Similar to England and Wales, Scotland has confirmed there are no changes to GAEC and SMRs for 2021. The previous guidance remains relevant and can be found via https://www.ruralpayments.org/topics/inspections/all-inspections/cross-compliance/

Similar to England and Wales, Scotland has confirmed there are no changes to GAEC and SMRs for 2021. The previous guidance remains relevant and can be found via https://www.ruralpayments.org/topics/inspections/all-inspections/cross-compliance/
The Agri Environment and Climate Scheme (AECS) is to reopen in Scotland in 2021 – but on a very limited basis. The new round will open on 25th January and after an ‘extended application period’, will close on 30th June 2021. But will only be available for the following types of application:
The Scottish Government has said further guidance is being developed and will be published on the Rural Payments and Services website in January 2021. The AECS, the flagship agri-environment scheme for Scotland, was not open for new applications in 2020, although expiring agreements were given a one-year extension. The industry is calling for more certainty, in order for it to plan and to prevent large areas dropping out of environmental management in the next few years.
On 24th December, the UK farming industry has received an early Christmas present as a Free-Trade Deal (FTA) was agreed with the EU, meaning that agricultural goods’ trade with the EU will not be subject to tariffs or quotas. This Trade and Cooperation Agreement should minimise the disruption when the Transition Period ends on the 31st December. However, with a whole range of Non-Tariff Measures (NTMs) (checks, paperwork etc.) being imposed from that point, there will be added friction. In the case of seed potatoes, exports to the EU will be prohibited which is a major blow to regions such as the East coast of Scotland, where seed potatoes is a major agricultural sector. This article examines some of the top-level implications of the FTA. However, with the agreement text (including Annexes) running to 1,246 pages, we will digest it further over the coming days and weeks and provide further updates as appropriate.
A mere 1,644 days since the EU referendum, and after a whole series of missed deadlines, the deadlock was finally broken on Christmas Eve. As previous articles mentioned, the negotiations culminated in a frantic final haggle on fish quotas. When a breakthrough was achieved on this issue, the remaining level playing field (LPF) and governance issues were quickly addressed so that the Deal could be announced on Christmas Eve. The key provisions of the FTA are:
The announcement of a UK-EU trade deal was greeted with a sense of relief by the UK food and farming industry as it provides much greater certainty for the sector. The major exception to this is the seed potatoes sector as exports from the UK to the EU will become prohibited. This is a significant loss as the EU is a major export market for the British seed potatoes’ sector, particularly Scotland, which has amongst the highest product standards for seed potatoes globally.
Overall, the anticipated impacts on UK agricultural output and trade are expected to be limited. Below are the findings of a recent study by The Andersons Centre undertaken on behalf of the Scottish Government using the Agmemod partial equilibrium economic model. For the sectors analysed (wheat, barley, beef, sheep and liquid milk (dairying)), the impacts of a UK-EU FTA are relatively small, particularly compared with No Deal. The changes under the FTA scenario are primarily due to the imposition of NTM costs which generally range from 0..1% (wheat, barley) up to 3% (beef) under an FTA scenario. These findings are corroborated by recent comments from the Tesco Chairman (John Allan) who believes that the Brexit Deal will not lead to any significant effects on consumer prices.
Agmemod Projections of Brexit Impacts on Selected Scottish Farm Sectors (£m)
Sources: The Andersons Centre, Wageningen University and Research (WUR) and the Scottish Government
Other key issues to watch out for include;
Given the extremely limited timeframe during which the UK-EU FTA was agreed, it is inevitable that a whole myriad of other issues will emerge once experts have had time to parse through the 2,000 pages of legal text and annexes. Overall, the trade deal is historic and marks the beginning of a new era in the UK’s relationship with Europe. However, as with trading relationships between other close neighbours (e.g. the US and Canada), the UK’s trading relationship with the EU is going to evolve and this will necessitate further negotiations in the the future, both on the implementation and governance of the existing agreement, but potentially on developing new accords. In this respect, we’ve not reached the end of the road on Brexit. Whilst the topic might (mercifully) move down the agenda as we move forward, it will not disappear from the news.
Further analysis will be provided in the coming days and weeks on this issue. On 11th February, The Andersons Centre will also be running a webinar to examine in-detail the implications of Brexit. Further information is available via: https://theandersonscentre.co.uk/webinars-2/
Further information on the UK-EU Trade and Cooperation Agreement, including the legal text, is available via: https://www.gov.uk/government/publications/agreements-reached-between-the-united-kingdom-of-great-britain-and-northern-ireland-and-the-european-union
The Seasonal Agricultural Workers Scheme (SAWS) will be extended to 30,000 places for 2021. The Government has announced that the Pilot scheme, which ran with 2,500 places in 2019, and 10,000 in 2020 will be extended, and expanded, for the coming year. Whilst the fruit and veg sector has welcomed the news, the numbers still fall short of the estimated 80,000 seasonal workers required. With the end of the Brexit Transition Period and free-movement of EU labour, there are still fears of a labour shortage. The Pick for Britain scheme which had modest success in attracting UK labour into the sector will run again in the spring and summer.
The 2021 rules for cross-compliance have been published in both England and Wales. In both cases the requirements are pretty-much identical to those for 2020. The main change is how the rules and inspected and enforced – with Brexit there is now more flexibility on how the inspection regime operates. The English guidance can be found at – https://www.gov.uk/guidance/cross-compliance-2021. The Welsh version at – https://gov.wales/cross-compliance-2021
Last month, we reported that time was almost up in the Brexit negotiations and last weekend, it looked as if a make-or-break decision on the future of the talks would be made on 12th December. As is nearly always the case with EU negotiations, and Brexit especially, the talking has continued beyond the latest deadline. A few days’ back it was suggested that about 97% of the draft legal text had been agreed. More recently, there have been signs of progress on addressing two of the three outstanding issues – the Level Playing Field (LPF) and Governance. However, Fisheries remains unresolved.
On the LPF and Governance, the outline of the Deal is taking shape. EU Commission President Ursula von der Leyen claimed that the architecture of the LPF is based on two pillars: State Aid and standards. On State Aid, it appears that the common principles around robust domestic governance, and the right to autonomously remedy situations of unfair competition / distortions in trade have now been established. In terms of standards, the EU Commission President also claimed that a mechanism of non-regression on labour, social and environmental standards has been agreed although there some issues remain around future-proofing such arrangements.
Sources close to the talks suggest that the negotiators’ energies are currently focused on resolving the remaining LPF/Governance impasses. Thereafter, the final hard bargaining will take place on fish. This looks set to come down to a pure numbers game in terms of quota access which both sides are able to live with. The EU appears to be linking access to fisheries with access to its Single Market which gives an indication of how hard it intends to bargain. There are also rumours that a five-year review mechanism will be included in the trade deal which will take stock of how the fisheries quota share and access arrangements are working on the one hand and whether the playing field has remained level. A formal review of how any agreement is functioning would seem prudent.
Overall, it appears that the talks are inching towards a Deal, but hurdles remain which could still scupper the negotiations. The European Parliament is unhappy that it will not have the necessary time to scrutinise the agreement before voting on it. Although the EU would technically be able to ‘provisionally apply’ the Deal before MEPs get to vote, this is not desirable. All EU institutions would much prefer an EU Parliamentary vote on 28th December. To have any chance of meeting this timeline, an agreed text would be needed a few days in advance of Christmas.
If a Deal is not agreed until after Christmas, a short No Deal (interregnum) period in January becomes a distinct possibility. Some claim that even if both sides agree to provisionally apply such a Deal, a range of procedural measures would still be required. However, in such circumstances, one would surely think that some sort of brief standstill period could be agreed whilst the required measures are put in place?
From an agri-food perspective, there is a big element of wait-and-see in terms of what Deal might be agreed. However, irrespective of a Deal/No Deal, major changes are afoot. Whilst arrangements such as those recently agreed under the NI Protocol (see accompanying article), might provide for a limited grace period, preparations for friction on UK-EU trade in early 2021 need to continue with urgency. Customs agents need to be booked. There are reports that some do not want to become involved in agri-food because it is too complicated given all of the additional Sanitary and Phytosanitary regulations which can result in difficulties in getting consignments through Customs. For agri-food companies trading with the EU, training and upskilling in Customs and other regulatory formalities will also be necessary. This is especially the case for exporters to the EU, as it appears that regulations will apply to a greater extent from January in comparison with importing from the EU into the UK.
The Welsh Government has set out plans to replace the BPS with its Sustainable Farming Scheme (SFS). However, those eager for scheme details still have to wait.
The Agriculture (Wales) White Paper was published on the 16th December; it sets out the intentions for primary legislation and provides the basis of the Agriculture (Wales) Bill. It describes the Welsh Government’s ambition to reform the way in which agriculture (including farm woodland management) is supported by Government and the policy direction for the next 10 to 15 years, and therefore has a broad scope including;
The Agriculture (Wales) Bill is planned to be put before the Senedd in summer 2022. It will provide the framework for future policy with secondary legislation providing the detail. Included will be the provisions to establish Sustainable Land Management (SLM) as the ‘overarching principle’ for future agricultural policy, including future support. The proposal is to replace the BPS and Glastir with a single direct support scheme – the Sustainable Farming Scheme (SFS). The scheme will provide support and advice for farm businesses. There will be separate support for the wider industry and supply chain beyond the farm gate.
The SFP aims to address climate change, public health and environmental issues associated with agriculture alongside the production of sustainable food. Although, the White Paper does not offer a time line for this transition, but the Welsh Government has requested a ‘sunset’ clause, so legacy CAP schemes will end in 2024. No scheme details have been included or an indication of payment rates, but the aim is to make payments by ‘rewarding’ farmers for the delivery of outcomes rather than compensation for the costs of inputs. A Farm Sustainability Review will be required for each farm to determine the delivery of outcomes.
The full White Paper can be found at Agriculture (Wales) White Paper (gov.wales) a consultation period on the White paper will run until 25th March 2021.
On 7th December the UK and EU announced that they agreed ‘in principle’ how the Northern Ireland (NI) Protocol would be implemented. This is a significant achievement given the problems in other UK/EU talks, and has been widely welcomed, especially by business groups. However, there is unease in some quarters on the how the new procedures will work in practice.
The arrangements will enter into force irrespective of whether the UK and the EU reach an agreement on their future trading relationship, although if such an agreement were reached, it would make the operation of the NI Protocol much easier. Key aspects include;
Whilst these temporary arrangements will ease the flow of goods from GB to NI initially, longer-term, there will be a significant increase in bureaucracy as Export Health Certificates (EHC) will be required for animal and plant products and Customs (import) declarations will be required for all goods. Furthermore, products will also be subject to a wide range of regulatory checks. Documentary and identity checks will be required for all plant and animal products subject to Sanitary and Phytosanitary (SPS) regulations. A significant proportion of these products (15% for red meat; 30% for dairy and poultry products for human consumption) will need to be physically checked at a Border Control Post. Added bureaucracy will lead to increased food costs in Northern Ireland. However, it must also be acknowledged that the UK plans to introduce a Movement Assistance Scheme to help traders with ‘reasonable costs’ incurred on EHC and official controls on goods moving from GB to NI. This is in addition to the Trader Support Service launched in August to assist with Customs-related issues.
At least, this grace period, will help to put the necessary infrastructure and systems in place to manage the long-term implementation of the Protocol. Such an application (adjustment/grace) period on any UK-EU trade deal is also needed to give traders and regulatory authorities the time to implement the new arrangements. Further detail on the UK Government’s Command Paper on the NI Protocol and supplementary information is available via: https://www.gov.uk/government/publications/the-northern-ireland-protocol
The Welsh Government has announced it paid over 94.6% of Welsh farm businesses either their full BPS or the BPS Support Payment (estimated 90%) during the first week of the 2020 payment window. This equates to over £219.3m being paid to more than 14,900 claimants. The Minister for Environment, Energy and Rural Affairs thanked Rural Payment Wales for paying an ‘impressive’ number of claims in ‘challenging circumstances’. Wales has a good track record in paying claimants early in the payment window. This year the number of payments made in the first week has exceeded those made last year (93.5%)
Farm profits slumped by over 20% in 2020 according to Defra. The Department has just released its first forecast of Total Income from Farming (TIFF) for the year and it shows the twin effects of reduced crop plantings and Covid-19.
The forecast put TIFF for 2020 at £4,151m compared to £5,278m in 2019. We had been predicting a 10% drop, so the level of decrease comes as a bit of a surprise. However, these first Defra forecast have a history of quite large revisions, to the figure could get back closer to our level (£4,700m) when the ‘first estimate’ is published in May. Defra itself states that the forecast this year is more uncertain that usual due to the problems in gathering data during the pandemic.
The main driver of the fall is a decline in crop output – in monetary terms down 13% compared to 2019. Livestock output is forecast to actually rise slightly, even with the disruption caused by Covid in the spring.
Looking to 2021, trying to forecast aggregate UK farm profitability is probably as hard as it has ever been – simply because of the uncertainty of Brexit. Should a UK/EU deal be reached (even a minimal one) then profits could recover back towards the £5bn level as shown on the chart. If there is No Deal, then profits could slump towards £3bn – a level not seen for over a decade.