The Agriculture (Wales) Act received Royal Assent on Friday 17th August 2023. This is the first ever Welsh Agriculture Act and provides Welsh Ministers with the powers to provide future farm support; it replaces the limited powers in the Agriculture Act 2020 which are due to expire in 2024. Whilst the main focus of the Act will be to allow delivery of the new Sustainable Farming Scheme (SFS), the Act also allows for the banning of snares and glue traps and provides tenant farmers with a route to dispute resolution to ensure they are not unfairly restricted from accessing financial assistance i.e SFS. The Act also gives Natural Resources Wales the powers to amend, suspend or revoke felling licences if these would contradict other environmental legislation.
The deadline for submitting applications to the Mid-Tier of the Countryside Stewardship (CS) has been extended to the 15th September. The closing date for applying to the scheme, for agreements starting 1st January 2023, was originally to be 18th August. However, a number of potential applicants have had issues with making applications this year – particularly with the slow processing of RLE1s to update land details and also when moving from older Environmental Stewardship agreements. The extension of the deadline is to give time for these issues to be resolved.
Furthermore, the deadline for submission of an ‘Intention to Move Form’ has also been extended to 18th August **TODAY**. Previously this was 1st July, but Defra has said it understands this deadline date was not very well communicated. It is unclear whether this date will be pushed back further due to the above announcement. The Intention to Move Form lets Defra know that an agreement holder would like to leave their current agreement early and apply for a new scheme. The existing scheme will remain in place unless a new one is offered by Defra and accepted by the applicant. The new agreement must offer equivalent or greater environmental benefits than the current agreement.
Defra has announced some changes to the SFI 2023 option rules and has also published some voluntary guidance on how to carry out the actions. The key changes include;
NUM3 (legume fallow) is now rotational
AHL1 (pollen and nectar flower mix) is now rotational
SAM3 (herbal leys) can now be done on the same land as Countryside Stewardship options OT1 and OR1 (relating to organic land)
it is no longer necessary to have hedges recorded on the RPA online digital maps for the SFI actions for hedgerows (HRW1, HRW2 or HRW3)
There are also some clarifications to the wording in the Handbook, which has been updated to include the changes; these are shown in blue text and highlighted yellow so can be found easily. In addition, there is a separate leaflet showing just the updates, both can be found via https://www.gov.uk/government/publications/sfi-handbook-for-the-sfi-2023-offer . This further set of changes to the SFI has unsettled many farmers and their advisors. SFI only started last June and all these agreements are in the process of being terminated and we have now had a change to the latest set of rules. The changes are in response to farmer feedback and Defra say it is possible for them to be able to respond quickly and can be more ‘agile and nimble’ now that we are out of the EU. However, it has been suggested that constant amendments could put some farmers off from entering for fear of more rule changes. In response Defra has said it is making these changes because the controlled rollout of the 2023 offer has not yet started. Once the controlled rollout starts from later this month, it ‘will minimise any further changes to the SFI Handbook, to provide stability, give certainty to farmers and agents, and save them the trouble of having to keep up to date with changes’.
Defra has also published ‘How to do the SFI Actions‘ guidance, there is one for each of the 23 Actions. This new guidance is voluntary. It is there to help and doesn’t have to be followed. The aim of the SFI is to be less prescriptive, and Defra’s overarching guidance on completing actions remains ‘it is up to you how to complete this action as long as you do it in a way that can be reasonably expected to achieve this action’s aim’. However, some claimants are concerned whether they are doing the right thing. Therefore, the new guidance provides suggestions on how land owners might choose to do the actions in the SFI Handbook. It is there to give ‘reassurance’. It is likely to be particularly relevant to the ‘plans’ under the SFI. It can be found at https://www.gov.uk/government/collections/sustainable-farming-incentive-guidance#further-information-to-help-you-
In terms of when the SFI 2023 will be open for applications, Defra has said, later this month farmers should be able to submit an Expression of Interest (EOI) and the RPA will contact them in a ‘controlled’ manner. This is to ensure the system is working before it is then scaled-up.
It seems likely that the UK Government will, again, delay checks on food coming into the UK from the EU. The ‘Border Target Operating Model’ was due to start phasing-in from the 31st October. This would have seen certain food and feed products require health certificates, with other checks being introduced next year. It is reported that the UK Government is looking to delay their introduction (for the fifth time) amid concerns that adding to import costs will push food prices even higher. All UK exports to the EU have been subject to the full range of checks since the end of the Brexit Transition period in January 2021. UK producers point out that there is not currently a level playing field for them and EU competitors, with checks only operating in one direction.
CF Industries has announced that it is to permanently close its ammonia production facility at its Billingham fertiliser plant. The company will continue to manufacture ammonium nitrate (AN) fertiliser in the UK, but this will produced from imported ammonia rather than from a natural gas feedstock. The ammonia plant on Teesside had already been mothballed for the past 10 months, as rocketing natural gas prices in the wake of the Ukraine invasion made production uneconomic. Gas prices are much cheaper in the US and other markets, so it makes sense for the company to import ammonia (which is relatively energy-dense). There have been concerns expressed that this move will reduce the long-term food security of the UK – now having to rely on imports for nitrogen fertiliser. It has been announced that buyers of AN fertiliser will need to provide photo ID as of the 1st October. This measure is being brought-in as AN can be used as a precursor to home-made explosives. If fertiliser is not being ordered in person (e.g. orders placed over the phone) then proof of identity will need to have been provided beforehand. The ID will need to be updated at 18 month intervals.
On Thursday 3rd August 2023, the Bank of England announced a 0.25% increase in its base rate from 5.00% to 5.25% – the 14th consecutive increase. With inflation remaining well-above the 2% target level the Bank continues to try and slow the economy to bring price rises under control. The consensus of forecasters is that interest rates will peak between 5.75% and 6% by the end of 2023 or start of 2024 – potentially pointing to a couple more 0.25% rises at the minimum. UK base rates are not expected to fall until mid-2024.
The SFI 2023 is probably not going to be open for applications until October 2023 for the majority of farmers. When the new SFI Actions were announced in detail in June, Defra stated ‘applications for SFI 2023 will start to be accepted through a controlled rollout beginning in August‘. At the time we said this was a ‘bit vague’, but it appears the new system will be tested on about 100 farmers who have been put forward via stakeholder participation. These will go through the whole application process and agreement offer to test the processes. Following this, they will be able to give RPA feedback to enable the system to be improved, if necessary, before opening up to more BPS eligible farmers. It seems to us that all this might take a couple of months.
The Government has issued a wide-ranging consultation on relaxing the Planning rules in England. This mainly refers to Permitted Development Rights and has the overall aim of increasing the supply of housing. In terms of farming and rural areas the main points are as follows;
Extending Class Q: this is the right to develop farm buildings (modern as well as traditional) into dwellings. The current size restrictions will be loosened and the ‘footprint’ of buildings will be able to be extended in some circumstances. The rights will be extended to areas such as AONBs and National Parks which have, until now, been excluded.
Non-Agricultural Conversions: buildings that are only in part-agricultural use; those that are being used for diversifications (e.g. storage); former agricultural buildings no longer on an agricultural unit; and forestry or equestrian buildings may be given the same ‘rights of conversion’ under Class Q as farming buildings
Extending Class R: this allows agricultural buildings to be converted into a ‘flexible commercial use’ – storage, distribution, hotels, offices or shops. The rights would be extended to allow for food processing and also leisure uses.
Increasing Agricultural Building Sizes: under the current rules, Class A allows farm buildings of up to 1,000 square meters to be erected on holdings of over 5 Ha without a full Planning Application being required. The consultation proposes this limit is raised to 1,500 sq m.
Design Codes: Local Planning Authorities are required to produce Design Codes that reflect local character and design preferences. These will be applied to Permitted Development Rights
Call for Evidence: the consultation announces a Call for Evidence to be run by Defra on a number of Planning-related agricultural issues. It is asking whether;
there needs to be greater clarity around when environmental works (digging ponds, re-routing rivers etc.) needs Planning Permissions
the Planning rules prevent projects to increase farm efficiency – notably slurry stores and reservoirs for crop irrigation
the current rules allowing diversification on farm are flexible enough.
On 16th July, the UK Government formally signed its accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). This comes approximately four months after accession negotiations were agreed and concluded in March (see previous article). Despite the formal signing of the accession agreement, the entry into force of the agreement will not take place until the latter part of next year. In the interim, each of the existing CPTPP members will need to ratify the UK’s entry.
Although there has been some lobbying by the Canadian meat industry for Canadian MP’s to vote to block the UK’s entry, this is not anticipated to scupper the deal. Canadian producers remain unhappy that the UK refuses to recognise Canada’s food safety and animal health systems as being equivalent to its own. This is chiefly due to Canada’s acceptance of hormone-treated beef and the use of antimicrobial carcase-washes in Canadian abattoirs.
As reported previously, whilst joining the CPTPP might help the UK to gain greater access to some Asia-Pacific markets (particularly Malaysia), its impact from an agricultural perspective looks set to be limited. This is because the UK already has bilateral trade deals with most CPTPP members and most agricultural trade will continue to be conducted via these bilateral trade deals.
On 9th July, the EU and New Zealand (NZ) reached an agreement on a Free Trade Agreement (FTA). From an agricultural perspective its key provisions include:
Elimination of all duties on EU agri-food exports to New Zealand: will be effective upon entry into force. This also includes wine, confectionary and dairy products including speciality cheeses.
NZ access to the EU: greater access has been achieved for its agricultural exports to the EU, including for;
Beef: a new tariff rate quota (TRQ) for 10,000 tonnes (t) with a reduced duty of 7.5%. This volume will be gradually phased in over 7 years from entry into force of the agreement.
Sheepmeat: a new 38,000t TRQ to be imported duty-free. Again, this volume will be gradually phased in over 7 years.
Milk powder: a 15,000t TRQ with a 20% import duty, to be phased in over 7 years.
Butter: for the pre-existing TRQ of 41,177t which currently attracts a 38% import duty, for 21,000t of this TRQ, the duty will gradually be reduced to 5%. There will also be a new butter TRQ of 15,000t which will also see in-quota duty rates gradually fall to 5%. This means the NZ TRQ access will increase to 56,177t, with 36,000t of this seeing duties gradually fall to 5%.
Cheese: a new TRQ of 25,000t to be imported duty-free. This will gradually be phased in over 7 years. NZ’s existing TRQs of 6,031t allocated under the EU’s WTO schedule will see tariffs eventually reduced to 0%.
High-protein whey: new 3,500t TRQ to be phased in over 7 years at 0% duty.
Other TRQs: for sweetcorn (800t) and ethanol (4,000t) will also be eventually at zero duty.
Sustainability: both sides claim that the dedicated Chapter on Sustainable Food Systems and Animal Welfare makes significant advances on the provisions of most existing trade deals and that the parties will work together on animal welfare, food, pesticides and fertilisers.
Geographic Indicators (GIs): the EU claims that 163 of its most renowned food GI’s will be protected in NZ as well as the full list of GIs for EU wines. GIs for 23 NZ wines will also be protected in the EU market.
The agreement will draw inevitable comparisons with the UK-NZ trade deal. Certainly, NZ’s access to the EU market is much more curtailed for beef, sheepmeat and dairy products in comparison to the relatively more generous access that the UK has granted. Therefore, the competitive pressures exerted on EU producers as a result of this deal will be much less pronounced. Over the longer term, for EU Member States such as Ireland, the UK-NZ trade deal could end up being more influential on its animal product sales as NZ exports to the UK could displace notable volumes of Irish beef exports to the UK.
Both the EU and NZ will now begin the ratification processes for this deal. Therefore, the entry into force of this FTA is still some time away.
