Category: Policy & Business

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.  

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 .

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 

The AHDB is proposing to increase levy rates from April 2024.  The Levy Board states that, with no increases in rates for a decade, its real-terms income has declined by 40%.  There are no details yet on how large the increases might be – the AHDB is consulting with farmers and processors.  Any increase in rates will be put to Defra to approve.

The Government has released a Policy Paper, setting out a series of initiatives designed to boost the economic performance of rural areas.  The ‘Unleashing Rural Opportunity’ document can be found at – https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1161242/Unleashing_rural_opportunity.pdf.  Some of the policy details what the Government is already doing.  However, a number of new schemes were included;

• a new £7m fund will look at how satellite, wireless, and fixed-line broadband van be integrated to improve rural connectivity
• extra funding for the new National Rural Crime Unit and an increase in fines for fly-tipping and littering
• a commitment to improve bus services in rural areas and also more funding for village halls and a strategy for rural libraries
• improving electric infrastructure in rural areas so that it can cope with the increased demands of EV charging and the pivot to electrical heating
• a network of ‘Rural Housing Enablers’ to be put in place to boost affordable housing.  They will identify possible sites for development and act as brokers between developers and communities
• consulting on a new grant scheme for small abattoirs
• a consultation on changes to the Planning rules to make the conversion of farm buildings to residential easier and also the adaption of buildings to improve productivity (as set out the the Number 10 ‘Farm-to-Fork’ meeting).

Defra has announced funding allocation under the latest round of the Farm Equipment and Technology Fund (FETF).  This is the ‘small-scale’ grants scheme whereby farmers apply for 40% funding on a defined list of pieces of equipment.  The FETF 2023 was made up of two themes.  The grant offers currently going out to farmers cover the ‘Productivity and Slurry’ theme.  This closed on the 4th April 2023.  The other theme, Animal Health and Welfare, closes on the 15th June.  Farmers who receive a Grant Funding Agreement (GFA) have to accept these via the dedicated FETF acceptance portal if they wish to go ahead.  They then have a limited period of time to buy and install the items and submit a claim for payment.  The deadline for this will be set out in the GFA, but it is thought to be November for most applicants.  Defra received 3,000 applications under the Productivity and Slurry theme.  Due to the high level of demand it increased funding from £17m to £31m.  Further rounds of the FETF are expected, but it could be 2024 before it reopens.

Defra has announced payments for 4 Upland Stewardship options will be increased.  The uplift will mean the rates are now equal for both upland and lowland farms where they are carrying out the same actions.  The new, increased payments will be back dated to take affect from 1st January 2023.  The table below shows the 4 options together with the old and new rates;

The evening-up of payments for both upland and lowland farms results in an increase for one option for lowland farms – WD4: Management of Lowland Wood Pasture and Parkland, with the payment being increased to £212 to match that of WD10: Management of Upland Wood Pasture and Parkland.

The improved rates are part of a package of measures to ‘improve and extend’ the offers available to Upland farmers.  Defra has said from 2024 there will be further improvements to Countryside Stewardship (CS) to make it more accessible, broader and rewarding for Upland farmers and has been working with farmers and stakeholders.  This includes a further update to the following 7 existing CS offers;

• GS9 – Management of wet grassland for breeding waders 
• GS12 – Creation of wet grassland for wintering waders and wildfowl 
• GS13 – Management of grassland for target features 
• GS14 – Creation of grassland for target features 
• GS15 – Haymaking supplement 
• GS16 – Rush infestation control supplement 
• SP8 – Native breeds at risk supplement 

No details are available yet but feedback has suggested reviewing dates associated with some actions, providing clarification on how the options should be carried out and reviewing payment rates.  Defra has said further details will be available this summer together with an announcement on the rest of the 2024 offer.  In addition, Defra is also trying to improve its engagement with Upland farmers and has produced The Payments for Upland Farmers leaflet (this can be found via https://defrafarming.blog.gov.uk/wp-content/uploads/sites/246/2023/05/Defra-SFI-Upland-Leaflet.pdf) This 15 page leaflet summarises what schemes and the options available within them are available for the sector.  It is said to be the first in a series of sector-specific leaflets.

The area of UK land managed according to organic principles grew marginally in 2022 compared with 2021.  Latest figures released on 25th May from Defra put the organic land area (both fully organic and in-conversion) at 509,000 hectares.  This is a rise of 0.4% compared to 2021.  The organic area peaked in 2008 at over 700,000 hectares, but has seen a steady decline until 2018, after which, it started to increase again.  The growth in 2022 was driven by an increase of 0.8% in the area of fully organic land, which was offset by a decrease of 3.9% in the area of in-conversion land.  In England the area of land in-conversion has declined by -23.9% in 2022 compared with 2021.  This could translate into a decline in the area of land farmed organically in the future.

Organic land represents 3% of the total farmed area on agricultural holdings in the UK.  Grassland makes up, by far, the largest organic area, with permanent pasture taking 61.8% of the share, covering 314,000 hectares, this is followed by temporary grassland at 18.9% and cereals at 9.7%.

In the meat sector, the number of cattle and sheep farmed organically both increased in 2022 compared to 2021 when numbers declined.  Organically reared sheep experienced a 1.5% growth, to 734,400 head; organic sheep account for 2.2% of the UK flock.  Cattle numbers grew by 1.0% to 298,600 head, making up 3.1% of the total UK herd.  Organically reared pigs made the largest increase, up by 9.2% and poultry the largest decline in numbers by -8.9% year-on-year.   At 35,000, organic pig numbers make-up 0.7% of the total UK pig herd.  Organic poultry numbers now stand at 3.66 million head and make up 1.9% of the UK’s flock.

The full details can be found a https://www.gov.uk/government/statistics/organic-farming-statistics-2022/organic-farming-statistics-2022

Total Factor Productivity (TFP) of the UK agricultural industry is estimated to have increased by 3.4% between 2021 and 2022.   TFP measures how well inputs are converted into outputs and thus gives an indication of the efficiency and competitiveness of the farming industry.  It is one of the measures that Defra looks at closely, as it tries to improve the performance of UK agriculture. 

Rather than an improvement in the level of output, the main driver for the increase in TFP was a decrease in the volume of inputs.  This offset a very slight decrease in the volume of all outputs; less than 0.1%.  The volume of all inputs decreased by -3.3%; this is as a result of a decline across all input items in the accounts except for veterinary expenses and labour which saw small increases.  The inputs which saw the largest percentage decreases were fertilisers (-12.8%), seeds (-12.0%) and animal feed (-6.7%).

Looking in a little more detail at output, total crop output increased by 1.7%, whilst total livestock output decreased by the same amount.  The notable changes in crop output were an increase in OSR (38.8%) and barley (11.5%).  In contrast, there were decreases in sugar beet (-18.3%) and vegetables and horticultural products (-4.9%).  Total output of livestock from meat was down by -0.8%; this was mainly due to a decline in output from pigs (-3.1%) and poultry (-3.3%) with both cattle and sheep output increasing on the year by 0.7% and 3.1% respectively.  Output from other livestock products was -3.2%, with milk output lower by -0.8% but the main driver was eggs, down by -21.4% on the year.

Getting TFP, and other productivity measures, improving is one of the key policy goals of Government over the next few years.  Despite annual variability, the long-term trend is still one of slow but overall improvement in TFP.  Since the time series began in 1973, TFP has increased by 67.3% driven by an increase in volume of all outputs by 37.9% and a decrease in the volume of all inputs by 17.6%.

For more details see https://www.gov.uk/government/statistics/total-factor-productivity-of-the-agricultural-industry?utm_medium=email&utm_campaign=govuk-notifications-topic&utm_source=4ef2b4b7-a6c7-4a22-b159-a7d383e472cf&utm_content=daily

Defra has responded to the Review of tenancy legislation in England and Wales undertaken by Baroness Kate Rock.  As reported in our October Bulletin (see https://abcbooks.co.uk/tenancy-review/), the Rock Review made 74 recommendations.  These were broadly in two areas – immediate changes to help tenant farmers access the new ELM schemes, and longer-term changes to drive a healthy tenanted sector.  Overall, the Government’s response does not herald major reform to the tenancy landscape, with most changes being enacted rather small-scale and any larger ones put-off

The full response (in two separate documents) runs to almost 100 pages.  This can be found at – https://www.gov.uk/government/publications/rock-review-on-agricultural-tenancies-government-response .

Some of the key points on the short-term issues are;

• Defra has not accepted the Review’s recommendation that Tenants should be able to enter ELM schemes without Landlords consent.  Whilst in the short-term SFI this has been allowed, Defra states that there will be a variety of different schemes and timescales involved and there will be some scenarios where Landlords approval would still make sense – especially where land use change is permanent.  The Department aims to specify which agri-environmental options will need consent
• Defra finds little evidence that land is being taken back in hand from Tenants for Landlords to enter it into land management agreements, although this will continued be monitored
• Defra will look at the issue of agreements being transferred between Tenants or between tenant and Landlord.  It will also look into joint Tenant/Landlord ELM agreements.  This will be done through the ELM co-design process and also through the new Farm Tenancy Forum (see below)
• joint applications between Landlords and Tenants for capital grants would also be explored
• the role of tenancies in facilitating new entrants to the sector will be incorporated in the forthcoming New Entrants Support Scheme
• there was a recognition that Tenants have specific problems accessing private environmental markets.  The response sets out Defra’s current approach and there is a commitment to consider the let sector in future policy-making.

In terms of some of the longer-term policies to develop a thriving let sector, the response set out;

• a new Farm Tenancy Forum (FTF) will be put in place.  This will effectively replace the existing TRIG group and provide advice to Government on the tenanted sector.  The Rock Review recommended that a Tenant Farm Commissioner be created and this will be the subject of a call-for-evidence later in the year
• in terms of trying to incentivise longer-term lettings, the Review recommended changes to the taxation system.  This included restriction full Agricultural Property Relief for Inheritance Tax to lettings of eight years or more.  As Defra is not responsible for tax policy it has not directly responded to this.  There is a Treasury consultation currently underway on changes to the tax system – see our March article on the Budget
• a new (voluntary) Code of Practice is to be drawn up to set out expected standards and practical steps to take to improve Landlord and Tenant relationships.  This will also apply to professional advisors.  The FTF will monitor how effective the Code is
• Defra will work with the FTF to see if there are specific issues with FBTs not allowing Tenants the flexibility to diversify.  This issue was looked at in 2019 but it is recognised that the situation may have evolved since then

Overall, Defra believes that there is no immediate requirement for legislative change in the tenanted sector – there will be no Tenancy reform in 2023, or for the foreseeable future.  Instead the Department seems more inclined to see how the let sector deals with the Agricultural Transition and whether the non-legislative measures set out above deal with some of the issues highlighted by the Rock Review.