Category: Policy & Business

The Catchment Sensitive Farming (CSF) initiative is being expanded to cover the whole of England.  Currently the programme, which gives farmers support to reduce water and air pollution, is only available on 40% of English farmland.  But by March 2023 Defra has said every farmer in England will be able to access advice and support to reduce pollution.  It has announced an extra £17m of funding will be introduced over the next three years.

CSF, which is a partnership between Defra, Natural England (NE) and the Environment Agency (EA), provides free one-to-one advice to farmers.  Natural England advisors also support farmers to make applications to the Countryside Stewardship (CS) for grants towards management practices and capital investments to reduce on farm pollution, such as planting new grassland buffer strips or riverside trees, or using better slurry storage facilities.  Some funding via CS is only available with support from a Catchment Sensitive Farming Officer (CSFO) and if the land is in a priority catchment area.  It is unclear whether this announcement will mean the whole of England now falls within this category and these grants are available to all.

The extra funding will mean more NE advisors will be available to help farmers implement practical solutions to reduce pollution.  But it will also fund 50 new EA inspectors to carry out an increased number of farm inspections.

 

 

NFU Scotland has called for area-payments and coupled payments to continue.  However, current direct payments should be amended to introduce more ‘conditionality’ in the areas of biodiversity, climate change and efficiency.  This would see tiers of payment levels with different rates depending on the measures a farmer choses to enact.

It is envisaged that the new support arrangements would commence from 2026 (the date set out in legislation for a new Scottish support regime to be in place).  In the meantime the farming sector should be prepared for the new scheme through a ‘just transition’.  The NFUS states that this should start as soon as possible – i.e. this year.  This would see a period of (subsidised) information gathering to set baselines in terms of environmental and business performance.  There would then be a period of support, advice, farm planning and capital grants to equip businesses for the future.

More details of the proposals can be found at -https://www.nfus.org.uk/userfiles/images/Policy/0521%20NFUS%20Proposals%20For%20Future%20(Conditional)%20Support.pdf.  The ‘Delivering Change’ document has distilled the concepts and principles from the Scottish Government’s Farmer-led Climate Change Groups (FLGs) and the Union’s own ‘Steps to Change’ proposals.

Reading between the lines of the document, there is a sense that the Union has got tired of waiting for the Scottish Government to come up with any proposals.  This publication seems, at least partly, an attempt to prod the administration into showing its hand in terms of farm policy.

The second part of the National Food Strategy report, undertaken by Henry Dimbleby, has recently been released.  A tax on sugar and salt made headline news but some of the other recommendations have a more direct impact on UK farming.  In total, there are 14 recommendations; 8 and 9 (looked at in more detail below) are likely to impact the most on farmers, but other recommendations including Innovations to Create Better Food Systems (recommendation 11) and Maintaining Standards for Trade (recommendation 10) will also be of interest.

The report is independent and the Government does not have to implement its recommendations.  Indeed, the Prime Minister has already rejected the idea of taxing sugar and salt.  The Government has said it will respond to the report with a Food White Paper within six months.  The recommendations in full can be found at https://www.nationalfoodstrategy.org/the-report/

Recommendation 8 – Guarantee the Budget for Agricultural Payments until at Least 2029

It is recommended that the current budget of £2.4bn is maintained, in real terms, to 2029.  Currently the Government has guaranteed that spending will remain the same for agriculture until the end of this Parliament (scheduled to be 2024).  The report recommends, at the least, this overall spending commitment is maintained to the end of the decade, progressively shifting about £2.2bn from BPS direct payments to ELM.  The remaining £200m should be used to improve farm productivity and innovation.

A further proposal is to ring-fence £500-£700m of the budget for schemes which encourage natural carbon removal and habitat restoration.  The idea being these schemes would incentivise farmers to convert their less productive land into nature-rich, carbon-sequestering landscapes.  This would see farmers receive payments on a basis of ‘carbon sequestered and nature restored’.  Initial payment rates should be 100% of costs with an additional per hectare payment uplift to ensure farmers receive a fair return on land taken out of production.

The report maintains changing the way agricultural land is used is key to achieving national targets; protecting 30% of land in England for nature by 2030 (30×30), the 25 year plan for nature and the net zero target and carbon budgets.  The report estimated in line with the Climate Change Committee’s (CCC) 6th Carbon budget report, that ‘roughly one tenth of agricultural land in England will need to transition to woodland, restored peat, other semi-natural habitats and energy crops by 2035 as part of the broader road to net zero’.

The strategy states ‘we think that Defra is broadly speaking, taking the right approach’ by transitioning from BPS to ELM, but notes that farmers have received subsidies based primarily on the amount of land they farm or the amount of food they produce for over seventy years and they ‘need time – and money – to adjust their business models’.  It acknowledges the reliance many farms have on Basic Payments, but it also draws attention to the fact that the difference in profit between farms is not just as a result of effort and skill by individual farmers, but much of it is to do with the quality of the land.  The report recommends that this unproductive land can now be turned into an advantage for both the ‘farmer and the common good’.  It states that around 20% of English farmland would be suited to creating environmentally friendly landscapes, such as species-rich wood pasture grazed by rare breed cows, new diverse forests and re-wetted peat bogs.  Although most would be upland farms, some lowland grazing land would also fall into this category.  Mr Dimbleby cites losing 20% of the least productive farmland would present very little risk to food security (just 3% of calories).  But until there is a market for carbon sequestration or natural capital restoration, the report recommends £500-£700m per annum, about one third of the ELM budget should be used to pay farms for establishing; 4000,000 hectares of species-rich broadleaf forests, 325,000 hectares of restored upland peat and about 200,000 hectares of farmland dedicated to nature.

Recommendation 9 – Create a Rural Land Use Framework based on the Three Compartment Model

The recommendation is that a Rural Land Use Framework should be devised by Defra ready for 2022.  This will provide a detailed assessment on which land should be used for what, so that food security is not compromised and the environment not made worse.  The report notes that, in the main, the land that could deliver the greatest environmental benefits is often the least productive.  The only real ‘clash’ in England is the Fens, where the land is exceptionally productive, mainly due to its peaty soils, which would otherwise be a major carbon sink.  The report recommends the framework should set out the best way to achieve a ‘Three Compartment Model’ for the country, including which land is more appropriate for;

• Semi-natural land
• Low-yield farmland
• High-yield farmland

It should also flag up land that is appropriate for economic development and housing and should be updated annually.  The aim is for it to provide detailed assessments of the best way to use any given area of land and inform the many existing incentive schemes and future policy within Defra.

Other Recommendations

The remaining recommendations are important in the overall drive in making everyday foods more healthier and tackling the nation’s obesity problems but have less of a direct impact on farming.  The one making the headline news is the introduction of a sugar and salt reformulation tax – £3 per kg on sugar and £6 per kg on salt sold for use in processed foods or in restaurants and catering businesses.  Some of the revenue to used to get fresh fruit and veg to low income household (Recommendation 1).  Others include;

• making it a legal duty for all food businesses with over 250 employees to publish annual data on their sales of various product types as well as food waste
• the Department for Education should launch a new ‘Eat and Learn’ initiative for all 3-18 year olds
• there are initiatives for households on low incomes including increasing the eligibility threshold for free school meals (FSM) from £7,400 to £20,000, extending the Holiday Activities Food programme open to those receiving FSM for the next three years, expanding the Healthy Start scheme and trialing a ‘Community Eatwell’ programme to improve the diets of those on low incomes
• creating a National Food System Data programme to collect and share data
• the Government should reform its Buying Standards for food so that taxpayers’ money goes on healthy sustainable food and it should also set a long-term statutory target to improve diet-related health and create a new governance structure for food policy, through a Good Food Bill.

Defra’s ‘flagship’ statistical publication ‘Agriculture in the UK’ has been published.  The latest edition includes a wide range of farming and food statistics up to the 2020 year.  It can be found at – https://www.gov.uk/government/statistics/agriculture-in-the-united-kingdom-2020 .

An industry group has been granted funding to develop a Farm Soil Carbon Code.  This would be similar to the existing Woodland and Peatland Codes, providing a set of formal protocols that would allow farmers to quantify and verify reduced greenhouse gas emissions and/or soil carbon capture as a result of adopting regenerative farming practices.  The lack of a formal standard is one of the issues holding back the development of a market in carbon offsetting in farming.  The consortium includes farmers, academics, technology businesses and NGOs led by Farming and Wildlife Advisory Group South-West (FWAG).  For more details see https://sustainablesoils.org/soil-carbon-code/about-the-code).  The grant has been awarded under the Environment Agency’s Investment Readiness Fund.

New figures have been released on the UK’s ‘carbon footprint’.  This measures Greenhouse Gas (GHG) emissions associated with UK consumption and is a much better gauge of society’s contribution to climate change than the ‘headline’ UK GHG production figures.  This is because we import many of the goods consumed, and therefore the production emissions are counted in other countries’ figures.  It is acknowledged that it is more difficult to account for the emissions ’embedded’ in imports and so these ‘carbon footprint’ figures are classed as experimental.  The headline figure is that the UK’s carbon footprint has declined by 37% between 1997 and 2018.  The full statistics can be found at – https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/979588/Defra_UK_carbon_footprint_accessible_rev2_final.pdf

A new Welsh Agriculture Bill is to be laid before the Sennedd this autumn.  This will contain the powers to enact the new Sustainable Farming Scheme (SFS).  In announcing the legislation, the Welsh Government has suggested the new support scheme should start in 2024 (although this is not 100% certain).  The Bill is unlikely to give details of how the SFS will work in practice – this is still being worked on.  Instead it will set the legal framework under which the scheme will operate.

 

The Sustainable Farming Incentive (SFI) Pilot application window is open for those who expressed an interest in the scheme earlier in the year.  All the information to make an application can be found at https://www.gov.uk/government/publications/how-to-apply-for-the-sustainable-farming-incentive-pilot/how-to-apply-for-the-sustainable-farming-incentive-pilot.  Applications are made via the Rural Payments online system.  Those who have made a BPS or CS application should find the process and systems familiar.

Note, however, that Defra has made some amendments to the Pilot announced earlier in the year.  In particular, the two Soils Standards – Arable and Horticultural Soils Standard and the Improved Grassland Soils Standard have seen their payments and prescriptions aligned with the SFI 2022 scheme announced at the beginning of July (see article of 5th July https://abcbooks.co.uk/sustainable-farming-incentive-2022/ ).  This means the Improved Grassland Soils Standard payment rates have increased considerably.  But as the SFI 2022 payments and prescriptions will not be confirmed until November, there is the possibility payments could alter again.  However, they are not expected to drop back to the initial Pilot levels.  Defra has confirmed the Pilot will use the finalised SFI 2022 rates.

The available capital items have also been updated.  Certain capital items are available under each Standard, these are detailed in the guidance.  If  capital items are chosen these will have to be claimed for through the CS Capital Grants Scheme which will open later this year for SFI Pilot applications.  The deadline for submissions to the Pilot is 1st September 2021

It was announced by the AHDB at the Cereals Event that the levy board was working in collaboration with Defra to produce an industry-standard carbon calculator for farming.  The aim is to have a tool available for the start of 2023.

There are a plethora of different carbon calculators being used in UK farming at present, all with different methodologies and producing different results.  The lack of an agreed, standard, approach causes confusion and hampers both the adoption of carbon reduction practices and the monetisation of carbon saving in UK farming.  A robust process of measurement should provide far more clarity.  

Payment rates under ELMs may be more generous than past schemes as the way they are calculated is set to change.  Defra has announced it is moving away from ‘income foregone’ as the method for setting payments.  This approach was mandated by EU law and meant that no incentive or margin could be included in payments – they were only designed to put the farmer back in exactly the same financial position as if they had not taken up the management option.

In future Defra states it will set payments based on four underlying principles;

• rates will be set to encourage wide participation, whilst fairly and effectively paying farmers
• payments, as far as possible, should pay for outcomes.  These can be delivered through a wide range of activities
• payments should recognise existing natural assets and not unfairly disadvantage those already protecting such assets
• any payments should integrate with a market for environmental outcomes, where participants can earn income from both public and private sources.

These principles are very broad-bush and quite vague – giving little detail on the specifics of calculation.  Any shift in approach is likely to be incremental.  Defra itself states that ‘the basis for the payments will, at least initially, be a cost-based methodology in most cases, that recognises the costs of achieving the outcome and/or the potential loss of income‘ – i.e. little different to income foregone.  However, the Department also states that such a methodology gives a wide range of potential payment rates.  It seems that there will be more of an inclination to push towards higher rates than in the past, to ensure take up.  There will be a limit on this however, as there is also a desire to achieve value-for-money. 

These payment principles will not just apply to ELMs, but also inform payments across the range of Agricultural Transition Schemes.  For more details see – https://www.gov.uk/government/publications/environmental-land-management-schemes-payment-principles