Category: Policy & Business

The RPA has given some updated information on Countryside Stewardship (CS) inspections, especially for agreements which commenced from 1st January 2021.  CS (and Environmental Stewardship (ES)) agreements which started prior to this date must still meet EU rules and regulations for inspections.  But for CS agreements starting on or after 1st January 2021 UK domestic rules apply and in its quest to try and increase the uptake of CS, the RPA has changed ‘Inspection’ to ‘Environmental Outcome Site Visit’, as it says it wants to focus on the environmental outcomes of the agreement.  It is well documented that the threat of ‘inspections’ is one of the key reasons why farmers do not enter agri-environmental schemes.  In 2021 there will be two approaches to the the ‘Environmental Outcome Site Visit’,

• Whole Agreement – as it infers, it will look at all the options in the agreement and an assessment will be made against the environmental outcomes found
• Campaign – this will just look at certain options which have been chosen for the year (see below).  These may change each year.

For 2021, the following ‘Campaign Options’ have been chosen;

• Buffer Strips
  • SW1 – 4-6m buffer strips
  • SW4 – 12-24m watercourse buffer strips
• Grassland Options
  • GS1 – Take field corners out of management
  • GS2 – Permanent Grassland with very low inputs (outside SDAs)
  • GS7 – Restorations towards species-rich grassland
  • GS17 – Lenient grazing supplement
• Boundary Options
  • BE3 – Management of hedgerows

If a Campaign Environmental Outcome Site Visit finds a breach this may trigger a ‘Whole Agreement’ visit.

A reminder that the ‘re-vamped’ Countryside Stewardship Capital Grant scheme closes to applications on 30th April.  However, we have become aware of a couple of issues with the new stand-alone scheme this year.

Firstly with the Fencing options F1, F2 and F3.  In the CS Capital Grant scheme these options are only available ‘to prevent water pollution caused by farming (approval from a Catchment Sensitive Farming Officer is not required nor does the parcel need to be in a High Priority area for water quality)’.  But in Mid-Tier, Higher-Tier or Woodland applications they are also available to ‘protect environmental features (for example newly planted trees, buffer strips and field corners taken out of management) or as agreed with the Forestry Commission Woodland Officer‘.  The RPA has recognised that this information may not have been clear at the outset and has changed the guidance to make it clearer.  Unfortunately some claimants have already put in CS Capital Grant scheme applications where the fencing has been applied for to protect environmental features.  In these cases, RPA has said it will not reject the applications, but will write to those affected and they will be given the chance to remove the fencing from the claim or move the location of them so they are eligible.

Secondly, for those who already have an existing CS Wildlife Offer.  It is possible to have a CS Capital Grant on a parcel which is in a Wildlife Offer (although not where a parcel is subject to other Agreements).  But some (not all) claimants with a Wildlife Offer are having problems applying online for a CS Capital Grant.  The RPA is looking into this matter, but with the deadline looming is suggesting applicants use a paper version this can be found at https://www.gov.uk/government/publications/countryside-stewardship-capital-grant-application-form

 

The much-delayed consultation on the delinking of the BPS and lump-sum payments has been postponed once again.  Originally planned for ‘early in the New Year’ it has now been put back due to the ‘purdah’ period ahead of the Local Elections.  It will not appear before the 7th May.

Defra has announced Organic Higher Level Stewardship (OHLS) agreements will now be eligible for one year extensions.  Originally it had said extensions would not be available for Organic ELS/HLS agreement holders.  This was applied to those whose agreements ended in 2020 – no roll-over was allowed.  But after pressure from the Soil Association’s legal team and the English Organic Forum, Defra is now allowing one year extensions to OELS/OHLS agreements subject to the same criteria as HLS.  For further information go to https://www.gov.uk/guidance/higher-level-stewardship-hls-2021-agreement-extension   This will be a relief to many organic HLS agreement holders who rely on these payments to be able to farm organically and would have been subject to a funding ‘gap’ if they had to move to Countryside Stewardship.  Unfortunately it has come too late for some.  Defra had blamed high administration costs compared to the number of agreements as the original reason for not extending Organic agreements.

The claim window for the Sustainable Agricultural Capital Grant scheme in Scotland has been extended.  The original deadline of the 31st March has been put back until 30th September 2021.  The reason for the extension is said to be due to issues over the supply of certain items.  Claim forms and supporting evidence (invoices and proof of payment) should be returned by email to local SGRPID offices.

The Scottish Parliamentary session ended, ahead of the 6th May elections, without any further announcements on future farm policy.  It seems that it will be the next Parliament that sets the agenda for future support.  It is perhaps not surprising that the Government decided to kick any changes into the long grass – any new policy is bound to upset one group or another which, ahead of an election, is not good politics.

As Parliament rose, a further set of reports has been published however.  It appears the commissioning and publication of reviews and reports has become a substitute for any actual policy development.  These were from various sector-led climate groups which were set up last year.  These have each produced reports giving advice and proposals on how to cut emissions and tackle climate change within their industry;

• Arable Climate Change Group
• Dairy Sector Climate Change Group
• Hill, Upland and Crofting Group
• Scottish Pig Industry Leadership Group
• Suckler Beef Climate Group Programme Board

Each have put forward practical proposals to cut emissions and ‘drive transformation in the agricultural sector’.  The proposals and ideas within the reports will now be analysed by the Scottish Government and will be used to help shape a new rural support scheme.  Further information and the reports can be found via  https://www.gov.scot/news/signalling-a-sustainable-future-for-farming-and-food-production/.  Whilst it may be reading too much into things, the press release that accompanied these reports referred to having new support policies in place by 2026.  This is legal ‘end-stop’ put in place by the Agriculture (Retained EU Law and Data) Act 2020.  It is therefore not a new date, but it is interesting to see the Government referring to this one, rather than 2024 as was set out in the ‘Stability and Simplicity’ consultation.

There has still been no report from the Farm and Food Production Future Policy Group (see https://www.gov.scot/groups/farming-and-food-production-group/).  This was the body set up to advise the Government on future policy.  It was meant to report ‘in 2020’ but nothing has emerged as yet.

Overall, it seems that future Scottish farm policy will be framed to a large extent by the need to address climate change.  The Government published the ‘Climate Change Plan Update 208-2023 at the turn of the year (https://www.gov.scot/publications/securing-green-recovery-path-net-zero-update-climate-change-plan-20182032/).   Chapter 7 of this relates to agriculture.  This sets out some broad policy principles that are likely to apply to farm support as and when firm proposals are finally published.

 

 

 

Sector-led

New Regulations to protect water from pollution came into force in Wales from 1st April 2021.  The rules, which were only published about a week before their introduction, puts the whole of Wales into a Nitrate Vulnerable Zone (NVZ).  The Water Resources (Control of Agricultural Pollution) (Wales) Regulations 2021, apply to all land in Wales, but transitional periods have been provided for certain requirements where land was previously not within an NVZ.

For those already in an NVZ all the rules (see link below) came into force from 1st April 2021.  For those previously not in an NVZ, from April 2021, they must follow the requirements for:

• Storage of silage;
• Notifying Natural Resources Wales (NRW) of the construction of any new substantially enlarged or reconstructed silo or slurry storage system;
• Controlling the spreading of nitrogen fertiliser at high risk times and high risk areas;
• Incorporating organic manures into bare soil or stubble; and
• Closed periods for spreading manufactured nitrogen fertiliser.

Further requirements (for those previously not in an NVZ) are applicable from 1st January 2023 and 1st August 2024.  The 96 page guidance can be found via  https://gov.wales/sites/default/files/publications/2021-03/water-resources-control-of-agricultural-pollution-wales-regulations-2021-guidance-for-farmers-and-landmanagers.pdf

Farm Incomes in England show a mixed picture for the past year.  The main sectors almost all show big changes on the previous year, but in varying directions.  The winners were Grazing Livestock and Poultry whilst the Arable sectors, Dairy and Pigs all showed large declines in returns.

The data comes from the Farm Business Survey (FBS).  Just released are forecasts for Farm Business Income (FBI) for the 2020/21 year (the years run approximately from Feb to Feb).  Final figures will be released in November.  FBI is effectively farm profit.  The full set of statistics can be found at https://www.gov.uk/government/statistics/farm-business-income.

As seen in the table below, both Cereals and General Cropping farms are estimated to show big falls in FBI compared to the previous year.  This is perhaps not surprising as the latest figures cover the 2020 harvest which saw reduced planted areas and lower yields.  Dairy farm profits have been affected by higher costs, notably feed, even though milk prices were largely stable during the year.

Livestock farms both in the lowlands and uplands have benefitted from much improved prices for beef and sheep.  Pig producers have seen lower values.  Coupled with rising feed prices this has resulted in a big downwards swing in FBI.  Poultry farms have also had to face increased feed prices.  In this case however, these have been offset by better egg and broiler values.

Agricultural rents in England remain broadly stable according to the latest figures released by Defra.  Whilst ‘full’ Agricultural Holdings Act tenancies showed a small (4%) increase, overall rents under Farm Business Tenancies fell by the same amount.

The Farm Rents publication uses data from the Farm Business Survey.  Due to the time taken to collect the data, it is somewhat historic.  The figures just published are for the 2019/20 year (shown as ‘2019’ in the table below).   Most farm types showed little movement in values.  However, beef & Sheep farms in the LFA recorded a, perhaps surprising, uplift in rents for both AHAs and FBTs.  There was a move downwards in rents for both Cereals and General Cropping, perhaps reflecting tougher business conditions in the arable sector.   Lowland cattle and sheep farms have seen quite a drop in FBT rents, again perhaps reflecting the more challenging conditions, particularly in the beef sector in the years covered by the survey.  However, it should be noted that the figures often show sharp year-on-year movements and one year’s data is not really enough to discern a trend.

Looking to the future it would be expected that, as the BPS is phased-out, then overall rents will fall.  

With Brexit, the Rural Development programmes no longer operate in the UK.  The environmental elements have largely been taken on under national ‘farm’ support policies.  However, there is no direct replacement for the economic development and social funding under such schemes as LEADER or the Growth fund.  The UK Shared Prosperity Fund (UKSPF) is designed to (partly) fill this gap.  However, up to now, there was little detail and no funding available.  This is now slowly starting to change.

The UKSPF replaces both Rural Development and EU Structural Funding.  As such, it is not just targeted at rural areas but all regions that are lagging behind.  This includes ex-industrial areas, coastal towns, deprived areas and rural communities.  The UKSPF is due to launch in 2022 with more details later this year.  Whether this will involve ‘business grants’ for things like farm diversification is not yet clear.  There seems more of a focus in investing in ‘people’ under the UKSPF – training, skills, employment help etc.  

Ahead of the launch of the UKSPF, the Government has announced an interim scheme.  The UK Community Renewal fund will have a £220m budget.  This will be targeted at 100 areas selected based on their poor economic resilience.  Many of these are rural or have significant areas of countryside.  Project proposals have been invited from local organisations (mainly Local Councils probably), with programmes starting in the summer and completed by the end of March 2022.   Each Council will draw up their own scheme so, at present, it is unclear what funding opportunities there might be for specific businesses or projects in any particular area.  We will keep you informed as the scheme progresses.