Category: Policy & Business

Improving Farm Productivity Grants

The Improving Farm Productivity grant is now open for applications.  It is the second theme under the Farming Transformation Fund (the first one was Water Management).  The grant will pay for capital items to improve farm and horticulture productivity and will pay up to 40% of the costs for;

  • robotic horticulture and arable equipment, including robotic weeding and robotic harvesting equipment
  • robotic animal welfare equipment such as robotic milking or robotic feeding items
  • advanced ventilation control systems for existing horticultural and livestock buildings
  • wavelength-specific LED lighting for horticultural crops.

The minimum grant is £35,000 and the maximum per theme is £500,000.  There is a two-stage application process; between 19th January and 16th March 2022 applicants are required to complete an online checker with business information and outline project details.  The checker will give the applicant a score, showing how well the project fits with the three funding priorities – improving productivity, improving the environment and introducing innovation.  It is possible to go through the checker multiple times to improve the application, before submitting it.  The funding is competitive, the RPA will inform those who are invited to make a full application.  The closing date for full applications is 14th September 2022.

Further information can be found via https://www.gov.uk/guidance/farming-transformation-fund-improving-farm-productivity-grant?utm_medium=email&utm_cam paign=govuk-notifications-topic&utm_source=454adb13-48d1-4002-87c5-2f9acf9e083e&utm_content=immediately

Defra is also holding a webinar on Tuesday 25th January for those interested see https://teams.microsoft.com/registration/UCQKdycCYkyQx044U38RAg,5yXTj8SJWE-tGJ3Jh8xTKQ,bMRbicryNkifID4EpSWchQ,7pa4VoVKR0-sbdny22ziNQ,cEBOVeI62ki2hBncOomt4Q,7xl8gYUc_0y-Lm1nbIA8OQ?mode=read&tenantId=770a2450-0227-4c62-90c7-4e38537f1102

The third theme under the Farming Transformation Fund will be Adding Value.  This is aimed at adding value in food production and will be available in Spring 2022.

Biodiversity Net Gain

More details on the operation of Biodiversity Net Gain (BNG) have been released.  This may seem incidental to agriculture but it potentially opens up a new income stream for land managers.  An impact assessment published by Defra alongside a consultation indicates that the annual market for BNG offsets may be in the region of £135m and require up to 10,000 Ha of land (see the market analysis here – Defra, UK – Science Search).  

In summary, BNG is a new policy being introduced in England under the Environment Act.  It requires any development to deliver 10% more biodiversity after the development has been done than was present beforehand.  Whilst it is possible to deliver some of the ‘after’ biodiversity through measures on the site itself such as ponds and tree planting, in many cases compensating biodiversity will need to be sourced away from the development site – the concept of biodiversity offsets.  When Planning Permission is being applied for, the application will have to submit a biodiversity gain plan with the application.  There is a calculator (the Biodiversity Metric 3.0) that is used to work out the ‘before’ and ‘after’ biodiversity.  A market will develop in biodiversity offsets to meet developers needs.  There is a requirement that any biodiversity created has to be guaranteed for 30 years.  Conservation covenants are seen as a key way of ensuring this.

Whilst the Environment Act provides the overall legislative framework, the scheme details need to be filled-in by Secondary legislation.  This is what is being consulted on.  On important announcement is that BNG will not become mandatory until November 2023 – therefore the market for land owners will not be fully developed in the short term (although some firms are already active and trying to set up a ‘bank’ of BNG offsets).  Another important date is that only habitats created after 30th January 2020 can be used as offsets.

One unresolved issue is the interaction of all the various ‘land management’ initiatives.  For example, could a landowner create a habitat to sell the biodiversity offsets, but then also sell the carbon credits, nutrient balances or any other environmental ‘service’.   This also applies to land entering a Defra scheme under ELM – could this also pick up BNG credits?  The consultation indicates Defra is ‘minded’  to allow BNG offsets and other market co-exist as long as any outcomes paid for are ‘distinct and additional’.  This builds on Defra’s payments principles under ELM schemes where it seems ‘stacking’ of payments will be allowed as long as different agreements do not ‘pay for the same thing twice’.  Although this seems positive for landowners the precise interpretation of these rules is still not clear and may not become so until both ELM and BNG scheme rules are published.  

The consultation on BNG runs until 14th April 2022.  The documents can be found at https://www.gov.uk/government/consultations/consultation-on-biodiversity-net-gain-regulations-and-implementation.

Future Northern Ireland Farm Support

Northern Ireland plans to continue with area-based direct payments as part of its new farm support proposals.  However, they are likely to be lower than current levels and total receipts will be capped at relatively low levels.  These proposals are set out in a consultation issued by the Northern Irish government and closely follow the Future Agricultural Policy Framework published in September (see https://abcbooks.co.uk/ni-farm-policy/).

There will be eight main ‘components’ of support;

  1. Resilience Measure:  an area payment, but at lower levels than currently.  Farm Sustainability Standards will replace cross-compliance but these will be amended and include new requirements like soil sampling, nutrient planning and data provision.  There are proposals to alter the eligible land and active farmer definitions.  Payments will start to be reduced after a threshold of £60,000.  One proposal is to raise the minimum claim threshold to 10 hectares.  There will also be a Crisis Framework put in place to deal with periods of very low market prices.  Details are still to be worked out, but it will move away from the EU mechanisms such as Intervention and Private Storage Aid and likely be more focused on direct payments to farmers.
  2. Headage Sustainability Measure:  17% of the current support budget will be diverted into headage payments for suckler cows, a beef slaughter premium and possibly ewe headage payments.  The suckler payment will be limited by quotas based on historic production.  There will be requirements on maximum age at first calving and calving intervals to drive productivity improvements.  The slaughter premium (‘Beef Transformation Measure’) will be targeted at getting animals finished earlier with the eventual aim of having all beef animals slaughtered by 24 months.  it is not intended to bring in a ewe premium initially, but this will be kept under review.
  3. Farming For Nature: this will build on existing NI agri-environment schemes.   The measures will evolve over time and the consultation indicates that funding will gradually shift from the Resilience measure so that this element becomes the ‘central plank’ of support.  There will be trails of new schemes to see what works – there is a clear desire for collaboration and landscape-scale schemes to achieve a critical mass in habitats.  Areas that will be focused on include hedges, walls, field margins, pollinators, buffer strips, tress (including agro-forestry and planting around farmyards), natural grasslands, farm ponds and control of invasive species.
  4. Farming for Carbon:  there is less detail on precise measures under this heading as they are still being worked on.  It is highlighted that removing low-productivity animals (via the headage payment system) will release land for other ‘carbon friendly’ uses such as forestry.  Other areas being explored include feed supplements, livestock genetics, fertiliser additives, fertiliser application, increase use of legumes, peat restoration and increased use of anaerobic digestion.
  5. Investment:  this primarily relates to grants for capital investment on farm.  These will be targeted at items that improve productivity, innovation, cooperation and environmental outcomes.
  6. Knowledge:  this is seen as key to the success of many of the other measures, with farmers’ education, knowledge and skills being vital to implement the improvements targeted.  The measure will build on existing programmes such as Business Development Groups.  Whilst the details are being worked on, there is a strong presumption that Continuous Professional Development (CPD) and lifelong learning will be part of the package.  This may, in time, become compulsory in order to access funding.
  7. Generational Renewal:  linked to the measure above, there is a view that getting farm businesses into the hands of younger people will drive innovation and lead to a better-skilled sector.  The consultation proposes a Succession Planning Facilitation Service to prepare businesses.
  8. Supply Chains:  the focus here is on farm-level issues rather than sector-wide measures as the latter will be covered in the Northern Ireland Food Strategy Framework.  Measures being looked at include better market information to increase transparency, better training for farmers on the food chain, and support for collaboration between primary producers.

More details on the consultation can be found at – https://www.daera-ni.gov.uk/sites/default/files/consultations/daera/21.22.164%20Consultation%20on%20Future%20Agriculture%20Policy%20Proposals%20for%20NI.pdf .  It runs until the 15th February 2022.

Local Nature Recovery & Landscape Recovery

Outlined by George Eustice at the virtual Oxford Farming Conference, Defra has released two policy papers giving more information on the Local Nature Recovery (LNR) and the Landscape Recovery (LR) schemes.  These are the other two components of ELM, the first being the Sustainable Farming Incentive (SFI) scheme.  The are due to be fully in place by late 2024.

Local Nature Recovery (LNR)

Defra has described LNR as the ‘improved and more ambitious successor to the Countryside Stewardship scheme in England’.  It will pay for locally-targeted actions to ‘make space for nature alongside food production’.  This can be contrasted with the SFI, which is more about incorporating environmental improvements within farming.  The aim is to take the best bits of CS to create a scheme with ‘wider appeal that can deliver more and better outcomes, in a less bureaucratic and more supportive way’.

LNR will provide a range of options (much like Countryside Stewardship), so that farmers can choose those that fit their own circumstances.   This will include options which have been successful under CS but also new ones as well.  Initially the options will cover the following themes:

  • managing feeding, shelter and breeding areas for wildlife on arable farms
  • managing, restoring and creating grassland habitats such as species-rich grassland on farms and in the wider countryside
  • managing, restoring and creating wetland habitats such as ponds, lakes, reedbeds and fens
  • managing, restoring and creating lowland heathland
  • managing, restoring and creating coastal habitats such as sand dunes, salt marsh and shingle
  • managing and restoring areas of upland and lowland peat and moorland on farms and in the wider countryside
  • targeted measures to support the recovery and reintroduction of particular wildlife species, such as creating and managing nesting and feeding habitat, and to tackle non-native invasive species
  • managing and creating trees and woodlands, including agroforestry, traditional orchards and tree planting on areas of farms – noting that the England Woodland Creation Offer will be the main scheme for woodland creation until 2025
  • nature-based solutions for water – such as creating and managing in-field vegetation, buffer strips and swales to reduce and filter runoff and contribute to natural flood management
  • restoring rivers, flood plains, streams and riparian habitats

More details on the full list of options are expected later this year, alongside more details on scheme rules and the proposed payment rates.  The LNR will be open to farmers, foresters and other land managers.  Agreements will cover multiple years, with the length dependent on the activities being undertaken.  It will be possible to add more options or land to agreements over time and work continues to try and ensure the scheme is accessible to tenant farmers and also those farming common land.  It will be possible for farmers to enter into both LNR and SFI, provided the actions are compatible and they are not getting paid for the same thing twice.  The aim is that, from 2024, both the LNR (and SFI) will be accessible through a single digital service that shows all the options available.

There will be encouragement for farmers to work together under the LNR as trials have shown these can provide some of the best outcomes.  There is likely to be a similar ‘facilitation fund’ as was seen under the CS.  Similarly, through tests and trials, it has been found that land management plans (LMPs) are a good way to assess the potential to deliver environmental benefits on farms and work will continue through 2022 on how best to use LMPs as part of SFI and LNR.  The priorities of the LNR scheme will be locally-targeted which will be influenced by the Local Nature Recovery Strategies to be introduced under the Environment Act.

Quite a topical issue is private finance arrangements and Defra has said it would like farmers to be able to enter into private arrangements such as carbon trading, providing Biodiversity Net Gain and nutrient trading alongside the government schemes.  It is working with stakeholders to consider how to make this work so that farmers are ‘better off when seeking private finance’.  Clear rules will be set on this later in the year.

In terms of timescale, piloting and testing is planned to take place in 2022 with up to 500 participants, focusing on specific areas which are new or different, more details on this and how farmers can get involved is expected shortly.  Then in 2023 an ‘early version’ will be available to a limited number of participants, followed by full roll out by the end of 2024.

Landscape Recovery

This scheme is for landowners and managers who want to take a more ‘radical and large-scale approach’ to producing environmental and climate goods on their land.  The scheme will initially focus on biodiversity, water quality and net zero.  Agreements are expected to be long term, 20-years plus, with safeguards, such as Conservation Covenants in place to protect them in the future.  There will be no set list of options with payment rates, instead Defra will work with project managers to negotiate bespoke agreements.  These will need to deliver good value for money, significant outcomes, and attract private finance to support the project.

At least two rounds of pilots will run over the next two years.  The application for the first round of up to 15 LR projects will open shortly and will focus on two themes;

  • recovering and restoring England’s threatened native species – projects under this theme are expected to recover priority habitats, habitat quality and species abundance
  • restoring England’s streams and rivers: improving water quality, biodiversity and adapting to climate change – these projects could restore water bodies, rivers, and floodplains to a more natural state, reduce nutrient pollution, benefit aquatic species, and improve flood mitigation and resilience to climate change

The second round of pilots will open in 2023.

LR will be open to any individual or group who can deliver a large scale project on between 500-5,000 hectares of land.  Land already in an existing agri-environment is eligible, but obviously payment will not be made for the same thing twice.  Work is being carried out looking into ending exiting HLS and CS agreements early, without penalty, to go into LR.  Applications will be assessed against set criteria, full details of which will be available shortly when the full guidance is published.

There will be a two stage application approach.  The initial application window will be open for 16 weeks.  Those projects that achieve the highest score in the initial round will receive development funding from Defra.  This will support more detailed planning over around a two-year period.  At the end of this, successful projects will proceed to the implementation phase i.e. when work on the ground actually commences.  At this point, there is a strong presumption that the schemes will only be part-funded by Defra.  Such large-scale projects are assumed to be attractive to private-sector funders which will supplement payments coming from Defra.

This is an ambitious scheme, the pilot projects alone are expected to create at least 20,000 hectares of wilder landscapes, habitats, rewetted peat and afforestation at a landscape scale, delivering on the commitments made in the Prime Minister’s 10 Point Plan.

These two schemes will not be for the majority of farmers, the SFI will be the component for most who continue to farm commercially.  But when fully up and running, the LNR and LR combined are expected to use 60% of the agricultural budget taken forward from CAP.  The SFI will receive 30% and the other productivity schemes the remaining 10%.

Countryside Stewardship Payment Rates

The Countryside Stewardship revenue payment rates have been revised.  Most (over 100) have been increased, although a few (less than 10) have been reduced.  All the new rates can be found at https://www.gov.uk/government/publications/countryside-stewardship-revenue-payment-rates-from-1-january-2022/countryside-stewardship-payment-rates-for-revenue-options-from-1-january-2022

If you have a revenue agreement, or an application for a revenue agreement starting on or before 1st January 2022 then where the new rate has:

  • increased; the new (higher) rate will be paid
  • decreased; the existing (higher) rate shown on the signed agreement will be paid
  • not changed, the existing rate shown on the signed agreement will be paid.

For new agreements starting from 1 January 2023 all of the new revenue rates will apply and full details of the changes will be included in the relevant Countryside Stewardship scheme manuals when the scheme opens in February 2022.  There are no plans to change payment rates for capital options for 2022.

Farmers Opinion on Welsh Support Sought

The Welsh Government is looking for farmers to take part in the co-design process of the new Sustainable Farming Scheme (SFS).  The first stage of co-design saw around 2,000 people take part.  The next phase will take place in the summer of 2022 and is looking for farmers to provide ‘opinions on the practicality of proposed actions underpinning the SFS and the wider scheme structure and processes’.  Details of the SFS are due to be published in the first half of 2022 alongside the Welsh Agriculture Bill.  Once the co-design process has been undertaken the final SFS will be announced in 2023.  More details of how to sign-up can be found at – https://gov.wales/register-have-your-say-wales-future-farming-scheme .

Peat Consultation

A consultation has been launched on the banning of the sale of peat for horticulture in England and Wales.  The consultation can be found at – https://consult.defra.gov.uk/soils-and-peatlands/endingtheretailsaleofpeatinhorticulture/.

Delinking and Lump Sum Payments

Defra’s response to the Delinking and Lump Sume Payment consultation has been delayed further.  Initially it was due to report on it in October, but said it hoped to report by the end of the year.  It has now announced ‘Publication of our report on the consultation has been delayed so we can fully consider the comments made by respondents. We received 654 responses. We expect to publish the report in early 2022’.  As said previously, if the Lump Sum exit scheme is to be availble in 2022, this gives very little time time for respective applicants and their advisors to interpret the rules.

Chief Brexit Negotiator Resigns

On 18th December, Lord Frost, the UK Government’s Chief Brexit Negotiator, and co-architect of both the Trade and Cooperation Agreement (TCA) with the EU and the Northern Ireland (NI) Protocol, resigned with immediate effect.  In his resignation letter, he cited issues with the Government’s direction of travel on Covid policy and higher taxation as key reasons for his departure. However, many suspect that frustrations with how negotiations with the EU are progressing on the NI Protocol were also influential.  In recent weeks, some progress had been reported on medicines and the UK’s stance on the European Court of Justice had softened but negotiations will continue into 2022 with agri-food, particularly Sanitary and Phytosanitary (SPS) regulation continuing to be a key stumbling block.

Whilst some see Lord Frost’s resignation as a blow to the Prime Minister, others believe that the possibility of a deal on the NI Protocol in early 2022 has increased.  Particularly with the Foreign Secretary, Liz Truss, now taking on the responsibility of overseeing negotiations with the EU.  Ms Truss is popular with Conservative party grassroots and is viewed as more of a pragmatist than Lord Frost.  Her experience as Defra Secretary (2014-2016) and International Trade Secretary (2019-2021) should also be helpful in addressing remaining SPS and customs issues.  She will be deputised by Chris Heaton-Harris MP who has become Minister of State for Europe who will support the Foreign Secretary on EU Exit and NI Protocol issues.