Scottish Farm Policy

Direct payments will remain central to Scotland’s future farm support.  This is the conclusion drawn from the Scottish Government’s latest ‘vision’ for the agricultural sector.  It is largely a re-statement of previous policies and does not provide that much more information on detailed scheme requirements.  However, it does add a little to the emerging picture of future Scottish Farm Policy.

The Vision and Timetable can be found at –  www.gov.scot/isbn/9781804351154.  It sets out the following values and principles for future farm support;

  • ensure that Scotland’s people are able to live and work sustainably on our land
  • remain committed to supporting active farming and food production with direct payments
  • seek to create a diverse, flourishing industry
  • integrate enhanced conditionality of at least half of all funding for farming and crofting by 2025
  • as part of this conditionality, expect recipients of support to deliver on targeted outcomes for biodiversity gain and low emissions production
  • develop policy, regulatory and support mechanisms which deliver emissions reductions in line with our climate targets, and contribute to wider government objectives and priorities, particularly in relation to our net zero ambitions
  • design those mechanisms to support outcomes that restore nature, benefit our natural capital and promote the natural economy
  • ensure those mechanisms are flexible enough to be adapted in delivery to accommodate emerging evidence, science, technology and tools
  • adopt an evidence-based, holistic, whole farm approach, including learning from and applying practice and experience from other nations
  • adopt a natural capital and just transition approach to land use change
  • where practicable, stay aligned with new EU measures and policy developments

Although much of this is vague and aspirational, there is some ‘meat’ to be found in it.  The continuation of direct payments is clearly stated, along with the shift towards more ‘conditionality’ on these.  It is also clear that climate change will be a big driver of farm policy (as we have written previously) and there is a desire to keep policy aligned with the Common Agricultural Policy as much as possible.

In terms of what ‘conditionality’ looks like, some key themes are outlined;

  • greenhouse gas (GHG) emission reductions
  • biodiversity audits (and improvement)
  • soil testing
  • nutrient and forage plans
  • animal health and welfare plans

In short, farmers will be expected to do some of the above in order to get their full BPS.  Interestingly, on GHG emissions, the Scottish Government states that it wants to see the same amount of agricultural production with fewer emissions, rather than more production with the same emissions.  

In terms of timing, a full consultation on a future Agricultural Bill will be undertaken this summer with a view to enacting legislation in 2023.  However, the replacement support framework under this will only be implemented from 2026.  Therefore, the ‘legacy’ CAP schemes will continue until 2025, albeit with some changes.  In the shorter-term, a ‘National Test Programme’ will commence this spring.  This will have two ‘tracks’;

  • Track 1 (Baselining):  this will be an offer to all farmers to start collecting information on their farming business (e.g. around GHG emissions and biodiversity).  This ‘baseline’ information can then be used to measure improvements in the future.  It is not yet clear whether there will be any element of compulsion to take part in 2022 or whether, at the outset, it will be voluntary.  There will be an initial focus on those parts of farming with the highest emissions – e.g. livestock.  The suckler beef sector has previously been highlighted in this regard and there may be some conditions on the Scottish Suckled Beef Support Scheme (SSBSS) either this year or in the near future.
  • Track 2: (Development):  this will aim to develop tools, processes and support structures that will deliver the goals of the vision.  It can perhaps be seen as a test-and-trials approach.  Recruitment of farmers to take part will commence shortly.  The development of policy will continue to be overseen by the Agriculture Reform Implementation Oversight Board (ARIOB).

This ‘announcement’ continues the pattern of limited and partial policies being announced by the Scottish Government.  It would no doubt argue that it is progressing steadily, with a desire to minimise disruption and take the industry with it in designing a new farm support system.  Alternatively, it could just be described as ‘slow’.  Much of the farming sector would just like more clarity on future support arrangements.  We will continue to report on developments.     

UK/New Zealand Trade Deal Signed

On 28th February, the UK and New Zealand signed the UK-New Zealand Free Trade Agreement (FTA), formalising the agreement-in-principle which was announced in October 2021 (see https://abcbooks.co.uk/uk-new-zealand-trade-deal/).  The FTA is similar in nature to the UK-Australia FTA announced in December.  The deal is seen by the UK Government as another important step towards joining the Comprehensive and Progressive agreement for Trans-Pacific Partnership (CPTPP).  The agreement will now be laid before Parliament for scrutiny.

The key points are;

  • Tariffs: upon entry into force, 100% of tariffs on UK goods exports to NZ will be removed whilst tariffs on 99.5% of goods imports into the UK from NZ will immediately be removed.
  • Tariff Rate Quotas (TRQs): will remain for the most sensitive product being imported into the UK including:
    • Beef: access would be limited by tariff rate quota (TRQ) in the first 10 years. This would commence with access to a duty-free transitional quota of 12,000 tonnes in year 1, rising in equal instalments to 38,820 tonnes in year 10.  Any beef imports above the annual TRQ allowance would be subject to the UK Global Tariff (UKGT).  In the subsequent 5 years (year 11-15 after entry into force) a product-specific safeguard will be applied on any beef imports exceeding a further volume threshold rising in equal instalments from just over 40,000 tonnes in year 11 to 60,000 tonnes in year 15. All TRQ allowances are on a product weight basis. All tariffs would be eliminated from year 16 onwards. 
    • Lamb: access would operate in a similar manner to beef, although tariff-free TRQ access would be managed in a series of step-changes as opposed to annual incremental increases and the allowances are calculated on a carcase-weight basis which is somewhat more limited than a product weight basis.  In years 1-5, an additional 35,000 tonnes per year could be imported tariff-free.  This, of course, is in addition to the 114,000 tonnes of the WTO TRQ that New Zealand has historically had available.  During years 5-15, the tariff-free access will increase to 50,000 tonnes per annum followed by unlimited access in year 16.  Importantly, trade via the FTA TRQ can only commence once utilisation of the WTO TRQ has reached 90%.  Any imports exceeding the FTA TRQ will be subject to the UKGT tariff rate. 
    • Dairy: similar structures will also operate for dairy products with unlimited access being phased in over 5 years.
      • Butter: initial duty-free TRQ of 7,000 tonnes rising to 15,000 tonnes in year 5.
      • Cheese: there will be an initial duty-free TRQ of 24,000 tonnes in year 1, increasing incrementally to 48,000 tonnes in year 5.
    • Fresh Apples: given the seasonal nature of production in both countries, tariffs on imports into the UK from 1st January to 31st July would be eliminated as soon as the deal comes into force.  Imports during August to December will be liberalised over 3 years.  During this time, there will be a tariff-free TRQ of 20,000 tonnes per year.  All fresh apple imports from NZ would then be tariff-free and quota-free from year 4 onwards. 

Sources: UK Government and Andersons

  • Customs Procedures: the deal is ambitious with respect to minimising customs procedures and the promotion of e-certification.
  • Rules of Origin (RoO): are set to remain standard for agri-food – i.e. a threshold of 15% of products traded can be non-originating from the country of origin (i.e. UK or NZ) in order to gain tariff-free access.  The RoO for automotive vehicles (25% originating materials as opposed to the standard 55% threshold) will become much more liberalised.  This is seen as a big gain for the UK, given the extent of its integration with EU supply-chains. 
  • Sanitary and Phytosanitary (SPS) Measures: the The FTA seeks to minimise barriers in the area.  Both countries are to recognise equivalence where both countries have similar standards and the deal will function in parallel with the existing UK-NZ Sanitary (Veterinary) agreement.  The UK Government is also keen to emphasise that the deal “does not create any new permissions or authorisations for imports from New Zealand and does not compromise on our high environmental protection, animal welfare, plant health, and food standards.”
  • Animal Welfare: has a dedicated chapter in the agreement which includes non-regression and non-derogation clauses which the Government intends that neither country will lower its animal welfare requirements in a manner which impacts trade. There is also an ambition to work together internationally to encourage greater animal welfare standards and research cooperation on animal welfare issues. 

Overall, the main thrust of the UK-NZ FTA is very similar to the previous agreement-in-principle and is quite similar to the FTA that the UK has agreed with Australia.  As such, it creates another precedent for future trade deals.  It is clear that the UK has offered enhanced market access for NZ agri-food suppliers in return for greater access to the NZ automotive and services sectors.  The cumulative impact of these trade deals is also important.  Whilst there is a 15-year transition period for beef, by year 14, the combined Australian and NZ TRQs (~214Kt) access will have surpassed recent years’ annual imports from Ireland (204Kt).  That said, just because TRQ access is available, it does not mean that it will be fulfilled as Asia-Pacific will remain very important to Antipodean suppliers. 

Finally, in the case of NZ, it must be acknowledged that whilst there are some differences in its standards versus the UK, its standards are very closely aligned.  Something that the EU also acknowledges in its veterinary agreement with NZ.  Therefore, whilst the competitive pressure will increase, the playing field is quite level in this instance.  What UK farming needs needs to do is to focus much more on improving its market orientation (i.e. focus on satisfying consumer needs profitably and sustainably) and to improve its value proposition and marketing generally, both at home and abroad.  That is its best chance to successfully competing with the likes of NZ in the long-term.

More information on the UK-NZ FTA is available via: https://www.gov.uk/government/collections/uk-new-zealand-free-trade-agreement

RPA Log-In

There have been problems accessing the RPA’s computer systems for many Agents over the last few days.   Those logging-on to undertake BPS or agri-environment work for their clients may have noticed that the usual ‘View business’ hyperlink is not available.  Due to data protection reasons, online access is being restricted to accounts until somebody holding ‘full business permissions’ for the business logs-in and confirms the relevant information.

This is causing a problem as not many Agents will hold ‘full business permissions’ for their clients, just permissions to allow them to update and make claims for the relevant schemes (BPS, CS).  This means accounts are effectively locked until somebody who does have such permission logs-in and confirms the details.  The problem further escalates as, in many instances, those who have got the relevant permissions (the business owners, partners etc.) may not have actually logged on for many years, leaving it to their Agent and will not even know their log in details, meaning many phone calls to the RPA helpline to retrieve lost log-in details.

Apparently the RPA is looking into solutions and we will try and keep readers up-to-date if there are any changes, but in the meantime, if access is required, the RPA has said the only solution is for an individual holding full business permission to access the business online and confirm the data and permissions.

The situation has arisen because a year ago, under pressure from the Government Digital Service as part of ensuring data security, the RPA put in a system which now requires RPA customers to log-in and confirm their business details on an annual basis.

Farm Equipment Technology Fund

The deadline for accepting a Farm Equipment and Technology Fund Agreement has been extended until 1st April 2022; originally this was 4th March.  Successful applicants need to accept their Agreements via the dedicated FETF acceptance portal  – https://www.fetf.org.uk/acceptance_portal_intro/ . They then have until midnight on 31st October 2022 (also extended by one month) to buy and install the items and submit a claim for payment (see our article of 22nd February https://abcbooks.co.uk/farm-equipment-technology-fund/).

NI Trade Issues

Intra-Ireland Trade

Latest data from the Irish Central Statistics Office (CSO) show that total agri-food trade between Northern Ireland (NI) and the Republic of Ireland (ROI) has increased significantly (by 42%) in 2021 versus 2020.

NI agri-food imports from ROI have increased by 47% with regulatory controls imposed on GB to NI trade as a result of the NI Protocol being the primary driver. Corresponding NI exports to ROI have also risen by 38% over the same period, showing that increased all-island agri-food trade is happening in both directions.

Looking at individual product categories in more detail, the chart below shows substantial increases in dairy trade during 2021.  NI exports to ROI are estimated at nearly £284m in 2021; up from £202m in 2020.  Imports are up from £169m to nearly £314m over the same period, suggesting that NI retailers and the food services sector are procuring a greater proportion of inputs from ROI as a result of regulatory barriers on GB to NI trade.  Other product categories also show similar trends with NI imports from ROI showing strong growth across all sectors.

NI Protocol Negotiations

Talks to simplify post-Brexit trade between GB and NI as a result of the imposition of the NI Protocol are continuing but progress has been limited of late.  Despite some rumours of the UK Government contemplating the triggering of Article 16 to suspend some parts of the Protocol, discussions look set to continue particularly as both the UK and EU are keen to show a united front as tensions between Russia and Ukraine mount.  Whilst some progress has been achieved on simplifying customs formalities, significant gaps remain in terms of how checks on food, animals and plant products are managed.  With the NI Assembly election looming in May, it is likely that both the UK Government and the EU will be keen to give the Protocol negotiations a low profile until then.

ROI Trade with GB

The CSO data also reveal a 4% drop in total agri-food trade between ROI and Great Britain (GB) from £8.8bn to just over £8.4bn.  The key driver of this has been a 19% drop in ROI imports from GB as EU regulatory controls have been effective since January 2021.  Over the same period, there has been an 8% increase in the value of agri-food exports from ROI to GB.  Increased agri-food prices during 2021 are the major driver of this increase.  Whilst the UK Border Operating Model is not fully functional and Irish exports to GB face few regulatory barriers and this will also have supported continued Irish exports to GB.  That said, Irish exports of beef to GB (£753m) have declined by 4% in value terms during 2021 and by 23% in volume terms (decreasing from 193Kt to 149Kt). Irish dairy exports to GB have witnessed a more severe decline, down by 24% in value terms in 2021 and are now valued at just under £530m.

Sustainable Farming Incentive Pilot

The RPA has issued the first batch of quarterly payments under the Sustainable Farming Incentive (SFI) Pilot.  These have been made to those participants whose agreements commenced on November 1st 2021.  Not all applications had been processed by this initial start date, but offers have been sent out on a regular basis since.  As of 18th February, 826 agreements have been offered, with 769 accepted and a further 57 still awaiting acceptance.  There are also 73 applications still being processed.  Pilot participants are now able to apply for capital items, see Bulletin article https://abcbooks.co.uk/countryside-stewardship-6/

Farm Equipment & Technology Fund

Defra has started to send out Agreements for the first round of the Farming Equipment and Technology Fund (FETF).  Successful applicants need to accept their Agreements by midnight on 4th March, via the dedicated FETF acceptance portal.  They then have until midnight on 31st October 2022 (extended by one month) to buy and install the items and submit a claim for payment.

The FETF is part of the Farming Investment Fund (FIF) offering grants of between £2,000 and £25,000 towards the cost of specific capital items identified to improve farm productivity in a sustainable way.  The first round was significantly over subscribed.  Defra received 5,624 eligible applications worth a total value of just over £53.5m; three times the initial allocation for the fund.  Of these 4,376 have been offered Grant Fund Agreements (GFA) totalling over £48.5m.  The scheme is competitive and items in an application are scored on how they meet the following criteria:

  • productivity
  • animal health and welfare
  • environmental benefits, including biodiversity

Defra is encouraging those who were unsuccessful this time to apply in the next round, which is expected to open later this year.  Defra is  reviewing all the feedback from this round to help inform the design and operation of the next round.  In the coming weeks it will be asking  farmers and stakeholders for input in reviewing the list of items eligible for grant funding in future rounds.

Slurry Grants

Both Defra and the Scottish Government have recently made announcements regarding funding towards improving slurry management on farms.

Scotland

In Scotland the Sustainable Agriculture Capital Grant Scheme 2022 (SACGS) will open in the spring, offering support towards the purchase of low-emission slurry spreading equipment and slurry store covers; both proven to reduce ammonia emissions.  Full scheme guidance is not available yet, but Scottish farmers, crofters and agricultural contractors who store and/or spread livestock slurry or digestate will be able to apply for the grant.  All businesses will need to be registered with the SGRPID.  Grants will be based on standard costs.  In the pilot (see below) this was at 50% or 60% in the Highlands & Islands, with a £20,000 maximum grant for a single business.  The scheme is expected to be open for 6 weeks in the spring for applications.  If an application is successful a Carbon Audit and Nutrient Management plan will be required.

The SACGS Pilot Scheme launched in autumn 2020 offering grants towards the cost of specific items identified to reduce GHG emissions and improve land and livestock management.  It seems this round is just concentrated on improving slurry management.

England

In England Defra has previously implied there would be a separate Slurry Investment Scheme available in autumn 2022.  The latest from Defra is that support for slurry management equipment and technology will be integrated into the Farming Investment Fund (FIF), rather than a separate scheme.  Readers will recall the FIF has two ‘levels’ – the Farming Equipment & Technology Fund (small grants for a specific list of items) and the (larger) Farming Transformation Fund.  Both have already offered funding for improving slurry management, but Defra will be inviting views on how to improve this in future rounds.  It is likely that a round within the Farming Transformation Fund will open this autumn, offering significant grant contributions to help farmers achieve 6 months storage capacity.  The scheme, if over subscribed, could be competitive and therefore projects maximising environmental outcomes will prioritised.  More information is expected through the spring and we will endeavour to keep readers up-to-date.

 

BPS 2022

This year the Basic Payment Scheme will open for applications in England on 15th March.  It is already possible to transfer land and entitlements online in preparation (see article https://abcbooks.co.uk/land-entitlement-transfers-3/) As 15th May falls on a Sunday this year, the deadline for applications (without a penalty) including Young and New Farmer, applications is midnight on 16th May.

It is still possible to make a late application up until 10th June but this will attract penalties.  However, it is also possible to make certain changes to a claim that was submitted by 16th May, without penalties up until 10th June.  These include;

  • changing the land use of a parcel
  • increasing the eligible area of a land parcel
  • increasing the area you want to use to activate your entitlements
  • adding a land parcel

Countryside Stewardship

The Countryside Stewardship scheme is now open for applications in England.  This includes;

  • Mid-tier – Open from 8th February to 29th July 2022 for agreements to commence on 1st January 2023.  This year, it is possible to apply online for Mid-tier via the Rural Payments service, meaning it is no longer necessary to request a pack.  But for those who prefer not to, or are unable to apply online, packs can be requested via Rural Payments by 5th July.  If it is not possible to go online, requests for packs by telephone or email must be made by the earlier date of 27th May.  The last date to request Catchment Sensitive Farming Approval or Natural England approval (required for certain options) is 20th May.  For more information go to https://www.gov.uk/guidance/mid-tier-and-wildlife-offers-manual-countryside-stewardship
  • Wildlife Offers – These are also open for applications from 8th February to 29th July 2022.  As previously, online applications are preferred, but where this is not possible, packs must be requested by 5th July.  The Wildlife Offers are meant to be quicker and simpler to apply for.  Unlike the Mid-tier, they are not scored, meaning all eligible applications will get an agreement.  There are no capital items included in the Wildlife Offers, but it is possible to apply for a standalone Capital Grant (see below) alongside a Wildlife Offer. For more information go to https://www.gov.uk/guidance/wildlife-offers-countryside-stewardship
  • Higher-tier – The application period commences on 8th February.  The deadline for submitting a Higher-tier initial application is 29th April with the final application to be submitted by 31st August.   The deadline for requesting an application pack (online, email or post) is 31st March.  Higher-tier includes woodlands, commons and environmentally significant sites (eg.SSSIs).  For more information go to https://www.gov.uk/guidance/higher-tier-manual-countryside-stewardship
  • Capital Grants – From the 8th February 2022, Capital Grant applications are now open all year round.  Further information can be found at https://www.gov.uk/guidance/countryside-stewardship-capital-grants-manual.  Readers will recall the Capital Grants offer was expanded last year so it now offers standalone capital items within three areas;
    • Boundaries, trees and orchards
    • Water quality
    • Air quality
  • SFI Pilot Capital Grants – It is now possible to make a Capital Grants application to support SFI Pilot Standards.  Those wishing to make an application need to read the Countryside Stewardship Capital Grants (SFI) supplement first (https://www.gov.uk/guidance/countryside-stewardship-capital-grants-manual-from-8-february-2022-sustainable-farming-incentive-pilot-supplement).  This will direct them to the relevant sections in the 2022 Capital Grants Manual.
  • Protection and Infrastructure Grant – This is a new standalone capital grant open all year round from 8th February 2022.  It is a two year capital grant for support to create Woodland Infrastructure (FY2).  Further information can be obtained via https://www.gov.uk/guidance/protection-and-infrastructure-countryside-stewardship
  • Other CS grants remain open all year round, these include;
    • Woodland Management Plan grant
    • Woodland Tree Health grant
    • Implementation Plan (PA1) and Feasibility Study (PA2) grants – funding for more complex projects – speak to a NE advisor first