Category: Policy & Business

More detail has been published on future support for Scottish farming.  This comes after various farming organisations requested more clarity on when changes were going to be made and detail on what was planned.

A ‘Route Map’ for agricultural reform has been published (see Agricultural Reform Route Map (ruralpayments.org)).  The key point is that significant reform will not commence until the 2026 year – 2025 will just see some ‘conditionality’ added to existing payments.  This conditionality is likely to be around emissions and biodiversity.  The current National Test Programme has been launched to ‘baseline’ in these areas  so that any future improvements can be gauged.  Detailed rules on what is required under ‘conditionality’ in 2025 will only be released early in 2024.  Given the legislative timetable for the new Agriculture Act it seemed increasingly likely that reform would be delayed until 2026 – as we wrote in September.  

The Route Map contains a number of examples and diagrams.  We have done our best to summarise them in the graphic below which shows the evolution of support through to 2027

When Tier 1 Base Support is launched in 2026 it will probably look a lot like the Basic payment – especially as the 3-region payment model (and presumably entitlements) is being retained for the early part of the period.  However, given budgetary constraints, and the need for funds to pay for the Enhanced element, it seems likely that Base payments will be quite a lot lower than currently.  Farmers will also have to ‘do more’ to get the Base Payment as the ‘Essential Standards’ (aka conditionality) introduced in 2025 will roll into the new Tier 1.  The requirement for a Whole-Farm Plan is currently under review.  Tier 2 will offer greater payments to those farmers who meet the Government’s policy goals in areas such as carbon and biodiversity. The Scottish Government has published a paper (‘List of Measures’) that gives examples of things that could be included.  This can be seen at Agricultural Reform List of Measures (ruralpayments.org).  No payment rates are yet available.

The other major farming support streams, Coupled Payments and LFASS will continue until 2026.  It is being considered how (or if) conditionality might be applied to these from 2025 onwards.  In the previous Agriculture Bill consultation in September, these payments continued in the future under the Tier 4 Complimentary category.  The Route Map is much less certain on this.  It merely states that ‘Consideration is still being given to how this type of support will be delivered from 2027’.

From 2027, a further two tiers will be added, subsuming many of the present support schemes.

This announcement provides some additional clarity that the industry was requesting.  However, there are still grumblings that detail (e.g. payment rates) is lacking.  It seems unrealistic however, to expect a fully worked-up scheme to be in place well over two years from its introduction.         

Defra published its Environmental Improvement Plan (EIP) on 31st January.  The EIP is the first revision of the 25 Year Environmental Plan (25YEP) which was published in 2018.  The EIP builds on the 25YEP, setting out how Defra will work with landowners, communities and businesses to deliver each of its goals for improving the environment.  The EIP will be updated again in another 5 years.   The EIP provides a review of the Government’s current environmental commitments, it also includes plans for the current decades.  It is based on the 10 Goals that were set out in the 25 YEP.

1. Thriving plants & wildlife
2. Clean air
3. Clean and plentiful water
4. Managing exposure to chemicals and pesticides
5. Maximise our resources, minimise our waste
6. Using resources from nature sustainably
7. Mitigating and adapting to Climate Change
8. Reduced risk of harm from environmental hazards
9. Enhancing biosecurity
10. Enhanced beauty, heritage and engagement with the natural environment.

Halting the decline of biodiversity to achieve Goal 1 – Thriving Plants and Wildlife, is at the ‘apex’ of the Plan, with all the other goals helping to achieve this.  The EIP sets out the actions required to achieve these targets, many actions will support more than one goal in the EIP.  The full report (260+ pages) can be found at https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1133967/environmental-improvement-plan-2023.pdf 

The document includes targets, delivery plans and monitoring processes that will contribute to achieving the overall Goals.  There will be a mix of ‘carrot’ – financial incentives such as ELM; but also ‘stick’ – increased environmental legislation.  There are also a number of ‘cross-cutting themes’ that are meant to help deliver the plan.  These are green jobs & skills; green finance; biodiversity net gain; green choices (consumer behaviour), the new farming schemes, land use policy and green Government.

The EIP is not something that farmers and land managers are that likely to engage with directly.  It is more a strategy for Government itself.  The targets and goals of the EIP will lie behind much of the Government policy that is implemented over the coming years.  It is these policies that will directly affect agriculture.  In that sense, looking at the EIP is useful in terms of knowing what is coming down the road.    

In terms of what this might mean for land managers, the new farm support schemes have been developed to help Government reach the targets in the EIP.  This requires farmers to take part in its new ELM schemes and the other Financial Assistance schemes.  Defra has said previously it was aiming to have around 70% of farmers in the schemes by 2028.  In the EIP, it is now aiming for between 65-80% of landowners and farmers to ‘adopt nature friendly farming on at least 10-15% at their land by 2030’.  Defra has produced a blog post covering what the EIP might mean for farmers and land managers.  This can be found at – https://defrafarming.blog.gov.uk/2023/01/31/what-the-environmental-improvement-plan-means-for-you/ 

A new round of the Farming Equipment and Technology Fund (FETF) will be opening shortly.  The FETF is part of the Farming Investment Fund (FIF) and offers grants towards the cost of specific items from a prescribed list.  These items have been identified to increase productivity, boost environmental sustainability and improve animal welfare.  Under the scheme farmers, foresters and contractors can apply for grants of between £1,000 and £25,000.  The scheme is competitive.  For the second round the FETF has been split into two themes;

• Productivity and Slurry – opening later in February, includes items for Horticulture, Forestry, Slurry Management, Arable, Livestock, Resource Management and General
• Animal Health & Welfare – opening in March, includes equipment for Cattle, Sheep, Pigs, Poultry and General Livestock

To help prepare for applications Defra has already released detailed guidance which can be found at Farming Investment Fund – GOV.UK (www.gov.uk).  Those interested can also find the list of funded items, including the specification and amount of grant available via;

Productivity and Slurry – https://www.gov.uk/government/publications/farming-equipment-and-technology-fund-fetf-2023/annex-3-fetf-2023-productivity-and-slurry-eligible-items

Animal Health & Welfare – https://www.gov.uk/government/publications/farming-equipment-and-technology-fund-fetf-2023/annex-4-fetf-2023-animal-health-and-welfare-eligible-items

Defra has published its Key Dates for 2023, these include the application and claim windows for the BPS, Countryside Stewardship, Environmental Stewardship and the Lump Sum Exit Scheme.  A summary chart can be found at https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1133033/Key_Dates_2023_v1.0_FINAL.pdf

Basic Payment Scheme (BPS)

The scheme will open on 14th March and close, as usual, at midnight on 15th May 2023.  These dates also apply to Young and New Farmer applications.  The Entitlement Transfer deadline also closes on 15th May.  It will be possible to make certain changes to a BPS application which has been submitted by 15th May, without penalty, until 9th June. Applications made after 15th May can still be made up until 9th June but these will attract a penalty.  Payments will once again be made in two instalments.  An advanced payment of 50% of the estimated total, will be made from 1st August with balance payments made from 1st December 2023.  Although the application window does not open until 14th March, it is possible to start preparing for this now.  The online land and Entitlement transfer facility is available and it is possible to update Land Use data onto Rural Payments.  The email Add-Land facility is also available; for BPS applications, requests need to be sent to RPA by 2nd May in order for them to process them in time for the 15th May deadline. 

Countryside Stewardship (CS)

Higher Tier – Applications to the Higher Tier of CS opened on 7th February and will close on 28th April 2023.

Mid Tier and Wildlife Offers – These will open for applications at the later date of 14th March and close on 18th August.  Defra has decided to delay the opening of the CS Mid Tier, including the Wildlife Offers, so they have time to amend the application process to make it more straightforward.  Feedback from the SFI has been positive regarding the application process and Defra has said, where it can, it wants to introduce this into its other services.  This means that the Mid Tier application will be different this year, but should be easier(!)  Although opening of the application has been delayed, the deadline has also been put back, meaning those wishing to apply still have the same length of time.  Just like the BPS, it is still possible to check land on Rural Payments and make sure it is all in order ready to make an application.  Remember any land details on Rural Payments is used across all schemes – BPS, CS, ES and SFI.

CS and ES Revenue Claims – This runs from 14th March until midnight on 15th May (same as BPS).  It will be possible to make certain changes to a CS claim which has been submitted by 15th May, without penalty, until 31st May 2023 (different to BPS).  CS and ES claims made after 15th May can still be made up until 31st August 2023 but these will attract a penalty.  Both CS and ES payments will be made from 1st December in one lump sum.  One thing to remember with CS and ES is an annual claim must be made.  Unlike BPS where the application generates a payment, the application or signing the agreement does not give rise to a payment; this must be claimed each year Even for agreements which have commenced in January this year, including ES extension offers, a claim must be made before 15th May 2023.  Applicants should receive reminders throughout the claim period.

CS Capital Grants – Including the new Higher Tier Capital Grants are open all year round for applications.  Claims can also be made at any time throughout the year, as long as the works have been completed and paid for.

CS Woodland Tree Health and Woodland Management Plan – Applications can be made all year round.

Lump Sum Exit Payments 

The deadline to return Lump Sum Exit Scheme evidence is midnight on 31st May 2024.  Payments are made once the evidence has been submitted.  Those who have applied for the Lump Sum Exit and will not have submitted their evidence before 15th May 2023, would be advised to submit a BPS claim this year.  To receive the BPS for the remainder of the Transition period, a claim must be made this year, even if it is just for the minimum 5 hectares.  Then if for some reason the land sale or FBT which is supposed to provide the evidence for the Lump Sum Exit Payment does not ‘go through’, at least the BPS would still be available.  If it does go through, the 2023 BPS payment would just be taken off the Lump Sum Payment.

 

The Farming in Protected Landscapes (FiPL) scheme is to run for an extra year and receive additional funding.  This announcement was included in the Environmental Improvement Plan (see other article).  This means the scheme will now run until March 2025 and will be boosted by an extra £10m in funding for each of the remaining years.

The FiPL programme supports farmers and the wider community in National Parks, Areas of Outstanding Natural Beauty (AONB) and the Broads.  It is not an agri-environment scheme, it funds one-off projects that;

• support nature recovery
• mitigate the impacts of climate change
• provide opportunities for people to enjoy the landscape and its cultural heritage
• support nature-friendly, sustainable farm businesses

More information can be found via https://www.gov.uk/guidance/funding-for-farmers-in-protected-landscapes?utm_medium=email&utm_campaign=govuk-notifications-topic&utm_source=894d2924-aec2-4773-af52-3aa7c1257e0b&utm_content=daily 

The Bank of England raised Base Rates to 4% on the 2nd February 2023.  According to statistics released on the 10th February, the UK economy just avoided entering recession in late 2022.  A recession is technically defined as two quarters of negative growth.  The economy contracted by 0.2% in Q3 of 2022 but there was zero growth in Q4.  The figures are often revised, so it is still possible that the UK went into recession. Any reprieve may be temporary, as the Bank of England still expects a recession during 2023.

The RPA has announced that the window for 2023 BPS applications in England will open on Tuesday 14th March.  As usual, the closing date will be the 15th May (a Monday this year).  The 2023 will be the last ‘classic’ BPS claim with delinking happening for the 2024 BPS.  The delinked payment will be based on average BPS claims for the three years 2020, 2021 and 2022.  Those that have given up land since then will still be eligible for the delinked BPS through to 2027.  However, a minimum claim (5 Ha) must be made this year.  

Defra has published further details of Environmental Land Management (ELM).  It includes new SFI Standards, changes to the Countryside Stewardship (CS) scheme and details of a further round of the Landscape Recovery (LR) scheme.

The details were announced in a comprehensive ‘Policy Paper’ – Environmental Land Management Update: how Government will pay for land-based environment and climate goods and services.  This can be found at https://www.gov.uk/government/publications/environmental-land-management-update-how-government-will-pay-for-land-based-environment-and-climate-goods-and-services/environmental-land-management-elm-update-how-government-will-pay-for-land-based-environment-and-climate-goods-and-services

Sustainable Farming Incentive (SFI)

Six new Standards will be available under SFI this year.  These will be in addition to the existing three made available in 2022.  The new Standards are no longer structured by Levels (Introductory, Intermediate etc) – the thought being this gives land managers more flexibility to pick and choose.  Those already participating in SFI can add these Standards and also more land (it is not yet clear whether this also applies to those in the SFI Pilot).  No specific date has been given for when they will be available but it is stated to be from ‘this summer’.  The table below includes a summary of the required actions and payment rates for each standard.

The six new Standards will be offered alongside the two existing Soil Standards and the Moorland Standard already available.  There does not appear to be any change to these Standards which look like they will continue with a ‘package’ of actions within different Levels (Introductory and Intermediate).  The new SFI Management Payment (see article https://abcbooks.co.uk/cs-sfi-payments/) of £20 per hectare per annum, payable on the first 50 hectares will be available to all new and existing agreements.

As SFI expands each year, Defra will be introducing more Standards and actions incrementally, with the full set planned to be in place by the start of 2025.  This means that each year there will be more that land managers can choose to do and get paid more as a result.  It will be possible for farmers who already have an SFI agreement to:

• add more actions/Standards
• increase levels within Standards already in the SFI Standards agreement
• add more land

The schemes are being designed so that they are accessible to Tenant farmers.  This includes those on tenancies that are rolling-on from year-to-year if the Tenant expects to have ‘management control’ of it for the 3-year duration of their SFI Standards agreement.

Countryside Stewardship Plus (CS Plus)

An enhanced version of Countryside Stewardship will now form the second tier of ELM, replacing the previously planned Local Nature Recovery.  It will reward farmers for working with their neighbours to support ‘climate and nature aims’ – i.e. reducing carbon emissions and increasing biodiversity.  Under CS Plus, a further 30 actions will be available by the end of 2024 in addition to the 250 plus already available.  The aim is to improve the existing actions where possible as the scheme evolves, by making them more ‘outcome focused’, less prescriptive and more flexible about how to achieve the intended outcomes.   Defra has said there will be greater flexibility over when farmers can apply (could this mean all-year round ?) and how they manage their agreements.  It has also said payments will be quarterly rather than annually – there is no indication if this will apply to existing agreements.  It is also replacing the current ‘burdensome’ annual revenue claim with an annual declaration, this will apply to all CS agreements. 

CS Plus will be available from 2024, further details along with payment rates are expected to be published later this year.  In the meantime the next round of Countryside Stewardship Higher-Tier will open in February, with Mid-Tier following in March for agreements starting on 1st January 2024.

As SFI and CS Plus evolve over the next two years, Defra aims to offer them in a single ‘integrated service’.  Applicants will be able to select a combination of actions from both schemes.  The intention is for England Woodland Creation Offer (EWCO) to also be available via CS Plus once the scheme has been transitioned over.  It appears there will be a lot more flexibility around the schemes allowing applicants to ‘mix and match’ between schemes and be flexible on adding land to an agreement.  However, this aspiration will need to be matched by efficient systems to handle applications.

Landscape Recovery

This is the third element of ELM.  It supports ‘ambitious’ large-scale nature recovery projects focusing net-zero, protected sites and habitat creation.  A pilot opened last year (see Bulletin article https://abcbooks.co.uk/landscape-recovery-2) and following high demand Defra has confirmed a second round will open in the spring of 2023 and a further round in spring 2024.  The second round will take up to 25 projects and will focus on net zero, protected sites and habitat creation.  Further details are expected soon.

Although we are still awaiting some of the practical details, this announcement does provide land managers with more clarity on what and how much the ELM schemes are going to offer.  By 2028 the BPS will have completely disappeared in England.  We have known for a while now that future support will not be as ‘profitable’ as the BPS – something will have to be done to receive money under ELM.  But this latest announcement should help with planning and it will now be down to land managers (and their advisors) to decide what will be the best way forward for each business.  It does appear from this announcement, and those made earlier in the year on CS payment rates, that Defra are listening to the industry.  It does have environmental targets to hit and, to this end, needs as many farmers as it can to sign up to these schemes.  On the other hand it also has to provide value for money to the tax payer.