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;
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
Speaking at Cereals on 30th June, George Eustice announced more details about the Sustainable Farming Incentive (SFI); the first component of Environmental Land Management (ELM) and the one most farmers should be able enter. These details are different to the SFI Pilot for which those who expressed an interest are now drawing up an Agreement. These details are for the ‘main’ scheme which will open in spring 2022 for applications to this first phase. The scheme will then gradually expand until all elements are available from 2024/25 onwards. Between 2022 and 2024, the SFI will run alongside existing schemes (e.g. Countryside Stewardship). Farmers will be able to choose which schemes to participate in and can participate in multiple schemes if they wish, but they will not be paid twice for the same action.
In this initial phase, the SFI will concentrate on soils and also introduce the first element of the Animal Health and Welfare Pathway which will be available under SFI. There will just be four Standards within SFI 2022, these are:
The payment rates and the standards outlined below are indicative, the final versions will be available by November 2021 following further refinements and feedback from farmers and stakeholders. With regards to payment, George Eustice has said the rates ‘roughly equate to a 30% uplift’ compared with what would have been available under the old EU methodology – a separate Policy Paper has been released which sets out the principles which will be used to set payments (see separate article).
No specific management prescriptions are available yet, but below is the general guidance given from Defra;
The Arable and Horticultural Soils Standard and the Improved Grassland Soils Standard – Farmers will be rewarded for management practices which improve the soil structure and soil organic matter. With the aim of promoting clean water, improving climate resilience, biodiversity and food production. There will be three ambition levels for each of the soil standards. The indicative rates are:
Those drawing up their SFI Pilot agreements will be interested in these payments as it appears these will replace those originally offered in the Pilot scheme. This would see the Improved Grassland Soils Standard payment increasing significantly compared with those offered in the pilot of £6, £6 and £8 per Ha for the Introductory, Intermediate and Advanced Ambition Levels respectively. Conversely, the Arable and Horticultural Soils payments will reduce slightly for the Introductory and Intermediate (£30 and £47 per Ha in the Pilot) with the Advanced payment slightly more (£59 per Ha in the Pilot). Of course, until the precise management prescriptions are known, it is difficult to judge how generous the payment rates are.
Moorland and Rough Grazing Standard – Farmers will be rewarded for assessing the range of habitats and features present on their moorlands. This has the aim of identifying the pressures on them and also the risks posed by wildfires. For 2022 there will only be an Introductory level; higher levels of ambitions are planned later in the Agricultural Transition. No indicative payment rate has been announced for this Standard. The plan is for this Standard to be developed further during the summer with farmers and stakeholders. It will be finalised by November 2021 along with a payment rate. This Standard will be available to all Moorland farmers, including those already taking part in Countryside Stewardship.
Annual Health and Welfare Review – This is the initial phase of the Animal Health and Welfare Pathway. It will involve a Defra-funded yearly visit from a vet. It is initially planned to be available for three years. The review will include;
Payments are expected to range from £269-£775. The main difference in the rate is due to the costs of the diagnostic tests which vary across the species.
More Standards – More Standards will be added to the SFI between 2022 and 2024. Priority will be given to those Standards which make the most significant contribution to the environment, climate and animal health & welfare outcomes and those that have multiple benefits. Consideration will also be given to as to how each Standard extends the opportunity to more types, location and sizes of farm. The Standards which are currently under consideration are;
Animal Health & Welfare – Defra is working with the livestock industry, including vets to ‘co-design’ the Animal Health & Welfare Pathway. Other components expected include animal health and welfare grants, endemic disease support and piloting payment-by-results. It is also continuing its commitments to strengthen the regulatory baseline and consult on animal welfare labelling.
Land Management Plans – The aim is that, eventually, the Sustainable Farming Incentive will involve each farm having a Land Management Plan. This would be the basis for farmers to decide how, where and when to produce public goods on their land. It would then also be possible to use these plans as a basis for assessing overall progress towards environmental, climate, and animal health and welfare targets. This starts to sound more like the Natural Capital approach to paying for public goods which was discussed when ELMs was first conceived.
Earned Recognition – the SFI Pilot will be used to trial and evidence how earned recognition could operate for the scheme, including how membership of existing assurance schemes might play a role in reducing checks and inspections.
Agreement Lengths & Flexibility – Defra wants to make the SFI accessible to all farmers and are looking at flexibility in agreements and lengths. The aim is that those who have control of the land for more limited periods of time, such as tenants, are still able to participate fully. It also wants to make sure that those farming on common land are able to join the scheme, with group agreements looking most likely to be required in order to enter common land into the SFI. Flexibility to adjust the content of agreements is being considered, as are ways to make it straightforward for a farmer to roll over an agreement if they wanted to do so.
Monitoring & Compliance – Defra has said it will continue to develop its approach to monitoring to make it ‘fairer, more targeted, more proportionate and more effective’. One of the barriers to entering Agri-environment schemes is the view that inspections are more common and payment can be held up, even when no problem is found.
Defra has provided a progress report on the Agricultural Transition in England. This update can be found at – https://www.gov.uk/government/publications/agricultural-transition-plan-june-2021-progress-update/agricultural-transition-plan-june-2021-progress-update. The document mainly covers the new SFI 2022 (see accompanying article) but also provides a review of the initiatives launched to date, and also a timetable for future schemes. In respect of the latter, it gives a firm opening date for the Farming Investment Fund (capital grants) of October 2021. The other main topic covered is payment calculations and scheme funding – again, see our separate article for details.
We reported last month on the new Farming in Protected Landscapes (FiPL) scheme that will provide additional grants in National Parks and Areas of Outstanding National Beauty (AONBs). Defra and Natural England have also announced the the potential creation of two new AONBs, plus the extension of two existing ones. The new ones are a Yorkshire Wolds AONB and a Cheshire Sandstone Ridge AONB. The extensions are to Surrey Hills and the Chilterns. Unhelpfully, the statement (see https://www.gov.uk/government/news/natural-england-announces-landmark-new-programme-for-protected-landscapes) gives no details on the precise areas to be covered by the designations. A consultation is promised later in the year.
The deadline to request a Mid-Tier application pack online using the Rural Payments service has been extended from 30 June 2021 to 16 July 2021. There is no requirement to a request an application pack for online applications to the Wildlife Offers. The deadline for submitting an application to either the Mid-Tier or one of the Wildlife Offers remains 30th July.
EU Member States have agreed new rules for the Common Agricultural Policy (CAP) to run from 2023 to 2027. Although no longer directly relevant to the UK, of course, it is the support system in place for our closest neighbours (and competitors) so is of more than passing interest. In general, the reform is not radical – being largely a ‘tweak’ of the systems already in place.
The BPS remains at the heart of farm support. However, the rules at EU level will be less prescriptive, with each Member State drawing up Strategic Plans (by the end of this year) setting out the details of their support systems. Other notable points include;
The final ‘political’ deal was thrashed-out between the European Parliament and European Farm Council (Member State representatives) on 25th June. Like most compromises, it did not meet universal acclaim. EU farmer groups stated it causes an ‘unprecedented challenge’ for European farmers. At the other end of the spectrum green groups claimed it did nothing to shift EU farm policy to properly align it with the organisation’s environmental commitments (such as the Green Deal) and that the many of the elements in the CAP deal simply amounted to ‘greenwashing’.
The UK and Australia have agreed the outline terms of an historic free-trade agreement – the first all-new deal signed by the UK since it left the EU. As such, it is seen by many as an important precedent for future trade deals, particularly concerning agriculture. Whilst the deal has been announced, it is an agreement in principle and subject to further negotiations on the legal text. There is an eventual aspiration to fully liberalise Australian goods entering the UK market. However, there are lengthy adjustment periods for several agricultural products in an attempt to take account of UK sensitivities. These include;
Based on the above summary, it would appear that the UK grazing livestock and sugar sectors in particular will be exposed to increased competition from Australia in the long-term and additional competitive pressure is likely to emerge when the likes of New Zealand others strike trade deals with the UK. Of course, having generous quota access with eventual full liberalisation does not necessarily mean that Australian imports will reach these levels, particularly as there is plenty of demand in Asia-Pacific. That said, beef imports from the Republic of Ireland are in the region of 200,000 tonnes per annum. Viewed in that context, the access offered to Australia is sizeable and of concern to British farming, particularly as it is the first of several trade deals.
For more detail visit: https://www.gov.uk/government/publications/uk-australia-free-trade-agreement-negotiations-agreement-in-principle/uk-australia-fta-negotiations-agreement-in-principle
