Category: Policy & Business

Agriculture (Wales) Bill

The Agriculture (Wales) Bill passed its final stage in the Senedd on 27th June 2023.  The Bill will now seek Royal Assent and is expected to come into force in Wales later in the summer.  This is the first ever Agriculture Bill for Wales and it sets out the framework for Sustainable Land Management, the over-riding principle of Welsh future farm policy, which includes the Sustainable Farming Scheme (SFS) the replacement for the BPS and Glastir.  The vote means the Welsh Government can move ahead with delivering the SFS which is planned to commence in 2025.

Hedgerow Protection

Defra has opened a consultation seeking views on the protection of hedgerows.  With Delinking of the Basic Payment, the cross-compliance regulatory framework will no longer apply in England from 2024.  In most cases, these rules are already in domestic legislation and will continue to provide protection to the environment and animals.  Farmers and land managers must legally continue to comply with these requirements and regulatory authorities have powers to enforce them.  However, some of the cross-compliance measures do not have a legal under-pinning; this is the case with hedgerows and other field boundaries, plus soils and watercourse buffer strips.  In all these areas Defra is actively considering the most appropriate approach to prevent environmental harm and encourage good practice, whether that is through regulation, incentive or other means.

In terms of hedgerows, outside of cross-compliance, legal protection is provided by the Hedgerows Regulations 1997, but these are limited in scope and there is no direct domestic equivalent of the hedgerow management measures currently provided for under cross-compliance and, in particular, GAEC 7a.  Defra has therefore opened a consultation and are proposing two options to protect hedgerows in the future.  The first is by replicating the existing cross compliance GAEC 7a requirements in domestic law, by making changes to the Hedgerows Regulation 1997.  These would include:

  • a requirement to ensure green cover on land 2m from the centre of a hedgerow in all fields over 2 hectares
  • a requirement not to spray pesticide or fertiliser on land within 2m of the base of a hedgerow on all fields over 2 hectares
  • to ensure that hedge cutting and management takes account of wildlife within hedgerows and supports biodiversity (cutting dates)

Views are also being sought on keeping the current exemptions; excluding parcels of less than 2 hectares, allowing early trimming for the purposes of OSR & temporary grassland and also exempting holdings under 5 hectares.

An alternative approach would look to develop new legal protections for hedgerows, and views are being sought on what requirements would be most effective at preventing environmental harm without unnecessary burdens on landowners.

In regards to timings, the latter would need Primary legislation, which would not be able to begin before autumn 2024, meaning measures would not come into force until late 2025 at the earliest.  Whereas changes to the Hedgerows Regulation 1997 could be in place for summer 2024.

The full consultation can be found via https://consult.defra.gov.uk/legal-standards/consultation-on-protecting-hedgerows/  views have to be submitted by 20th September.

Lowland Peat

A report has outlined 14 recommendations to help lowland peatlands contribute more to greenhouse gas mitigation.  This largely involves allowing the land to become wetter to prevent the escape of existing carbon locked in the soils, plus sequesting additional carbon.  It is acknowledged that there are significant trade-offs, with these peat soils being some of the most productive in the UK and growing a large proportion of high-value crops.  New forms of wetland farming (‘paludiculture’) are proposed.  For details see – https://www.gov.uk/government/publications/lowland-agricultural-peat-task-force-chairs-report .  The report was commissioned by Government but was independent.  In response, Defra has committed an extra £7.5m to fund pilot projects on water management on peatland.

 

 

Tree Planting:Wales

The next window to apply for Woodland Creation Funding opens in Wales on 24th July and closes on 15th September.  This will be the last chance to apply for planting this winter.  This is for the Small Grants Woodland Creation, Woodland Creation Grant (for larger projects) and the Planning Scheme.  The scheme is open a little later than expected as payments have been recalculated.  Rates have been increased to reflect 100% of 2023’s actual costs of creating woodland as part of Wales’ drive to plant 86 million trees by the end of the decade to combat the climate emergency. Details on how to apply and the new rates can be found via https://www.gov.wales/forestry-grants

 

Trade Policy Blueprint

The UK Trade and Business Commission, a body consisting of business and political leaders from opposition parties as well as international trade experts, recently launched its blueprint for future trade policy.  It is designed to address key barriers to trade and help grow of the UK economy.  The blueprint was launched at the Trade Unlocked conference in Birmingham.  This event was attended by over 650 businesses, industry leaders and several Labour MPs, including the Shadow International Trade and Foreign Secretaries.  As such, the conference provided an interesting insight to the potential direction of a future Labour Government.  The Commission’s recommendations, if enacted, would have significant implications for agricultural trade.  They include;

  • ‘Beneficial’ alignment with EU Standards and Regulations:  whilst staying outside the EU Single Market and Customs Union, the Commission suggests that there is ‘everything to be gained’ by the UK aligning with EU Standards and Regulations, where it is beneficial to do so.  The Commission also suggests that where it is sensible to diverge, the UK should use its freedom to do so, whilst acknowledging that costs would arise in such instances.  It argues that this would give greater predictability regarding the UK’s regulatory system,  helping investment.  It is also seen as key to achieving a UK-EU Sanitary and Phytosanitary (SPS) and veterinary agreement  – something that a future Labour Government is particularly keen on.  In addition to SPS, other areas where the Commission calls for alignment include;
    • Food safety: the UK should maintain and uphold the key principles of EU food safety standards, including the General Food Law (EC 178/2002) and EU regulation (EC 852/2004) on the hygiene of food stuffs.
    • Chemical contaminants and residue monitoring: continue to align with EU maximum residue limits (MRLs) for pesticides and align veterinary drugs’ regulations with the EU.
    • Foodborne disease surveillance and outbreak response: the UK should actively participate in the various EU surveillance networks and systems including the Rapid Alert System for Food and Feed (RASFF) and have close collaboration with the EU across a range of other disease-related areas.
    • Safeguard against lower quality imports: the UK Government should ensure that imported food products meet minimum regulatory standards that apply to domestically produced food, including on environmental requirements and animal welfare.
    • Organic food equivalence: maintain regulatory alignment between the UK and EU for organic food standards to facilitate continued equivalence beyond December 2023.
  • Establish a new regulatory forum for trade cooperation with the EU: this UK-EU Regulatory Council would be styled on the US-Canadian Regulatory Cooperation Council and would aim to reduce non-tariff trade barriers and build on the commitments made in the Windsor Framework.  It would be established ahead of the 2026 review of the UK-EU Trade and Cooperation Agreement. This is a sensible approach and the US-Canada relationship provides a useful template for how the future UK-EU trading relationship should be managed.
  • Establish a new UK Board of Trade: this would be an independent body acting for the Department for Trade and Business in much the same way as the Office for Budgetary Responsibility (OBR) acts for the Treasury. As such, it would impartially assess the UK’s trading performance and help to drive improvements across Government.  It would also provide impact assessments of new and existing trade deals and assess areas of divergence between the UK’s and other trading blocs’ regulations that will benefit the UK economy.  Its board would include representatives from major UK business organisations, SMEs, trade unions, devolved Governments, and senior experts in trade and regulation. One would imagine that if such a body were established that it would supplant many of the functions of the Trade and Agriculture Commission.
  • Visa system reform: to address labour shortages, including in agriculture.  This would include a comprehensive review of the Seasonal Worker Visa Scheme to determine areas for improvement and give greater long-term certainty to businesses.  It also calls for the reform of short-term and business visa rules to enable corporations to bring in highly-skilled personnel for short-term projects and to extend the maximum permissible stays under business visas to enable UK businesses to pursue longer-term projects.  It also calls for a bilateral and reciprocal Youth Mobility Visa Scheme with the EU allowing young people (aged 18-35) to travel and work in both UK and the EU for up to five years.  In addition, it calls for the UK to develop targeted skills development programmes to address labour shortages in specific sectors.  Many in the agri-food sector are likely to be sceptical about this latter recommendation as numerous organisations have tried to recruit and train indigenous workers, with minimal success. 

Overall, given the make-up of the UK Trade and Business Commission, and statements by Shadow Ministers at the UK Trade Unlocked conference, it is evident that a future Labour Government will seek a much closer relationship with the EU.  Whilst the EU will be open to such an approach, it has other priorities given what is happening in Eastern Europe.  Its appetite for any renegotiation of the Brexit deal is minimal.  This is recognised in Labour circles; hence the focus of the UK aligning with EU regulations.  The EU will also push back strongly on any attempts to dilute what it sees as the indivisibility of the Four Freedoms of the EU Single Market.  Without free movement of people and leaving open the possibility for UK regulations to diverge in the future, the EU will not offer the UK frictionless trade.  That said, significant improvements are possible and should be pursued. 

The full report is accessible via: https://www.tradeandbusiness.uk/blueprint

Image source: Best for Britain

Base Rates

The Bank of England increased UK Base Rates for the 13th time in a row at its June meeting.  The rise was not a surprise, but its size was.  Markets were generally expecting a 0.25% increase, but the Bank decided to raise rates by 0.5% to 5% – a level not seen since 2008.  The size of the increase was in response to the inflation data which came out a day earlier.  This showed that inflation was not yet coming under control – the headline CPI rate at 8.7% for May was unchanged compared to April.  Perhaps more worryingly for the Bank of England was that the rate of ‘Core’ CPI (excluding energy and food prices which are closely linked to commodity prices) increased in May.  It was 7.1% compared to 6.8% in April.  This indicates the recent interest rate rises are not yet achieving a slowdown in demand in the economy.  With more people now on fixed rate borrowing deals, higher base rates appear to be a less effective, or at least slower, policy mechanism than has been the case historically.  Money markets are now pricing-in a rise in rates to 6% by the end of 2023.   They may then be slow to reduce through 2024.

Agricultural Reform: Scotland

More detail has been released covering what Scottish farmers will have to do to receive support in 2025.  An updated ‘Agricultural Reform Route Map’ was announced by Rural Affairs, Secretary Mairi Gougeon, at the Royal Highland Show.  It is an update of the previous document released in February (see https://abcbooks.co.uk/scottish-support-details/) – but supposedly rewritten to make it shorter, more practical and clearer.  The latest version can be found at – https://www.ruralpayments.org/topics/agricultural-reform-programme/arp-route-map/ .

None of the fundamental timings set out previously have altered – the BPS (and other support) will be unchanged for 2024 before altering in 2025.  The key points to emerge from the new document relate to what will be required from 2025 onwards.

To receive the BPS in 2025, farmers will have to meet new ‘Essential Standards’ – this is part the ‘conditionality’ that requires farmers to do certain actions to gain support.  The Essential Standards will include;

  • Greening – with the rules unchanged from currently
  • Cross-compliance – as per the current rules, but with new protection for wetlands and peatlands added-in
  • Whole-Farm Plans (WTP) – at this point the document becomes a little vague.  It states that – ‘the foundations of the Whole Farm Plan will go live in 2025. The Foundations are ‘productivity baselines’: soil testing, animal health and welfare declaration, carbon audits, biodiversity audits, and the support for effective business planning’.  It is not clear what elements of the WFP will be required in 2025 and to what extent.  The Scottish Government plans to work with the industry to refine the requirements.  Full details of the conditionality rules are set to be published in the first quarter of 2024.

The Preparing for Sustainable Farming (PSF) scheme is currently funding ‘baselining’ with grants for soil sampling, carbon auditing, and animal health & welfare.  The PSF will end by March 2025 when these elements will be subsumed into the Whole-Farm Plan process.

The other new announcement in the document relates to conditionality on the Scottish Suckler Beef Support Scheme (SSBSS).  From 2025, payments will be linked to calving intervals.  Again, details of the requirements are still awaited.  Thereafter, the Government has stated that the SSBSS will continue for 2026 but may be delivered differently.  In terms of the Scottish Upland Sheep Support Scheme (SUSSS), the Roadmap states that it is ‘expected to continue in 2025 and 2026 but may be delivered using a different model from the current one’.  It seems to suggest that there will be no conditionality on SUSSS payments in 2025, or that would have been announced now.  Longer term, it is stated that ‘consideration is still being given to how Voluntary Coupled Support will be delivered from 2027’.

As set out in February, much larger changes will occur in 2026 – not least as the BPS will go to be replaced by a ‘Base’ payment and then ‘Enhanced Support’.

Capital Grants: Upcoming Schemes

A number of capital grants in England have been flagged-up as opening in the next few months.  Farmers, and their advisors, may wish to prepare for these – especially in terms of starting the process of applying for Planning and any other permits.  Details are below.

Calf Housing Grant

This is a new scheme that will offer 40% grants to build new or refurbish existing calf housing.  It will be available to both the beef and dairy sectors.  The grant aims to improve the health and welfare of calves (up to 6 months old) by providing a good ambient environment and facilitating social contact through pair or group housing.  The grant will be competitive so only the best schemes will be funded.  More details are expected shortly.

Farming Transformation Fund (FTF)

This is the ‘large scale’ capital grant scheme.  The next round to be launched under it is expected to cover Robotics and Automation.

Slurry Infrastructure Scheme

Technically, this will be another ‘theme’ under the FTF.  Another round for Slurry Infrastructure is expected sometime this autumn.  As in the first round, the grant rate is expected to be 50%.  It is not yet known whether there will be any changes to scheme rules.  This is likely to be the scheme where the most up-front preparation in terms of Planning, permits and quotes is required.

Roof-Top Solar

At the Farm-to-Fork summit (see https://abcbooks.co.uk/food-summit/) one of the pledges was to boost ‘barn-top’ solar.  Grant support for this will be included in Defra’s schemes (although it is not yet clear which one it will fall into, or whether a separate scheme will be launched).  There will also be changes to the Permitted Development Rights (PDR) regime which may be of help if Planning issues are preventing the installation of solar (although this, generally, tends not to be a big issues with barn-top arrays).  The consultation on Planning changes will only commence in the autumn, however, so any improvements will be some way further off.  

Private Nature Funding

It has been announced that there will be a further round of the Natural Environment Investment Readiness Fund (NEIRF) later this year.  This scheme helps groups develop nature recovery schemes to a point where they can attract private finance.  The next round is to be specifically targeted at groups of farmers.  The announcement was made by Defra secretary Therese Coffey at a ‘Nature For Finance’ event on 19th June brought together farmers, land managers, investors and conservation experts.  The Government has a target that £500m for nature should come from private investment by 2027 and this should reach £1bn by 2030.  Whilst there has been a lot of discussion of this source of funding, the number of deals done and amounts being generated still appear to be small.  For more details see – https://www.gov.uk/government/news/support-for-farmers-to-access-investment-to-drive-nature-recovery .

SFI 2023: Details

Further details of the Standards available under the Sustainable Farming Incentive (SFI) in 2023 have been released by Defra.  These will be available from August onwards.

These are largely the same as set out in the previous announcement in January (see https://abcbooks.co.uk/environmental-land-management/).  However, there have been some changes;

  • the Soil and Moorland Standards have altered compared to the 2022 version.  In line with the new approach of the SFI, instead of multiple actions being grouped into Levels (Introductory, Intermediate etc.) the actions themselves are just offered.  Defra states that this allows farmers to adopt a more flexible pick-and-mix approach.  This does mean that three actions included in the 2022 Soils Standard (add organic matter, single species winter cover and minimise bare ground) will no longer be available as they only have benefit when grouped with other actions
  • there is a new Buffer Strips Standard.  However, this has been created by moving two previously-announced options out of the Wildlife Standards for Arable and Grassland
  • The management Payment of £20 per Ha on up to the first 50 hectares entered into the SFI will now be paid on all Standards.  Previously the Moorland Standard was going to be excluded as no land management actions are required
  • The rates for Low-Input Grassland have been equalised between the SDA and non-SDA (lowland) farms.

A brief summary of the options are given in the table below.

Applications for the SFI closed as of 21st June.  This is allow the computer systems to be changed to process the new 2023 Standards.  Defra states that ‘applications for SFI 2023 will start to be accepted through a controlled rollout beginning in August’.  This is somewhat vague – both on what a ‘controlled rollout’ might look like, and when in August it might commence.   At present, the SFI is still being limited to farmers who were eligible for the BPS in 2022 or 2023.  In future, it is expected to be rolled-out to other land managers. 

Those that have already applied for the SFI 2022, but yet to accept an agreement, will be offered the choice of continuing with their application or starting again under the 2023 rules.   For farmers already with a 2022 SFI agreement, things are, again, a little vague.  Defra states ‘we will be in touch with all farmers signed up to the original scheme . . . to explain how they can access the payments, benefits and improvements in the 2023 offer’.   This seems to suggest they may be able to change their existing Soil and Moorland Standards for the new versions.  SFI 2022 agreement holders will get their Management Payments backdated to the 1st January 2023 or when their agreements started – whichever is the later.

The SFI 2023 guidance has been consolidated into a single Manual – this will be a relief for those that struggle to navigate multiple webpages.  It runs to 156 pages and can be found via – https://www.gov.uk/government/publications/sfi-handbook-for-the-sfi-2023-offer