Category: Policy & Business

Scottish Transition Schemes

Scottish farmers are now able to claim grants if they take part in carbon audits and soil testing on their farms.  The Preparing for Sustainable Farming (PSF) programme has opened, as part of the Scottish Government’s National Test Programme (NTP).  As we wrote in February, ‘Track 1’ of this will encourage farmers to start collecting information on their businesses.  This baseline data will then be used to measure future improvements.  There is a goal to have half of all funding for farming and crofting be subject to ‘conditionality’ by 2025.  Part of this conditionality will be making improvements in emissions and input use.

The Carbon Audit element will pay a fixed amount of £500 towards having an audit.  The calculator to be used is not specified, but it must be compliant with the PAS 2050 standard to be eligible for the grant.  Funding is only available for businesses that don’t already have a carbon audit, or if it is more than three years old.  To be eligible for the grant, the Carbon Audit must have been reviewed by, and had recommendations from, a Farm Business Adviser Accreditation Scheme for Scotland (FBAASS) adviser.  This will give pointers to how the farm can reduce its GHG emissions.

The Soil Sampling scheme covers only Region 1 land (land included on that year’s SAF form).  The soil analysis is to determine the current levels of pH, Phosphate (P), Potash (K), and Carbon in the soil.  If any of these are not included (e.g. carbon), then the testing will not be eligible.  Payments will be the actual cost of having the testing done (the invoiced cost), plus an allowance of £4 for gathering the sample.  However, there will be an annual ‘cap’ on payments; this will be the area of Region 1 land, divided by 5, multiplied by £30.  Small farms (and crofts) will have a minimum annual allowance of £300.  In the first year of the scheme there will also be a one-off payment of £250 as a ‘development’ payment.  Before a claim for the Soil Analysis and Development Payment is made, the farm must have a current Carbon Audit (i.e. less than three years old).

There is no requirement to register for the grants – it is a question of claiming the funding once the work has been done.  This is via a new online portal which will be accessed from the Preparing for Sustainable Farming (PSF) guidance page on Rural Payments and Services website.  The full scheme guidance can be found at – https://www.ruralpayments.org/topics/all-schemes/preparing-for-sustainable-farming–psf-/ .

Border Check Postponement

It has been confirmed that there has been a (further) postponement to the introduction of the remaining border controls for imports into the UK from the EU.  The Minister responsible, Jacob Rees-Mogg, issued a statement to the House of Commons on 28th April which set out the reasoning behind these delays and the UK Government’s plans for the future operation of its border controls.

Mr Rees-Mogg claimed that introducing additional controls from July would have replicated the controls that the EU applies to its global trade which would have meant ‘complex and costly’ checks which would have to be altered in the future when the UK implements its transformation programme (including greater digitisation) for the operation of its border controls with both the EU and non-EU countries.

This means that no further controls on EU goods (notably agri-food products) will be introduced in 2022.  Instead, the UK Government plans to publish a Target Operating Model in  the autumn that will set out its new regime of border import controls.  Thereafter, the new import controls regime would be introduced by the end of 2023.  In effect, the following controls will now not be introduced:

  • A requirement for Sanitary and Phytosanitary (SPS) checks on EU imports to be done at a Border Control Post (BCP) (currently done at destination)
  • A requirement for safety and security declarations on EU imports
  • A requirement for further health certification and SPS checks for EU imports
  • Prohibitions and restrictions on the import of chilled meats from the EU

As alluded to in previous articles, it is no surprise that there is a further delay to the implementation of border controls on imports from the EU as the required infrastructure, particularly IT systems, were simply not ready.  In light of this, business organisations have broadly welcomed the announcement.  However, some firms had already spent quite heavily on preparing for the introduction of more controls from July, and potentially, this money will effectively be wasted.  This latest announcement is also different to previous delays in that a more fundamental review of import controls on all UK trade (EU and non-EU) is taking place.  Certainly, there are areas where greater efficiency is possible, particularly around the use of e-certification processes, which is widely used by New Zealand.

Within the farming sector, several organisations have rightly highlighted the lack of a level playing-field – in that UK exports to the EU are subject to the full range of regulatory checks, whilst UK imports from the EU continue to need far fewer checks.  This has put UK Farming Plc at a significant disadvantage.  In this context, it would surely have been better for the UK Government to have reached a veterinary agreement with the EU, to drastically lower the levels of checks on both sides?  Such an agreement would not have stopped the UK from introducing a separate border control regime in the future, but would have supported UK exporters. 

Scottish Farm Incomes

Farm profits in Scotland showed a significant increase in the 2020/21 year.  The Scottish Government has released figures from the Farm Business Survey (FBS) that relate to the 12-months spring 2020 to spring 2021 – i.e. the period ending around a year ago.  The average Farm Business Income (FBI), which can be thought of as farm profit, was £39,300 across all farm types.  This is an increase of £10,000 on the previous year and takes profits to their highest level in real terms since 2012.  The main cause of the improvement in performance was lower costs.  Of course, over the latter half or 2021 and into 2022 there have been significant cost increases.  The figures for 2021/22, and certainly 2022/23, when they are published may well not be so good.  Full details of the data, including a breakdown by farm type, can be seen at – https://www.gov.scot/news/farm-income-statistics/.

 

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;