Category: Policy & Business

Changes to Immigration Rules

On 7th December, the UK Government announced a series of changes to its immigration rules that it is proposing to introduce from spring 2024.  If enacted, these changes could have significant implications on the UK agri-food sector, particularly companies which rely heavily on migrant workers.  The key changes suggested include:

  • Increased skilled worker salary threshold: the eligibility threshold for visas will rise from £26,200 to £38,700 from April – a 48% rise.
  • Changes to the Shortage Occupation List (SOL): from April 2024, it is proposed that the SOL will be replaced by a new Immigration Salary List.  The 20% discount on the going rate for for job roles on the current SOL will also be ended and will be replaced by a ‘general threshold discount’.  The Migration Advisory Committee (MAC) is to review the new Immigration Salary List and associated thresholds.  As this affects some agricultural positions (e.g. agricultural trades, veterinarians), it could have a substantial impact on labour availability and costs for many agri-food companies, if enacted.
  • Student (graduate) visas: the graduate route, which allows students who have studied at degree level or above in the UK to remain and seek employment, will be reviewed to address potential abuse.  Further announcements affecting this route will be made once the review has been completed.
  • Dependent visas: spouses and children accompanying Skilled Worker visa holders will need to meet a higher income threshold to qualify for a visa.  The threshold will rise from £18,600 to £30,800 per year.

The Government’s aim in introducing these changes is to reduce net migration down towards 300,000 per year.  It is currently in excess of 700,000, significantly higher than when the UK was an EU Member State.  If the changes are implemented as currently proposed, it will be another major headwind for the agri-food sector on the back of a high-inflationary period.  Importantly, the Seasonal Workers’ Scheme (SWS) is not affected.  The SWS currently allows up to 45,000 seasonal workers (with stays of up to 6 months) to work in the UK agricultural sector, with an option to increase this number by another 10,000 if necessary.

Large swathes of the UK food processing industry are heavily reliant on migrant labour to fill full-time positions – not just seasonal work.  The Government’s proposed changes are a broad-brush approach which give little consideration to these labour needs.  Several attempts have already been made to recruit more indigenous workers into food processing.  In almost all cases, the numbers employed have fallen a long way short of targets as British workers have little interest in working in some job roles (e.g. abattoirs).  In a bid curb immigration, the Government is in danger of adding fuel to the threat of more price inflation.  Whilst automation is advancing, it is still a long way short of addressing the agri-food industry’s labour requirements.  It is clear that a more substantial agri-food workers’ scheme is needed which caters for both the industry’s full-time and part-time labour requirements.  Otherwise, the competitive position of many UK agri-food companies will be further eroded.

Further information on the UK Government’s proposed plan is available via: https://www.gov.uk/government/news/home-secretary-unveils-plan-to-cut-net-migration#:~:text=From%20next%20spring%2C%20the%20government,relying%20on%20migration%2C%20while%20bringing

Protected Landscapes

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.

Farm Grants

Defra has announced a new round of funding & grants opening in the next few weeks.  These were made by Steve Barclay in his first major speech as the new Environment Secretary, which was delivered at the Country Land and Business Association Conference.  A summary of these is included below.

Farming Transformation Fund (FTF)

The FTF provides grants towards large capital items to help businesses improve productivity, profitability, animal health & welfare, and environmental sustainability.  The FTF is part of the Farming Investment Fund (FIF).  The grant funds projects in different themes, the recent annoucement gives an update on the following themes:

  • Improving Farming Productivity – a second Round of this theme will be open for applications in January.  Defra is making a total of £30m available, to provide capital grants of between £25,000 and £500,000 towards robotic and automatic equipment.  This Round will also include grants of between £15,000 and £100,000 towards solar-equipment.  It is believed this will be at a rate of 25%, (similar to that in the Calf Housing Grant) as opposed to the usual 40%.  Funding will support roof-top solar and also solar equipment that can float on irrigation resevoirs.  Further guidance is expected to be published sometime in December in preparation for applications to open early in the New Year.  We were not sure if Barn-top Solar would be a separate scheme when we first wrote about it (see https://abcbooks.co.uk/capital-grants-upcoming-schemes/), but it seems it is being brought under the FTF unbrella as part of the Improving Farming Productivity theme.
  • Slurry Infrastructure Grant –  a reminder the Online Checker is open until 17th January.  See previous articles for details https://abcbooks.co.uk/slurry-infrastructure-grant-3/.
  • Calf Housing for Health and Welfare – the Online Checker is now closed

Farming Innovation Programme

A further £8.65m is to be made available through Defra’s Farming Innovation Programme.  This is run in partnership with Innovate UK, part of UK Research and Innovation (UKRI).  The scheme funds innovation, research, and development projects that benefit farmers, growers and foresters;

  • Research Starter Project – Round 4 opens on 18th December for Expressions of Interest and runs until 14th February 2024.  Under this Round, a total of £850,000 is available for individuals or group of farmers, growers or foresters who have an idea that could improve farming and solve a long-term practical challenge.  The process is competitive, grants for project costs of between £28,000 and £56,000 can be applied for.  Funding will cover up to 70% of the costs.  More information can be found at https://farminginnovation.ukri.org/explore/.
  • Large R & D Partnership – Round 3 opens on 15th January and closes in March 2024 (exact date yet to be confirmed).  This funding is for those who have a farming product or service that needs support to be developed.  The large R & D Partnership funds project costs of between £3-5m for up to 4 years.  The grant is competitive.  More information can be found at https://farminginnovation.ukri.org/develop/.

Defra has also announced that 2024 will see the extension of Farming Innovation Programme grants to include Accelerating Development of Practices and Technologies (ADOPT) fund.  Through this, businesses will be able to apply for a share of £44 million to test and trial new technology and techniques on farms.

Labour’s Policies

It seems highly likely that there will be a General Election next year.  Political commentators are split between the Prime Minister, Rishi Sunak, going for an early date at the time of the Local Elections in May, or waiting until the autumn (maybe in the hope that ‘something turns up’).  Although, theorectically the election could be delayed into January 2025 the received wisdom is to avoid winter elections as it depresses turnout.

Given the imminence of the vote and the large poll lead the party has, more interest has turned to potential Labour policies if they were in Government.  Very few concrete plans have been set out.  At the Party Conference in the autumn little was said abour farming or rural matters more generally.

A few additional pointers have come from a speech by Labour’s shadow Defra secretary, Steve Reed, at the recent CLA conference.  It seems unlikely that the budget for farming will see a big boost from any incoming Labour administration.  Mr Reed stated that the economy would have to grow before funding could be increased.  However, he also set out that he was not planning substantial changes to the ELM scheme either.  This provides some policy certainty at least.

BNG Regulations

The Government has started publishing the detailed regulations for Biodiversity Net Gain (BNG).  This requirement for most development in England to result in an increase in wildlife habitats becomes law from 1st February 2024.  Six Statutory Instruments have been published that, together, provide the legal basis for the system.  These can be found at https://defralanduse.blog.gov.uk/2023/11/29/the-biodiversity-net-gain-statutory-instruments-explained/ along with an explanation for each.  Guidance on BNG has also been updated at the same time,  This can be found at – https://www.gov.uk/government/collections/biodiversity-net-gain .

SFI Experience

As the SFI 2023 has been open for a couple months now we thought it might be useful to share some things we have learnt so far:

  • Ensure maps are correct on Rural Payments – before you begin an application it is important that the business’s digital maps are correct.  At the bare minimum, ensure the parcels that will be included in the application are up todate, but it is probably a good time to check that all land parcels are correct.  For any parcels that need updating for mergers, splitting, boundary changes, ineligible features, land cover changes, new land etc., an RLE1 will need to be submitted.  Further information can be found at https://www.gov.uk/government/publications/tell-the-rural-payments-agency-about-land-changes-and-entitlement-transfers/rle1-guidance-2023.  This can be  submitted online, but applicants will have to wait until the RPA has updated the changes before they continue with their SFI application.  It is possible to add an already registered parcel via the RPA’s ‘add land by email service’ see https://www.gov.uk/guidance/rural-payments-applications-add-a-land-parcel-by-email
  • Ensure Land Cover is correct on Rural Payments – before you begin an application, for each land parcel you want to use for an SFI action, check that the land cover shown on your digital maps is compatible with the land use code declared in the BPS 2023 application (again it may be prudent to check all land parcels).  When you view each land parcel on your digital maps in the Rural Payments service, you’ll see that it has one or more registered land covers.  The land cover identifies what broad category the land is.  There are three agricultural land covers;
    • arable land
    • permanent grassland
    • permanent crops

There are also a number of non-agricultural land covers, such as woodland or farm buildings, the land use codes must be compatible with these – i.e. if the land cover is permanent grassland the land use cannot be an arable code or temporary grassland.

  • Ensure there are no undeclared or overdeclared parcels – for each land parcel you want to use for an SFI action, in ‘Land Use’ on Rural Payments ensure there are no undeclared or over-declared parcels.  These may be due to splitting fields at BPS time last year – the RPA has now used the submitted RLE1, measured the parcels and the areas are different to those estimated on the BPS application.  This can leave an undeclared area.

All of the above actions will cause an ‘error warning’ if not completed.  We have also noticed there have been problems when trying to submit an SFI agreement when there is another application waiting to be processed i.e. if a CS capital grant is in the process, the system doesn’t seem to cope.  We would hope this will be sorted by RPA shortly, but it is something to be aware of if you have an ‘error’ message when you come to validate your application on completion – if you cannot find any other errors it could be because you have another application waiting to be offered.

Once an application has been submitted, we have found, at the moment, the turnaround time by RPA is quick; about 10 days and the agreement, if accepted, will start on the first day of the month following.

As with all new schemes there will be a lot of questions at the start, until everyone gets more familiar with the rules.  Furthermore unlike most of the previous schemes, the rules are less ‘rigid’.  For most of the actions the handbook simply says ‘It’s up to you how you complete this action, as long as you do it in a way that can reasonably be expected to achieve this action’s aim’.  Further help is available in the ‘How to do’ guidance for each action.  These are voluntary and can be found via https://www.gov.uk/government/collections/sustainable-farming-incentive-guidance

The RPA has answered some of the most commonly asked questions and this Q and A can be found at https://ruralpayments.blog.gov.uk/2023/11/17/the-sustainable-farming-incentive-commonly-asked-questions-answered/

One of the most common questions we receive is are you able to subsequently add land to an agreement?  The answer to this is ‘yes’ and it can be done via two ways:

  • It will be possible to upgrade your SFI agreement to add more SFI actions and land.  This will be done via an ‘upgrade request’ towards the end of the first and second years of your 3-year SFI agreement.  There will be strict deadlines on submitting an upgrade request and, if approved, on accepting it.  With an upgrade the length of the agreement will not extend.
  • It is possible to have more than one agreement.  Applicants can submit as many applications as they want and subsequently have a number of agreements running in conjunction.  These agreements could cover separate land parcels or,it is possible to add a compatible action to a land parcel in an existing agreement.  Although you cannot apply for NUM1 or IPM1 in multiple agreements.

By mid-November, Rural Payments reported there were 1,000 live agreements with a further 300 offers with customers; perhaps a little lower than they anticipated, but it feels like there is a lot of interest in the scheme now and momentum is growing.  Similar to when the system was new under the BPS, there are likely to be some ‘teething’ problems and it will also take time for clients and advisors to get to grips with the new system.  However, for many, it is possible to build a good agreement which complements the existing farming operations and can help to offset some of the ‘lost’ BPS payments.

Welsh Schemes Update

The Welsh Government has published its Winter Update.  This gives an overview of the various agricultural policy changes that are happening, most of which we have covered in previous articles.  These include the Sustainable Farming Scheme, the Agricultural (Wales) Act, Agricultural Pollution Regulations and Livestock ID and Movement rules.  The document can be found via – https://www.gov.wales/sites/default/files/publications/2023-11/agriculture-winter-update-2023.pdf

The Welsh Government has also released dates of when it will be accepting applications to the various schemes from now through 2024.  These are in the table below.  Note that. for Small Grants Environment, there are different themes; Carbon, Water, Landscape & Pollinators and Hedgerow Creation.  The Welsh Government has not confirmed which theme will open in each of the three windows announced.

ELM Announcment

Readers may recall that we are expecting a major announcement on Environmental Land Management (ELM).  This will cover additional SFI Standards for 2024, as well as details of the ‘new’ Countryside Stewardship (CS) scheme which is to be introduced next year.  This announcement was meant to be made ‘in the autumn’.  With December now approaching, the timetable has obviously slipped.  Having a new Minister in charge at Defra (see other article) is likely to have delayed things as the schemes will need to be signed-off.  However, we expect a statement to be issued before Christmas.

Farm Business Income

The latest Farm Business Income figures released by Defra show a mixed picture for farm profitability.  The data relates the 2022/23 year – covering harvest 2022 and the 2022 BPS payment.  They are an update of the estimates released in the spring (see https://abcbooks.co.uk/farm-business-income-9/).  Although titled ‘income’ what the series shows is average profit at the farm level for a typical farm in each sector.  A summary of the results is included in the table below.

They key sectors of Cereals and Dairy both experienced an increase in profits – even on the high levels seen in the previous 2021/22 year.  Whilst costs were higher, sale prices for both grains and milk more than offset this.

General Cropping farm profits were pulled-down by lower outputs from potatoes and sugar beet.  Readers will remember the drought in the summer of 2022 which reduced yields of these two crops.

The grazing livestock sector, both in the lowlands and uplands, recorded lower profits.  Although sales prices for beef and lamb were reasonable, it was higher costs that really caught up with these type of businesses last year.

The Pigs figures are a little odd – showing a massive jump in profits when most businesses were struggling with high costs and only slowly increasing prices.  However, delving a little deeper into the data, a large amount of the increase in profit comes from a big jump in diversification income.  It is difficult to believe that pig farms really all started alternative enterprises in 2022/23.  What seems more likely is that there is a slightly different population of farmers being sampled.  Promar took over the Farm Business Survey for the 2022/23 year.  It has always been difficult to recruit certain categories of farmer to the survey, including pigs, due to the relatively small number of them.  It may well be that data from different businesses have been collected.

Looking to the current, 2023/24 year, first Defra estimates will be published in the spring.  These are likely to show sharp falls in the profits from Cereals and Dairy farms as output prices have fallen considerably.  General Cropping farms could well record a rise with better potato returns and high beet prices.  Grazing Livestock may well also show a small recovery, as a result of the high beef prices this year and also firm lamb markets.

More data is available at – https://www.gov.uk/government/statistics/farm-business-income .