretary has commissioned Natural England to begin identifying an area which will be considered for designation as the next National Park in England.  The search for a new National Park, which was a manifesto commitment, will begin in the New Year and will focus on looking for England’s most beautiful nature spots, alongside the area’s ability to connect people with nature.  One of the recommendations in the Glover Review in 2019 was that three of the larger AONBs (National Landscapes – see below) should be considered for National Park status.  In particular the Chilterns, the Cotswolds and Dorset & East Devon were suggested.  A final decision will be made by the Secretary of State.

ANOB Re-brand

All Areas of Outstanding Natural Beauty (AONBs) in England and Wales will now be known as ‘National Landscapes’.  The re-brand follows a recent survey which showed that public awareness of the protected landscapes was less than 50%.  The decision was made to carry out a full re-brand starting with simplifying the name to National Landscapes, along with a new visual identity with the aim of improving the visibility and accessibility of these important natural areas.

Landscape Recovery

A further 34 projects have been successful in the second Round of the Landscape Recovery (the third element of ELM).  This is 12 more than in the first Round.  Between them they will receive £25m of funding, which will;

• restore more than 35,000 hectares of peatland
• sustainably manage more than 20,000 hectares of woodland
• create over 7,000 hectares of woodland, including some temperate rainforest
• benefit more than 160 sites, which include Sites of Special Scientific Interest (SSSIs).   

Together, the projects are said to involve over 700 farmers and landowners covering over 200,000 hectares across England.  The next step will be to move into the Project Development Phase (PDP), in which there will be up to two years to complete project development activities.  After which, subject to reaching agreement on suitable funding, projects will then move into Implementation.  It has been noticed that in both rounds of Landscape Recovery Defra has given out more agreements than it indicated at the outset.  This might be because of the high quality of the applications.  However, it might also be because Defra envisage a number of them not continuing for the long-term.  They are meant to draw in private funding eventually which some might not achieve.  Could Defra be building in an element of contigency by accpeting a few more?   Defra has confirmed a third round of Landscape Recovery will be open in 2024.

Natural Environment Readiness Fund (NEIRF)

The new Environment Secretary, Steve Barclay has announced the third round of the Natural Environment Investment Readiness Fund (NEIRF) at the CLA’s conference.  NEIRF will open on 11th December 2023 and close on 16th February 2024, offering grants to help farmers attract private investment in nature projects, such as selling carbon units through peatland restoration.  With individual grants of up to £100,000 on offer from a total £5 million, this round has been designed specifically to support farmers to prepare nature projects that will help attract investment from the private sector.  The NEIRF grants can be used to help farmers blend public and private investment.   The Government has a target to stimulate at least £500 million of private sector investment into nature recovery in England each year by 2027, rising to at least £1 billion each year by 2030.  So far, amounts being commited appear well short of this.   Further information on NEIRF can be found at https://www.gov.uk/government/publications/apply-for-a-grant-from-the-natural-environment-investment-readiness-fund.

Woodland

There has also been a number of measures announced to boost tree planting, including;

• £750,000 of Research & Development funding to improve resilience, management and protection of unique temperate rainforests in England which can be found in Cornwall, Devon and Cumbria.
• A competition to create a new National Forest.  This is inspired by the success of the existing National Forest, which spans 200 square miles across parts of Derbyshire, Leicestershire and Staffordshire.
• The creation of two more Community Forests in Derbyshire and the Tees Valley which will create 175 hectares of new woodland planted by 2025 alongside new pipeline forests.