Category: Policy & Business

At the time of writing, there was no indication of when the SFI 2024 would be open to all applicants.  At present there is still a requirement, for those that wish to make an application, to fill out an expression-of-interest (https://defragroup.eu.qualtrics.com/jfe/form/SV_cSGsCBrA5Kim3H0).  The Rural Payments Agency then invites people to make a full application.  It is unclear how long the ‘waiting list’ is of those who have expressed an interest, but have yet been asked to submit a full application.

There are a number of teething issues with the application system – perhaps not surprising when their are 102 different options to try and integrate.  The SFI is also being run on the RPA’s legacy computer systems.  It might be supposed that these are perhaps not at the cutting edge of computer technology….   The SFI is unlikely to be opened fully (including to those who have not previously made a BPS claim) until these issues are resolved.  We have received no indication of when this might be.  We would guess at least a month if not longer.

A  number of other questions are still to be answered.  Earlier in the year further options under the SFI were promised.  These include an education access option and further ‘endorsed’ options on wildlife, grass habitats, heritage, wood pasture, orchards, coastal habitats and waterbodies.  There is no information as yet on when these might be launched.  It is also unclear whether any extra SFI options will be made available in 2025.  We would guess not, with the SFI 2024 being given a chance to ‘bed-in’ for a while – but this is not certain given previous scheme changes. 

There is also the question of what is happening with Countryside Stewardship (CS).  This is essentially now just a Higher-Tier scheme as the SFI has subsumed almost all Mid-Tier options.  A new CS application process was promised in the second half of 2024 with year-round applications rather than just a one-off window.  Things have gone rather quiet on this.  Many farmers already in an existing Higher Tier agreement, or in an HLS agreement that is rolling-on, wish to enter the SFI but the system currently prevents this.

Hopefully, now new Ministers have their feet under the table, we will see some more announcements on these issues.  

A new Chairman has been appointed to the Environment, Food and Rural Affairs (EFRA) Committee.  The new head of the Commons committee is Liberal Democrat, Alistair Carmichael.  Mr Carmichael has been MP for Orkney and Shetland since 2001.  He is the son of hill farmers on Islay.  The EFRA Committee holds Defra and its associated bodies to account.

The Welsh Government has provided an update on the progress towards the Sustainable Farming Scheme (SFS).  A number of Government and Stakeholder groups are reviewing the all of the Universal Actions and key Scheme Rules.  The plan is that, once the Universal Actions and Scheme Rules have been ‘refined’, further modelling work will be undertaken to produce a revised Integrated Impact Assessment.  It will be next year before Ministers make any final decisions on the the rules of the SFS.  The Cabinet Secretary for Climate Change and Rural Affairs, Huw Irranca-Davies, has promised to update the Senedd later this year on progress, but has said he will not provide a ‘running commentary’ on the development of scheme.  More details can be found at – https://www.gov.wales/written-statement-sustainable-farming-scheme-sfs-update-partnership-working .

The European Union’s Deforestation Regulation (EUDR) is causing growing concern within the agri-food industry in the UK and beyond as the deadline for its implementation, set for December 2024, approaches.  The EUDR aims to curb the import of products into the EU which are linked to deforestation.  It will require firms to prove that goods like palm oil, beef, and soy come from deforestation-free supply chains.

In the UK, there are concerns from a few perspectives.  Firstly, those within export-focused sectors such as beef and sheepmeat are concerned that the UK has not done the preparatory work required to adhere to EUDR requirements.  This could leave the industry exposed from January as British exports may no longer be compliant with EUDR requirements which will require traders that place commodities on the market to prove that the products have not been derived from, or have contributed to deforestation.  Industry representatives claim that other countries that trade with the EU are being more proactive in creating Government-backed systems that are EUDR-compliant and that the same level of preparation has not taken place within the UK.

Linked with this, several industry stakeholders based in Northern Ireland (NI) have expressed concern that EUDR will significantly increase costs, particularly in terms of procuring soybeans for animal feed as producers there will have to comply with EU requirements.  They state that there is already a £30-£40 per tonne premium to procure soybeans which will be compliant with EUDR requirements.  This is creating difficulties for NI-based industries, particularly poultry meat which is especially reliant on soya-based feed.  There is a competitive disparity emerging vis-à-vis GB-based producers who will still have the option to procure soybeans (e.g. from the US) which may not yet be EUDR compliant.

Several other nations including the US are calling on the EU to delay the implementation of the EUDR as they fear logistical and cost challenges. The pressure is mounting on the EU Commission to address the issue as it is creating uncertainty within agri-food supply-chains, particularly as the Commission have not yet released its guidelines on implementing EUDR (expected since the spring).  According to recent reports from Strasbourg, the EU Commission President Ursula von der Leyen is poised to table a ‘postponement’ or another ‘temporary solution’ in the coming days as most believe that entry into force by January is not possible.

The implementation of the EUDR is also another example of emerging divergence between EU and UK legislation and illustrates the difficulty that NI producers are in in terms of having to comply with the ‘highest common denominator’ in order to be able to serve both the EU and UK markets.  Examples of this so-called ‘divergence creep’ are also emerging elsewhere (e.g. different refrigeration requirements for dairy products in EU countries than in the UK and differing tolerances for lead-levels in sheepmeat products between the UK and the EU).  Issues such as these add more urgency to calls for a Sanitary and Phytosanitary (SPS) agreement between the UK and the EU.  Given that the nomination process for the new EU Commissioners is underway, it will be January before any substantive talks on a potential SPS agreement are likely to begin.

The Welsh Government commenced its ‘Data Confirmation’ excercise on the 22nd July which will run until 6th December.  This allows farmers to update the mapping information held.  This especially relates to the habitat and tree areas on farm, ahead of the introduction of the Sustainable Farming Scheme (SFS) in 2026, when the 10% requirement will be introduced.  It is also relevant to the Habitat Wales Scheme (HWS) which will operate again in 2025 as an interim scheme.  Next year, the application for HWS will be via the SAF rather than a stand-alone application.  There is no compulsion on farmers to check and update their data, but it is strongly advised to get them into a good postion to make future claims.  More details can be found at – https://www.gov.wales/sustainable-farming-scheme-how-complete-your-data-confirmation-form.

Defra has consistently underspent on the farm budget during the Agricultural Transition.  There is a danger that the shortfall will be clawed-back by the Treasury given the spending pressure on the Government.

The figures come from The Farming and Countryside Annual Report (see https://www.gov.uk/government/publications/farming-and-countryside-programme-annual-report-2023-to-2024).  This sets out that Defra planned to spend £2,267m on farming and the environment in 2023/24.  This is, in itself, someway short of the £2.4bn per year on average promised by the previous Government.  In reality, the Department distributed £2,136m during that period – a shortfall of £131m.  This comes on top of under-spends of over £100m in both the 2021/22 and 2022/23 financial years.  Spending those years was £2,294m and £2,230m respectively.

This is funding promised to the farming industry that has not been paid.  There has been a suspicion that the deductions in the BPS which started in 2021 were generating a pot of money that Defra was struggling to ‘recycle’ though other schemes – not least because the flagship SFI was slow in getting started.  The Department had been somewhat opaque on the budget but these figures seem to confirm the suspicion.  It had been assumed (or hoped) that underspends in earlier years would just be rolled-forwards and could be used in later years once, for example, the SFI got up to speed.  However, it is now reported in the press that the Treasury is eyeing some of the underspend to help pay for shortfalls elsewhere in Government.  None of this seems to bode well for the next allocation of agricultural funding which may be announced with the Budget on the 30th October.   

The Scottish Government has published the BPS rates for this year.  The table below sets out the breakdown between Standard BPS and Greening, plus last year’s rates.  The rates are very similar to 2023 – Regions 1 and 3 have gone down slightly, with Region 2 up by just 2p.  The latter will be due to slightly less entitlements being claimed in those Regions this year and the former due to more claimed.  Advance payments commenced on 4th September.

As of July 2024, there were 23,200 live SFI 2023 agreements, according to data published by Defra.  There has been a 67% increase in the number of agreements since April 2024.  Many of the actions have seen similar proportional increases in uptake, with the area covered by 16 of the 24 available actions at the time, increasing by between 60-70%.

The largest increase in area since the April 2024 dataset is for grass buffer strips on arable and horticulture land and flower rich margins.  Both of these options have increased in area by 74%.

By far the most popular option is the soil management plan and organic matter testing (SAM1).  There is now 2.65 million hectares under this option – up by more than 1 million hectares since April.  Given the total farmed area in England is around 9m Ha, this suggests that a minimum of 30% of farmland is now under a SFI agreement. 

A total of 133,000 kilometres of hedges have been placed into the assess and record hedgerow standard.  Of this, 95,000 kilometres are now being managed according to the prescriptions of SFI.

For arable farmers, there is a clear interest in actions such as no use of insecticide, which is taking place on 678,000 hectares.  Cover and companion cropping is taking place on 199K and 151K hectares respectively.  Many of the farms entering land into these standards will have already being carrying out these practices.  There is a total of 154,000 hectares in the actions which are limited to 25% of farm areas.

Legume fallow is one action which may yet see further uptake.  Defra has changed the action back to a rotational option, having made it static in May this year.  At present approaching 86,000 hectares is entered into the action.  Full details on SFI uptake can be found at – https://www.gov.uk/government/collections/annual-countryside-stewardship-and-environmental-stewardship-summary-data .

Policy Direction

With the change of Government there could have been a change to agricultural policy, but the new Defra Ministers have confirmed that they are fully committed to Environmental Land Management (ELM) and they want to ‘maintain the momentum’ built up over recent months.  Defra has said work is being carried out on how the schemes and grants can produce the right ‘outcomes for farmers, food security and nature recovery in a fair and orderly way’.  Quite what this means for farmers and the schemes available is currently unclear.  There has been reference to schemes delivring value for money, but it is very hard to prove the precise contribution of schemes to environmental outcomes, and then even harder to put a value on this.

SFI 2024 Roll-out

The expanded SFI 2024, offering 102 options, is currently still only available via the controlled roll-out.  Those interested must first complete an expression of interest and then the RPA will ‘invite’ them to apply.  We are experiencing differing lengths of waiting times for ‘invites’.  We expect this depends on size, complexity, type of farm and whether another agreement already exists as this is being used to test the system before rolling it out to everyone – it is not simply a first-come-first-served process.  There is no indication when SFI 2024 will be made open to all. 

Scheme Guidance

Guidance on the individual Actions has been amended a couple of times since it first came out in May, the latest version can be found via https://www.gov.uk/government/publications/sustainable-farming-incentive-scheme-expanded-offer-for-2024.  This web page also has a link to the Terms and Conditions, which have also been amended, our article of 2nd August reported these (see https://abcbooks.co.uk/sfi-2024-rule-changes/) including the removal of the annual upgrade provisions.  There is also a search facility for all the actions available via this page – similar to the CS Grant Finder, as well as general scheme guidance.  Many of the recent updates to the actions are to do with compatibility of the options with each other.  But notable is the change to CNUM3 – Legume Fallow, which is rotational again (!).  The ‘general’ scheme guidance has also been updated to include an Annex C which shows the Supplemental action you can do with each Base Action i.e. Grazing Supplement or Haymaking Supplement can be carried out on Low Input Grassland (the Base Action).

Endorsed Actions

Some of the actions under the SFI will target priority habitats or species, or heritage features and applications including these will require ‘endorsements’ from Natural England or Historic England.  The first endorsed action is now available – GRH6: Manage Priority Habitat Species-rich Grassland.  This action was much publicised when the expanded offer was introduced as the payment increased considerably from previously (GS6 was £182 per Ha and now GRH6 is £646 per Ha).  We have been waiting to find out how we get these actions endorsed, but it seems relatively straight forward to apply for;

• select the relevant SFI action and which land the action is going to be done on in the SFI application
• submit the application
• Natural England or Historic England, as relevant, will be in contact about the endorsement process for the action – they may need to visit the land to confirm it’s suitable for the selected endorsed SFI action – with regards to GRH6 the assessor will check that the area is either already priority habitat species-rich grassland or that it has the potential for the restoration or creation of priority habitat species-rich grassland.

Although the process seems relatively straightforward, Defra has said agreements which include actions that require endorsement will take longer to be offered and therefore applicants may want to include these on a separate agreement if there are other actions being claimed so that the endorsement is not holding up the whole claim.  Currently only GRH6 is available.  Other endorsed actions will be added later in 2024 including ones on wildlife, heritage, wood pasture, orchards, coastal habitats and waterbodies.

Into 2025

Whilst there has been no official announcement, it is strongly beleived that there will be no major changes to the SFI for 2025 – or at least the early part of the year.  There may be the now-usual ongoing tweaks but we do not expect a further tranche of options to be added – beyond the endorsed ones outlined above.  This is especially likely to be the case if the new Government wishes to see how the present scheme performs.   

Capital Items

The SFI does not include capital items, but the agri-environment Capital Grants offer has increased considerably over the last few years.  It is available as a stand-alone grant or can be used to support an SFI application.  To this end a further eight items have been added to support some of the new SFI 2024 actions, these are;

• AF1: Plant an agroforestry woodland tree
• AF2: Plant an agroforestry fruit tree
• AF3: Supplement: Species diversity bonus
• TE6: Tree guard (tube and mesh)
• TE7: Tree guard (wood post and rail)
• TE8: Tree guard (wood post and wire)
• PA4: Agroforestry plan
• PA5: Moorland mapping plan

In total there are now 105 capital items under this programme.

Annual Declaration

Each year agreement holders have to submit an Annual Declaration to confirm that they have delivered against their agreement for that year.  This must be completed to receive the final payment for that year.  The Declaration must be submitted within the last two months of each relevant agreement year i.e. an agreement start date of 1st October can submit from 1st August to 30th September.  ‘Early adopters’ of the SFI 2023 should be able to submit their first Declaration now.  RPA will notify agreement holders when their annual declaration period begins – no confirmation yet whether this is via e-mail or through ‘Messages’ on Rural Payments.  The Declaration can then be accessed and completed online in Rural Payments via farmers’ ‘Business Overview’ page.

The first instalment of delinked BPS payments have been sent to English farmers.  The RPA confirmed that as of 5th August, 98% of eligible farmers had received their advanced payment.    This is the first of two instalments this year.  The RPA has also brought forward the second instalment, which this year will be paid from 30th September (instead of 1st December).  Delinked payments will continue during the Agricultural Transition until 2027.  These will decline each year by a set deduction, although as of yet the deductions for 2025 – 2027 have not been released.  These are not expected to be announced until the Spending Review which will be held on the same day as the Budget – 30th October.