Category: Policy & Business

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.  

England

The BPS application window and the Countryside Stewardship (CS) and Environmental Stewardship (ES) annual revenue claim submission period is now open.  The deadline for submission for all three schemes, without incurring a penalty is 17th May this year, as 15th May falls on a Saturday.  This includes Young and New Farmer applications and is also the deadline date for transferring entitlements in England to be used for the 2021 claim.  Applications or revenue claims made between 17th May and 11th June will be accepted but will receive a penalty for each working day late.  Any submitted after 11th June will not be processed.

Certain changes can be made to a BPS application which is submitted by 17th May, without penalty, until 11th June (in previous years the date was 31st May).  This means, in some circumstances, if the deadline is close, it might be worth submitting the claim and making the amendments afterwards.  For CS revenue claims made by 17th May, certain amendments can be made up until 31st May without penalty.  A few changes have been made to the BPS scheme rules this year,

• A reminder that all three of the Greening requirements – EFAs, Crop Diversification and Permanent Pasture retention, have been removed.  But farmers must still meet the cross-compliance rules including on hedges and buffer strips etc.  With regards to Permanent Pasture, even though the Greening rules have been abolished, it must not be ploughed if it is a Natura 2000 site, or has not been cultivated for 15 years or is semi-natural grassland; an Environmental Impact Assessment (EIA) screening remains a requirement in such cases.
• Cross Border applications have been abolished.  Only land located in England should be applied for on the BP5 form or through Rural Payments online.  Land located in other parts of the UK must claimed via the appropriate devolved administration.
• The entitlement usage rule has also been abolished.  From 2021 onwards, farmers do not have to use all their entitlements in one claim, at least once in every two years to avoid using them.  Unused entitlements do not have to be leased or sold.
• There will be no option to be paid in Euros.  Entitlement values will be shown in Sterling and payments will be calculated in Sterling rather than using an exchange rate.

There have been a few simplifications to the Rural Payments online site, mainly due to the removal of the Greening requirements.  This means the EFA section of the application ‘form’ has been removed, the tab to ‘reduce the EFA area’ has also gone and the ‘Declarations’ are a lot simpler; no Organic Exemption required, payment in Euros removed and Cross Border farms.  The Hedge View remains, partly because it was so costly to design, but also as it may be useful for agri-environment scheme applications.  But reference to the hedge being available for EFAs has been removed.

All guidance and forms required to make a BPS application can be found at https://www.gov.uk/government/collections/bps-2021

Guidance on making a CS revenue claim can be found at https://www.gov.uk/guidance/countryside-stewardship-2021-how-to-submit-a-revenue-claim-online

Wales

The Single Application Form (SAF) claim window is now open.  It closes on 17th May.  Applications can still be submitted until 11th June but these will receive late penalties.  Any claims received after 11th June will not be accepted.  The deadline date for transferring entitlements in Wales, to be used for the 2021 claim, is the 15th May.  The submission date for BPS Supporting Documents (except for growing Hemp) has been extended until 31st December 2021.  But for other schemes (Glastir), SAF deadlines continue to apply.  Other changes in Wales include;

• Greening has been removed.  Although Environmentally Sensitive Permanent Grass (ESPG) is now protected as part of Cross Compliance.
• The Negative List has been abolished.  This was the Active Farmer Test for businesses operating other activities such as airports, water works, railways etc. which rendered the claimant ineligible.

Scotland

The Single Application Form (SAF) window opened on 15th March and closes on 17th May 2021.  The entitlement transfer window closes on 2nd April.  In Scotland, a reminder that the Crop Diversification (CD) requirements under Greening have been abolished from 2021.  Claimants are advised to ignore any reference to the CD requirements on the claim form.  (Rural Payments Scotland is considering removing the references for next year’s claim.)  But Ecological Focus Areas (EFAs) are still required in Scotland.