Crop diversification looks set to be abolished in Wales and the other ‘Greening’ requirements moved to the Cross Compliance regulations from 2021. The Welsh Government has published its response to the consultation on changes to the current CAP regulations until the new Sustainable Land Management scheme is introduced. Titled ‘Sustainable Farming and Our Land: Proposals to Continue and Simplify Agricultural Support for Farmers and the Rural Economy’, the changes will apply to the new domestic BPS and Rural Development Programme, which will commence in the next scheme year (2021). The full document can be found at https://gov.wales/sites/default/files/consultations/2020-11/sustainable-farming-summary-of-responses.pdf . A summary of some of the key outcomes include:
Removing the Crop Diversification rules under Greening. The EFA requirements and Permanent Pasture retention rules will no longer be part of Greening, but they will be retained under the Cross Compliance regulations. The Ecological Focus Areas most often declared (hedgerows and stonewalls) will continue to be protected through unchanged Cross Compliance. However, a new condition will be added to GAEC 7 to protect Environmentally Sensitive Permanent Grassland, to ensure it cannot be ploughed or converted without the consent of Natural Resources Wales. There will be no loss of support, as the Greening element (worth approximately 30% of total payment) will be subsumed into the BPS.
Reallocating any unused National Ceiling annually to the BPS.
Simplifying cross-border claims, so that the Welsh payment can be made in isolation of the English claim. Provision will however be made to ensure farmers with land in other parts of the UK can continue to rely on land declared in another UK administration in the calculation of the 5 hectare minimum claim size for BPS for the claim year 2021 onwards.
The proposal was to close the Young Farmers Scheme to new entrants from 2021. But strong opposition to this from respondents has resulted in no changes being made to the BPS Young Farmer Scheme, which will continue to accept applications from 2021. The Welsh Government has however said the scheme will be included in any review undertaken to transition from BPS to the new agricultural support schemes.
Allowing supporting documents to be submitted up to 31st December in the relevant claim year. The application deadline and late claim penalties will remain unchanged.
Whilst the majority of responses supported the extension of the National Reserve categories to include those who have purchased new land or committed to a lease of 5 years or more since 2015, the responses also indicated there was no consensus as to how the new category should be delivered. The Welsh Ministers have therefore decided that no new categories will be added to National Reserve for 2021. The 2-year usage rule, which requires entitlements to be activated at least once in any two year period will continue to apply in Wales, and be used to replenish the National Reserve.
Reducing the inspection rate so that 3% of scheme claimants are inspected.
Simplifying the over-declaration penalty rules by removing the current ‘yellow card’ legislation.
Introducing advance and balance payments, so that 70% will automatically be paid in October following basic checks and a balance payment during the payment window once full validation checks have been completed. The payment window will remain 1st December to 3oth June.
Removing the ‘Negative List’ which means operators of railways, waterworks, real estate services or sports and recreational grounds will be deemed eligible to apply for BPS, however, minimum levels of agricultural activity will be retained as currently apply.
The proposal to make the growing of hemp not eligible for BPS has been rescinded after responses to the consultation suggested there is sufficient potential for hemp to be grown throughout Wales and be part of the wider green recovery.
The response also included additional information on the BPS entitlement trading window which will be extended from 30th April and remain open all year round. For entitlements to be available, transfer and lease forms must be submitted by midnight on 15th May in a scheme year.
The payment window for the 2020 BPS opens on 1st December. However, in Scotland the National Loan scheme which has been running since 2016, means many farmers and crofters have received a 90% advance on their payment already; these started in September. For England and Wales, the beginning of December sees the earliest they will receive their monies. Wales has a good record for paying on the first day of the window, but for those claimants who do not receive their payment in the first week of December it is possible to get 90% of their estimated payment via the 2020 BPS Support Scheme as long as this has been previously applied for; the deadline for applications was 27th November.
England does not have a ‘support’ scheme, but anecdotal evidence appears to show more payments could be made in the early tranche. Claimants are reminded they can check the progress of their claim via the Rural Payments website. On the ‘Basic Payment Scheme’ page of a claimant’s account, go to ‘Apply for BPS or view status of your application’. As the claim progresses it moves through three stages ‘Claim validation’, ‘Final checking’ and ‘Preparing for Payment’. Once the claim has reached the latter stage, this means it is ready for payment.
The Scottish farming sector is seemingly getting increasingly frustrated by the lack of a clear direction for farm support. Speaking at the online AgriScot event, the President of NFU Scotland, Andrew McCornick stated that the Scottish Government needs to ‘stop dithering and start delivering’ on future policy for Scotland’s farmers and crofters. He went to add ‘The Cabinet Secretary and Scottish Government must have desks that are buckling under the weight of commissioned reports and stakeholder input, promoting policy and a way forward. With still more reports in the pipeline to come.‘ The latter point is almost certainly referring to the Farming and Food Production Future Policy Group which is set to deliver its recommendations before the end of the year. The NFUS has been a big supporter of the ‘Stability and Simplicity’ approach of not making any major support changes until 2024. However, even the Union now seems concerned about the complete lack of progress on what support from 2024 onwards might look like.
Scottish farmers and crofters will see an increase in their BPS payment rates this year. This is due to a budget review and also because there will be no Financial Discipline deduction from 2020 payments; previously used to fund the EU Crisis Fund. This means Region 1 will see a 3.1% increase compared to 2019 payments.
However, 2019 claimants also received £90m worth of Convergence money via top-ups to their BPS and coupled payments. There is a further £70m which the Government has indicated will be made available from January to April 2021. But in the announcement there was no mention of the Convergence funding and it is unclear how this will be distributed. In the past, there has been strong hints it would be used to top-up the Less Favoured Areas Support Scheme (LFASS), but there was no reference to this in the News Release earlier this month which announced LFASS payments would be increased back up to 2018 levels. NFU Scotland has always maintained that the Convergence money was obtained through Pillar 1 payments (eg. BPS) and should therefore be used to top-up these and not be used to resolve the shortfall in LFASS. We will endeavour to keep readers up to date with the situation.
The table below shows the published rates in Euros, our estimates and the actual payment that farmers will receive in Sterling and a comparison with last year, before convergence payments. For 2020 the exchange rate has been locked at the 2019 level; €1=0.89092.
The Government has announced an extension to the temporary increase in the Annual Investment Allowance (AIA). In the 2018 Budget, the cap was increased from £200,000 per annum to £1 million. It was due to revert back to £200,000 on 1st January 2021 but will have a year-long extension until 1st January 2022. The AIA provides businesses with 100% same year tax relief on qualifying capital expenditure which includes plant and machinery. This extension will help those businesses looking to invest in new pieces of machinery, but unfortunately not for investment in agricultural buildings or infrastructure.
The Less Favoured Area Support Scheme (LFASS) is to continue to be available to farmers and crofters in Scotland until 2024. As set out in our earlier article (https://abcbooks.co.uk/lfass-payments-4/), the scheme will be available in 2021 and payments will revert back up to 2018 levels. The further extension comes via a draft Scottish Statutory Instrument (SSI) laid under the new Agricultural (Retained EU Law and Data) (Scotland) Act 2020. This provides the legislative basis for continuing the LFASS for the whole period 2021 to 2024, and also fixing payments at (the higher) 2018 rate.
For 2020, payments under EU requirements have been reduced to 40% of 2018 levels. In 2019 they were reduced to 80%, but claimants received top-up payments. There has been no announcement yet on 2020 rates. NFU Scotland has been lobbying the Scottish Government to try and get them increased back to 2018 levels. However, the Union’s position remains solid in that ‘Convergence funding should not be used to resolve the LFASS shortfall’.
An Environmental Land Management (ELM) Test & Trial project, focused on Net Zero emissions has been approved by Defra. The project, which has been fully designed by the NFU, will explore practices that can be included in the new ELM scheme which will contribute to farmers reaching the NFU’s 2040 Net Zero ambition. The trials will be conducted on 200 farms across England throughout 2021; with NFU regional offices having selected members to participate. The object of the project is to:
demonstrate a broad range of activities that could be included in ELM, including productivity measures
ensure land management plans are farmer-friendly and include Net Zero practices
look into appropriate levels of advice. The trials will include one-to-one, virtual facilitated workshops and no support.
One key part of the project will see whether using a carbon calculator to benchmark progress is a useful tool to help farmers transition to Net Zero. A final report will be submitted to Defra in Autumn 2021. ADAS will be managing the project on behalf of the NFU.
The Agriculture Act 2020 received Royal Assent on 11th November. The Act enshrines into law the phasing out of the BPS over the seven year ‘Agricultural Transition’ in England. There had been strong lobbying for the Act to also include minimum standards for food imports to the UK. This resulted in the House of Lords and the House of Commons going through the ‘ping-pong’ process over amendments (see earlier article on Foods Standards https://abcbooks.co.uk/food-standards/).
On the 9th November, the Lords agreed to the final Commons amendments, with Lord Grantchester, shadow Defra Spokesperson withdrawing his amendment to the Bill saying the ‘Opposition would not be pressing their amendment to a division’. However he did call on the Government to ensure that amendments to the separate Trade Bill address three issues:
Ministers must ensure Parliament and devolved Administrations are aware in a ‘timely manner’ if future trade deals are likely to contain measures that change primary or subordinate legislation relating to current standards,
both Houses, Select Committees and devolved Administrations are provided with draft objectives, progress reports and the final text of any future trade agreements; and
sufficient time is provided by Government for Parliamentary committees and devolved Administrations to consider all matters relevant to future trade agreements and that Parliament itself has time to debate and vote on all such treaties.
To this end, some lobbyist groups are already turning their efforts to try and get amendments into the Trade Bill.
The minimum grant threshold is £3,000 per application. The maximum overall grant threshold is £12,000. It is possible to submit EOIs in more than one window as long as the thresholds are adhered to. This FBG – Yard Coverings Scheme is separate to the main Farm Business Grant Scheme, meaning any funds received under the main scheme do not affect the Yard Covering scheme thresholds and vice-versa.
The grant provides a maximum 40% contribution towards standard costed capital investments in equipment which have been pre-identified. The closing date for this first round of EOIs is 18th December. A further round is expected to run from 18th May to 25th June 2021. Contracts will be offered to successful applicants via RPW Online, these have to be accepted within 21 days.
The Scottish Government has announced that payments under the Less Favoured Areas Support Scheme (LFASS) will continue in 2021 and will be increased back to the levels paid in 2018. For the last two year’s, under EU rules, the LFASS has had to be paid at a reduced rate of 80% and 40% respectively of the 2018 value.
Following the Agriculture (Retained EU Law and Data (Scotland) Bill passing stage 3 on 26th August, the Common Agricultural Policy (Less Favoured Area Support) (Scotland) Amendment Regulations have been laid for approval by the Scottish Parliament and will come into force on 1st January 2021. This means the Scottish Government can introduce its own policy. However, it is not absolutely clear if this funding is definitely guaranteed yet as the announcement says ‘we continue to push for assurances that the UK Government will fully replace all lost EU funding so that we can provide assurance to the rural economies of Scotland’. But if it is the case, then it will be a big boost to farmers and crofters working in the Less Favoured Areas of Scotland.
Also being laid before the Scottish Parliament, to come into force on 1st January 2021, is the Common Agricultural Policy (Simplifications and Improvements) (Miscellaneous Amendments) (Scotland) Regulations 2020 which will allow the Scottish Government to make changes to the previous CAP schemes. This will mean for inspections of former CAP schemes in 2021 the focus will be on improving compliance through ‘support, enhanced guidance and better targeting’. The number of routine visits should also reduce. The Scottish Government has already announced the Crop-Diversification rule will be abolished from the 2021 scheme year under these new regulations. Ecological Focus Areas (EFAs) are to be retained for 2021, but will be part of a short-term ‘wider farmer-led review’ for the period post 2021.
