Category: Policy & Business

Border Checks Delay

It is heavily rumoured that full checks on foodstuffs coming into the UK from the EU will be delayed once again.  The Border Operating Model (BOM) was due to see sanitary and phytosanitary (SPS) checks for most agri-food products being introduced from the 1st July.  With concerns over the extra costs the checks could impose on top of already considerable food-price inflation (and logistics issues at ports) the Government seems minded to delay their imposition.  This is the fourth delay in implementing checks on imports.  It has even been suggested that they may be delayed until 2025 when a new computer system is meant to be in place.  UK food exports to the EU have been subject to full checks since January 2021.

Welsh Residential Tenancies

From 15th July 2022, the (long awaited) Renting Homes (Wales) Act 2016 will see the end of Assured Shorthold Tenancy Agreements (ASTs) in Wales.  The Act introduces two new forms of ‘Occupation Contract’ for letting residential property in Wales: a Secure Contract and a Standard Contract; the latter will replace the AST.  The legislation will apply to existing tenancies as well as new Agreements.  Existing ASTs will need to be converted to Standard Contracts.  The new Contracts will also be ‘Model Contracts’ meaning that, when setting up a new Tenancy, the contract will need to contain certain clauses and conditions set by the Welsh Government.  Model Contracts are available from the Welsh Government website.  More information can be found via https://gov.wales/landlords-housing-law-changing-renting-homes.  This will affect farmers and landowners who let out surplus cottages.

UK/Australia FTA Analysis

On 13th April, the Trade and Agriculture Commission (TAC) published its advice to the International Trade Secretary (Anne-Marie Trevelyan) on the UK-Australia Free Trade Agreement (FTA). This is the first such piece of advice that the TAC has compiled and its findings have been presented to Parliament to aid its discussions on ratifying the trade deal. 

The Terms of Reference for this TAC report focused on assessing whether, in relation to agricultural products, the new FTA is consistent with the maintenance of UK levels of statutory protection in relation to three key areas;

  • Animal or plant life or health,
  • Animal welfare, and
  • Environmental protections

The TAC report addressed three questions which are set-out below, with the TAC’s conclusions on each question summarised in italics. 

  1. Whether the FTA requires the UK to change its levels of statutory protection in relation to the three areas above? The TAC has found that the FTA does not require the UK to change its existing levels of statutory protection in relation to animal or plant life or health, animal welfare, and environmental protection. 
  2. Whether the FTA reinforces the UK’s levels of statutory protection in these areas? The TAC’s view is that the FTA reinforces the UK’s statutory protections in the areas covered.  It cites two reasons.  First, the FTA contains environmental and animal welfare obligations that require the UK to maintain its statutory protections in the areas covered.  Second, these obligations also ensure that Australia will not gain a trade advantage by lowering its standards of protection or not properly implementing its domestic laws in the areas covered. 
  3. Whether the FTA otherwise affects the ability of the UK to adopt statutory protections in these areas? The FTA does not otherwise affect the UK’s ability to adopt statutory protections in the areas covered.  It does not restrict the UK’s WTO rights to regulate in these areas, and potentially enhances these rights in some respects.  However, the UK is able to adopt decisions under the agreement, together with Australia, that may constrain its freedom to regulate in future.  Therefore, the TAC believes that it is important to ensure that the UK’s import control systems are properly resourced to manage increased imports under the FTA.

 The TAC report also examines a number of other issues which have caused concern. These include;

  • Pesticides: the TAC finds that the FTA is likely to lead to increased imports of products from Australia using pesticides which are banned in the UK.  Whilst there are Commonwealth laws concerning the environment and pesticides use which Australia has obligations under, these laws are limited. 
  • GMOs: although there is negligible GMO production in the UK, it is currently legal to import and market GMO products, provided that it is labelled as such.  The TAC suggests that it is possible that GM canola oil (from oilseed rape) from Australia could be imported in increased quantities under the FTA.  However, imports of cotton and safflower, the other two major Australian GMO crops, will not be imported in increased quantities.  Furthermore, the UK’s WTO rights to regulate the import of GM products remain the same under the FTA.
  • Hormone-fed beef: the importation of such products would remain illegal in the UK and the FTA does not change this legal position.
  • Feedlot beef: would inevitably increase under the FTA and it would be difficult under WTO law for the UK to impose restrictions.
  • Hot branding: whilst legal in Australia, the UK requires electronic identification of cattle for export to UK, thus hot branding is unnecessary.
  • Slaughterhouse CCTV and stunning: CCTV is not required in Australia and meat from these premises could not be restricted from being imported into the UK.  The TAC also state that it is illegal to export meat from non-stunned animals so such meat should not enter the UK as a result of the FTA.
  • Mulesing: is the practice of removing wool-bearing skin, without pain relief, from the buttocks of a live animal and is done by Australian sheep farmers to prevent flystrike. The TAC found that the likelihood of mutton from mulesed sheep being imported into the UK is negligible but there is a “much higher chance” of wool from mulesed sheep being imported. 

Overall, whilst the TAC has found that whilst imports using the most controversial practices (e.g. hormone-fed beef) will continue to be prohibited, there is scope for increased competition from Australian imports, particularly beef, lamb and wheat, which sometimes will be produced to lower animal welfare and environmental standards.  However, it is worth acknowledging that Australian beef and lamb is currently achieving high prices in the global market (particularly Asia), thus making exports to the UK somewhat less attractive, at least in the short-term.  Of course, in the long-term, supply/demand and geopolitical influences can change the market situation significantly.  Importantly, the UK-Australia FTA creates a precedent for other trade deals.  Whilst this FTA alone does not alter the playing-field that significantly, the cumulative impact of trade deals will have a much more influential impact. 

For full detail on the TAC’s advice, please visit: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1068872/trade-and-agriculture-commission-advice-to-the-secretary-of-state-for-international-trade-on-the-uk-australia-free-trade-agreement.pdf

Also, please note that the TAC has launched a similar consultation on the UK-New Zealand trade deal. More detail via: 

https://www.gov.uk/government/consultations/uk-new-zealand-fta-trade-and-agriculture-commission-call-for-evidence

Sustainable Agriculture Capital Grant Scheme (Scotland)

Grants for slurry equipment are now available in Scotland.  The Sustainable Agriculture Capital Grant Scheme (SACGS) opens in Scotland on 26th April and will close on 1st June.  The scheme funds farmers, crofters and contractors to invest in covers for slurry stores (including lagoons) and spreading equipment to reduce ammonia emissions.  There is a set list of equipment eligible under the scheme.  Funding will be 40% (50% in the Highlands and Islands) of the actual costs, up to a maximum ‘standard cost’ for each item (included in the guidance).  No second-hand or ex-demo items are eligible.  The total amount of grant a farm business can receive per application is is £20,000 and only one application and claim is allowed per funding round.  Eligible items include:

  • Lagoon and slurry store covers – fixed and floating
  • Dribble bar applicators
  • Trailing shoe applicators
  • Flow rate monitoring slurry application system
  • Realtime inline nutrient analysis of slurry
  • Shallow injection systems

All applications have to be made online via ‘Manage Applications and Claims Service Portal’.  The scheme is competitive and applications will be scored.  Priority will be given to applications that deliver the best outcomes for the scheme.  ‘Bonus Green Points’ will be given to those who already have a Carbon Audit (prepared within the last 3 years) and a Nutrient Management Plan within the last 5 years.  Further information can be found via https://www.ruralpayments.org/topics/all-schemes/sustainable-agriculture-capital-grant-scheme–sacgs-/.

Food Strategy

The Government is expected to produce its long-awaited White Paper on Food shortly.  This is the response to the National Food Strategy produced by Henry Dimbleby in June last year (see https://abcbooks.co.uk/national-food-strategy-2/).  It was due to be published earlier in the year, but then the war in Ukraine intervened and a hasty re-write was required.  It was then further delayed by the purdah period ahead of the Local Elections in England on the 5th May.  The White Paper is expected to appear shortly afterwards.

Lump Sum Retirement Scheme

The Lump Sum Exit Scheme is now open for applications.  Our article of 8th February provides background detail on the scheme see https://abcbooks.co.uk/lump-sum-payments/.  The Scheme is open until 30th September 2022 and is not expected to open for applications in future years.  It allows English farmers to take their future BPS payments through to 2027 in a single Lump Sum.  In return, farmers will have to transfer out (rent, sell or surrender their tenancy) the agricultural land that was at their disposal on 17th May 2021.  Up to 5 hectares of agricultural land can be retained, also any non-agricultural land and buildings including the farmhouse.

The payment will be based on the average BPS payment received by the business for the three years 2019-2021 (the reference period).  This will be capped at £42,500 and multiplied by 2.35, meaning the maximum payment will be just under £100,000.  The full scheme guidance and application forms can be found via  https://www.gov.uk/government/collections/lump-sum-exit-scheme

Defra has also said ‘the Scheme will free up land for new entrants to farming’ and it will be ‘saying more’ about a New Entrants scheme shortly.  We have previously stated that any new Entrants Scheme would be ‘programme’ based i.e. matching hubs, rather than actual financial support.  We wait to see whether this is correct and will inform readers as soon as information is available.

New Welsh Schemes

The Welsh Government has announced it is making £227m of funding available over the next three years (2022-2024) to support Wales’ rural economy.  This funding is in response to the ending of the EU Rural Development Programme (RDP), which will completely close in 2023; it will ensure continued support for the areas previously funded under the RDP.  The funds will be delivered through a flexible framework across the following themes:

  • Farm-scale land management – providing support for on-farm sustainable land management actions.
  • On farm environmental improvements – including a focus on nutrient management, enhancing fuel and feed efficiency, embedding circular economy approaches and encouraging the use of renewable energy.
  • On farm efficiency and diversification – including supporting farm efficiencies through investment in new technology and equipment and to enable opportunities for agricultural diversification.
  • Landscape scale land management – delivering nature based solutions at a landscape scale, through a multi-sectoral collaborative approach.
  • Woodland and forestry – supporting the commitment of 43,000 hectares of woodland creation by 2030 and supporting the creation of a timber based industrial strategy.
  • Food and farming supply chains – creating a strong and vibrant Welsh food and drink industry with a global reputation for excellence with one of the most environmentally and socially responsible supply chains in the world.

Scheme details are still being drawn-up, but for 2022 £100m is being made available for the following;

 

Rents and Land Values

Rents

The latest agricultural rents data shows quite a mixed picture.  Some sectors have experienced a rise in ‘full’ Agricultural Holdings Act (AHA) rents whilst at the same time seeing a fall in FBT rents; for other sectors it is vice versa.  The table below shows a summary of the last three years.  Defra’s Farm Rents publication uses data from the Farm Business Survey.  Due to the time taken to collect the data, it is somewhat historic.  The figures just published are for the 2020/21 year, March to February, (shown as ‘2020’ in the table below).  The full statistical notice can be found at https://www.gov.uk/government/statistics/farm-rents.

The overall average annual rent for AHA tenancies in 2020 has risen by 5% compared with 2019.  Average Farm Business Tenancy (FBTs) rents, after an annual decline in 2019, have also risen, up by 8% to £239 per Ha.  Cereals farms on AHA Tenancies recorded a 10% rent increase, whilst FBT rents declined marginally.  Although only a small decrease this year, it can be seen this is the second year in a row that Cereal FBT rents have fallen.  However, they still remain 16% higher than AHA rents.  The only other farm type to experience a rise in AHA rents in 2020 compared to 2019 is Lowland Cattle & Sheep, again after a drop in 2019.  However, Lowland cattle and sheep farms have also seen a significant (30%) increase in FBT rents after a large decline in 2019, perhaps reflecting better conditions in the livestock sector.  Dairy farm rents show  a decline in AHA rents but continue to see steady increases in FBT rents, perhaps a reflection of progressive farms keen to expand in the sector.

As written previously, data on rents can fluctuate annually and one year’s information should not really be taken in isolation.  In general, rents have been on an upward trend, but looking to the future it would be expected that, as the BPS is phased-out, then overall rents will fall.  

Land Values

Also a little historic is the RICS/RAU Farmland Market Directory of Land Sales.  As previously reported, the RICS/RAU Farmland Market Survey has been discontinued.  However the Farmland Market Directory of Land Sales provides a Weighted Average – comparable with the figures in the previous Farmland Market Survey.  The Weighted Average Value excludes those sales which have been identified as having a residential value of more than 50% and a regional adjustment is also made.  The most recent values are for the first half of 2021.  This shows the Weighted Average value per hectare was £27,191 per hectare (£11,004 per acre).  This compares with £25,674 per hectare (£10,390 per acre) for the full year 2020.  The table below shows the last six surveys.

As can be seen land values have remained robust even through the uncertainties of Brexit and Covid.  Demand remains strong, with rollover money and lifestyle buyers helping to drive the market.

SFI Update

Defra has released further information on the Sustainable Farming Incentive (SFI) for 2022.  It is now expected to open for applications in June and then remain open with no closing date.  This is to allow those interested to apply at a time to suit.  However, Defra has stated that, if it is necessary to close applications, it will give six weeks notice.  The information is included in a ‘collection’ of webpages which can be found at https://www.gov.uk/government/collections/sustainable-farming-incentive-guidance.  Below is a summary of the key points:

  • Agreements will be for three years.  Initially it will only be open those businesses which are eligible for the BPS – the business (SBI) must have at least 5 Ha of eligible land and 5 or more BPS entitlements on 16th May 2022 – but there is no requirement to have made a claim.
  • The applicant must have ‘management’ control of the land for three years e.g. own the land or a tenancy
  • Payment will be made quarterly in arrears i.e. the first payment will be made three months after the agreement commences
  • The Standards will not include funding for capital items in 2022.  But it is possible to apply for existing funding for capital items for parcels included in an agreement, such as Countryside Stewardship capital grants
  • In the future, SFI will include capital items funding to help complete the actions in the standards
  • Applications will be online via the Rural Payments Service.  Prospective applicants are encouraged to ensure their digital maps are up-to-date, including land cover (certain land covers will be eligible for each standard) and available area.  With the application window opening after BPS, in most cases these should already have been checked
  • Certain changes can be requested to an agreement.  It will be possible to upgrade an agreement annually to:
    • add more Standards as they become available
    • add more land, including land coming out of Countryside Stewardship
    • increase Levels within Standards already in an SFI agreement
    • it will not be possible to reduce the Levels or land area, except under very limited and specific circumstances
    • it will not usually be possible to transfer an SFI agreement to another person
  • You do not need to have an SFI Standards agreement to be eligible to apply for the SFI Annual Health and Welfare Review.

Below is a summary of payments.  The Moorland Standard payment has been increased, fairly significantly, since the previous announcements.  Those with common land entered into an SFI agreement will receive an additional £6.15 per Ha.  Payments for the other standards, remain the same:

Fertilisers, Slurry & Manure

In response to rocketing prices of fertiliser, Defra has announced a number of steps to help farmers with their nutrient management.

Urea

The planned ban on the use of urea fertiliser has been scrapped.  Instead, an industry-run voluntary scheme will aim to reduce the ammonia emissions from solid urea fertiliser, commencing in 2023.  This will be delivered through the Red Tractor farm assurance scheme and FACTS advisers.  This is an alternative approach to the Options included in the Defra Consultation (see our article https://abcbooks.co.uk/ban-on-urea-fertiliser/) and will mean scheme members can:

  • use untreated or unprotected urea fertilisers from 15th January to 31st March each year
  • use urease inhibitor-treated or protected urea fertilisers throughout the rest of the year

Defra has said it will monitor the effectiveness of the scheme and will introduce regulations if it does not reduce the necessary amount of ammonia emissions.

Defra consulted on three regulatory Options to reduce ammonia emissions from solid urea fertiliser in November 2020.  In Defra’s response to this consultation, just released, it says ‘global fertiliser shortages and price increases have led to significant concerns over the cost of food and, in turn, on the cost of living’.  It therefore considers a ban on solid urea fertilisers (Option 1 in the consultation) to be unfeasible.  Furthermore, evidence submitted through the consultation indicated that the costs to farmers of banning solid urea would be substantially greater and ammonia emissions reduction less than previously expected.  It has also found the timelines to implement a ban would be longer than previously estimated due to the changes to infrastructure required to handle and store greater volumes of ammonium nitrate (AN).  An industry consortium including farming unions, research and advice bodies, accreditation/assurance schemes, and the fertiliser supply industry offered to set up and run a non–regulatory approach, which they have termed as ‘Option 4′.  This would utilise farm assurance schemes such as Red Tractor, to reduce ammonia emissions from the use of fertilisers containing urea (both solid and liquid), in England from April 2023 a year later than originally proposed.

Farming Rules for Water

Defra has released ‘revised and improved’ statutory guidance on applying the Farming Rules for Water.  The de facto ban on autumn manure spreading, based on how the rules were being enforced, has been removed.  However, farmers will need to demonstrate that what they are doing does not pose a risk of diffuse pollution – and the guidance is somewhat complex.

The Farming Rules for Water (formally the Reduction and Prevention of Agricultural Diffuse Pollution (England) Regulations 2018) have not been amended.  Instead, the new guidance tells the Environment Agency about criteria that they should consider when assessing if enforcement action should be taken under the regulations.  It also provides some clarity for farmers as to how to manage the use of slurry and other manures during autumn and winter including;

  • the planning of applications,
  • assessing the crop and soil needs,
  • assessment of significant risk of agricultural pollution
  • spreading time periods

The new guidance can be found at https://www.gov.uk/government/publications/applying-the-farming-rules-for-water/applying-the-farming-rules-for-water.

Slurry Storage

The final Defra announcement on the issue of nutrients was a confirmation that grants for slurry stores will be available in England.  As we wrote in the February Bulletin, this will come under the Farming Investment Fund.  The announcement didn’t provide much further detail (this is expected over the next few months).  However, from what we have learned, the following rules are likely to apply for Slurry Infrastructure Grants;

  • grant funding will be at 50% rates with grants from £25K to £250K (thus project sizes of £50K to £0.5m)
  • initially they will only apply to dairy, beef and pig farms already on a slurry-based system – i.e. those operating a FYM system will not be eligible to get grants to ‘convert’ to slurry
  • grants will fund projects that create up to 6 month’s storage.  If additional capacity beyond 6 months is constructed, this element will not be grant-funded
  • the scheme will fund replacement, reconstruction and additions to storage.  However, once the work is completed all slurry storage on the farm must be compliant with the Silage, Slurry and Agricultural Fuel Oil (SSAFO) regulations.  Effectively, pre-1991 ‘grandfather’ rights on old stores will be removed for those applying for grants
  • stores will need to be covered.  Grants may be available for covering existing stores, but this could depend on the type/quality of existing storage
  • all types of storage will potentially be eligible including earth-bank, lined lagoons (as long as they can be covered)
  • a manure management plan (to work out volumes of slurry) will be required – potentially signed-off by the Environment Agency.  There will also need to be a Nutrient Management Plan to show how the stored slurry will be used
  • the grant will be competitive, with a scoring system used.  Farms in certain locations (priority catchments, close to protected sites etc.) will be favoured.

These are subject to change before the final scheme is launched.  However, farmers (and their advisors) may wish to start preparing ahead of this by doing such things as applying for planning permission, securing quotes for work and discussing funding.