Category: Policy & Business

Countryside Stewardship Now Open

The Countryside Stewardship (CS) scheme in England opened for applications on 9th February.  The scheme will continue to be available whilst ELM is being piloted.  Those that enter a CS agreement from 2021 onwards will be able to end their agreement without penalty, at agreed points, if they wish to go into ELM when it is available.

There have been a number of changes to CS to make it more attractive, these include making it easier to apply online, simplifying options to make them easier to understand and changing the focus of inspections.  Recognising the inspection regime was a reason why some did not want to apply, there will be more emphasis on the delivery of environmental outcomes, offering advice and allowing breaches to be put right or paying on smaller areas without additional penalties.  This new regime will only be possible for ‘domestic’ agreements i.e. agreements starting from 2021 onwards.

Capital Grants Offer

A new objective for CS from 2021 will be air quality, with the aim to reduce ammonia emissions from agriculture.  Under a new Capital Grants offer, existing options that improve air quality such as slurry store covers or planting tree shelter belts will be available as a stand-alone capital agreement, in priority areas, together with two new capital items – automatic floor scrapers and low emission flooring for livestock housing.  The new Capital Grants offer also expands on and replaces the Hedgerows and Boundaries Grant.  In total it offers 67 standalone capital items within 3 groups;

  • Boundaries, Trees and Orchards (the previous Hedgerows and Boundaries Grant)
  • Water Quality
  • Air Quality

Some of the items require approval from a Catchment Sensitive Farming Officer (CSFO) and are only available in High Priority Areas for Water and Air Quality.  Capital agreements are for two years, the maximum grant is £60,000 but there are limits a of  £20,000 for each of the three option groups.

Woodland

Improvements are being made for 2021 onwards to woodland options which will see bracken control and stone wall funding being brought into Woodland Management.  In addition, Woodland Creation and Woodland Management Grants will be combined into one application.

Key Dates

Higher Tier – Open from 9th February 2021.  Application Pack request deadline 31st March.  Closes 30th April.

Mid Tier – Open from 9th February.  Paper Application Pack request deadline 28th May.  Online Application Pack deadline 30th June.  Closes 30th July.

Wildlife Offers – Open from 9th February. Paper Application Pack request deadline 28th May.  No Application Pack required for online applications.  Closes 30th July.

New Capital Grants Offer – Open from 9th February.  Closes 30th April.  6 weeks notice required for CSFO.

New Woodland Creation and Maintenance Grant – Open all year round for applications.

Woodland Tree Health – Open all year round for applications.

Woodland Management Plan – Open all year round for applications.

LAMMA 2021 Cancelled

LAMMA will not now take place at all during 2021.  The annual machinery event which had already been rescheduled from its usual January date to 25th/26th May has been cancelled altogether in 2021 due to the ongoing uncertainties of the Covid-19 pandemic.  The organisers have said it will however, be back on 11th/12th January in 2022.

English Future Farm Support

This year sees the start of the Basic Payment being phased out and we will also get further details of what will be available in the future.  Below is an outline of what is expected and when:

Basic Payment Scheme– A consultation on the Lump Sum exit scheme and Delinking of payments will be published in March.

Countryside Stewardship (CS) – Applications are expected to open shortly.  Whilst ELM is being piloted, the CS scheme will remain open to new applications and those that go into CS will not be penalised if ELM is ‘better’.  The RPA has stated ‘no-one in a CS agreement will be unfairly disadvantaged’ as the transition to ELM takes place.  Those who enter a CS agreement from 2021 onwards will be able to end their agreement, at agreed points, where they have secured a place in ELM.  A new objective for CS from 2021 will be air quality, with the aim to reduce ammonia emissions from agriculture to this end a new stand-alone Capital Grants offer is expected to be available in priority areas for options which tackle this.  Further details are expected in the new CS manual which will be out this month.

Sustainable Farming Incentive (SFI) – This is the first element of the ELM scheme. According to Defra it should be a ‘straight forward way for farmers to get paid to produce public goods on their land’.  Information on the first phase of the scheme and how farmers can get involved with the pilots will be available in March.  By June 2021 Defra will publish information on how the scheme will work, what farmers will get paid for and how much, with the aim of the first phase of the SFI being available to all by March 2022.

Local Nature Recover (LNR) – The second element of the ELM scheme.  This will pay for actions such as creating, managing or restoring habitats, natural flood and species management.  Defra aims to be piloting this element by the end of 2021.

Landscape Recovery (LR) – The third and final element of ELM.  These will be large-scale projects such as creation or restoration of forests, coastal habitats or peatland.  Many fewer will be offered, Defra aims to offer the first 10 between 2022 and 2024.

Farming in Protected Areas – Funding for improved public access and the environment in Areas of Outstanding Natural Beauty and the National Parks.  More information will be made available on this in the first half of 2021.

Animal Health and Welfare – More details here do not look likely until 2022, but Defra has said it would like this to ‘sit alongside its environmental schemes to help farmers to improve animal health and welfare’, so might this be part of the SFI?

Business Planning Advice – This will be offered through the Resilience Support Programme by May 2021.

Support for New Entrants – Currently being co-designed with farmers; updates will published throughout the year, but doesn’t look like anything will be available in 2021.

Farming Investment Fund – This is the ‘Son of the Countryside Productivity Scheme’ and the latest communication from Defra is that it will be open for small and large grants to support farm productivity by October 2021.

Slurry Improvement Scheme – This aims to reduce air and water pollution from slurry.  The scheme should be launched in 2022.  Progress reports are expected throughout 2021.

Innovation, Research and Development Scheme – Defra aims to launch the scheme in 2022.

The Institute for Agriculture and Horticulture (TIAH) – A new professional body will be set up later in 2021 which will provide clear direction for all on skills, standards and career routes in the industry.

As further detail becomes available for each of the schemes we will endeavour to keep readers up-to-date.

Cross Compliance Breaches

Defra has published the 2019 Cross Compliance inspection results.  The usual categories remain at the top of the most failed list, but whilst the proportion related to SMR7 creeps down, others are moving up:

SMR 7 Cattle ID and Registration – 47.2% of those inspected failed (50.1% in 2018)

SMR 1 NVZs – 27.8% of those inspected failed (25.4% in 2018)

SMR 13 Animal Welfare – 24.9% of those inspected failed (17.5% in 2018)

SMR 8 Sheep and Goat ID – 21.6% of those inspected failed (21.3% in 2018)

For SMR  7, contrary to popular opinion that it is all about missing eartags, the failure to report and record movements and report the death of an animal are the areas most found to be non-compliant.  Rather worrying is the increase in failures for Animal Welfare.  The full report can be found at https://www.gov.uk/government/publications/cross-compliance-2019-inspection-results/cross-compliance-2019-inspection-results

Defra has also published a useful list of the records required at a cross-compliance inspection, this can be found at Cross compliance inspections: information needed for an inspection – GOV.UK (www.gov.uk)

 

 

All Wales NVZ Designation

All of Wales is to become a Nitrate Vulnerable Zone.  The Welsh Minister for Environment, Energy and Rural Affairs, Lesley Griffiths, has announced that regulations will be introduced across the whole of Wales to protect the health and quality of watercourses from agricultural pollution.  The regulations will come into force on 1st April 2021 and, whilst no details have been published on what these will entail, the Written Statement says the ‘baseline standards’ established by these regulations are ‘not excessive’.  It continues to say they will establish standards of production in Wales ‘comparable’ to those which apply in the rest of the UK and Europe.  It also says the regulations will ensure the regulatory baseline is set at the appropriate level, in accordance with principles of the EU Trade and Cooperation Agreement.

The Minister said the industry had been given four years to ‘demonstrate a change in behaviour’ but it had not shown the ‘scale, rate and commitment to change needed’.  The introduction of the regulations will be supported by knowledge transfer programmes via Farming Connect and funding for capital grants.  The latter may be available through the Sustainable Production Grant which opens again for Expressions of Interest on 1st February to March 12th 2021.  The SPG provides a maximum grant of 40% towards capital investments in equipment and machinery which have been pre-identified to address nutrient management and improve water, soil and air quality by reducing on farm pollution.  Grants of between £12,000 and £50,000 are available.

 

Land & Entitlement Transfers

England

Defra has announced it is now possible to transfer land parcels and BPS entitlements for 2021.  The functionality on the Rural Payments service is open until 17th May 2021 (15th is a Saturday).  Those making the transfers will need to have ‘amend’ permissions for ‘land details’ and ‘entitlements’.

In some cases a paper RLE1 may already have been sent in to transfer land, or entitlements to be used in 2021, i.e. where land has been sold in the autumn.  If the transfer hasn’t yet been completed, you can still make the transfer using the Rural Payments online service, but you must let the RPA know.  Details on how to do this can be found on Page 4 of the RLE1 Guidance Notes (https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/919288/RLE1_GUIDANCE_2020_v4.0.pdf) The 2020 guidance is still valid for 2021.

It is also possible to ‘Add land’ via email.  This service is open until 3rd May 2021 for BPS applications, to ensure the RPA has time to get back to applicants.  Details on how to do this can be found at https://www.gov.uk/guidance/rural-payments-add-land-by-email-for-2021

Wales

The entitlement transfer window opened at the beginning of January in Wales.  Transfers via sale, lease or inheritance can be made via a client’s RPW Online account.  In Wales notification of transfers must be made by midnight on 15th May 2021 in order for a 2021 claim on the entitlements.

LFASS Payments & Convergence Funds

Farmers in Scotland are due to receive an additional £71.8m of funding in 2020 direct payments.  This is the second (and final) tranche of ‘convergence’ money.  A total of around £160m was provided by the UK Government, of which £90m was paid out last year – see our article of November 2019 for the background to the funding.

This year’s funds will be used in two ways.  Firstly, £32.8m will be used to top-up 2020 LFASS payments.  Due to EU rules these were only paid at 40% of the usual, 2018, rate.  This funding will bring them back to the 100% level.  For 2021 onwards, payments are due to return to their full, historic level (see Nov 2020 article).  The other £38.9m will be used to top-up 2020 BPS payments – following a similar pattern as was seen for 2019 BPS.  This results in payments of £9.65 per Ha in Region 1, £17.97 in Region 2 and £9.69 in Region 3.  More details can be found at https://www.ruralpayments.org/topics/customer-services/common-agricultural-policy/convergence-funding/

UK-EU TCA ‘Teething Problems’

Having been agreed on Christmas Eve and becoming effective just over one week later, it is unsurprising that challenges have arisen for agri-food traders as a result of the UK-EU Trade and Cooperation Agreement (TCA).  The TCA (click here for summary) is perceived by many to be a ‘thin’ deal as it only focuses on delivering tariff-free and quota-free trade in goods; it delivers little in terms of services and reducing trade friction (non-tariff barriers).

It is in relation to the latter that agri-food trade has been significantly affected, as the EU’s border controls on UK exports became effective immediately.  Trade frictions have been experienced in two key areas:

  1. Customs and Sanitary & Phytosanitary (SPS) controls: whilst there are some limited easements in the TCA on Customs issues (e.g. allowing the pre-lodgement of documents), these are less than many would have hoped for.  There are even fewer easements in the SPS area with most of these limited to trade between GB and Northern Ireland.  Here, a grace period has been agreed which varies from 3-12 months for specific items.  As a result, traders have suddenly been faced with a substantial increase in paperwork with only a few days’ notice.  Some have reacted by limiting the number of consignments being shipped to the EU until they get a greater understanding of how the procedures work.  Hauliers are unwilling to depart warehouses, processing plants etc. until the paperwork for each shipment is in order.  This has meant that port traffic volumes are lower than normal.  For instance, traffic on the Dublin-Holyhead route is down by 50%.  Volumes traditionally start to increase during the spring.  This will be a key test of the ability of border control systems to cope, especially as additional certification and checks will be required on imports into the UK from April and will become fully operational in July.

When both the UK and EU border controls are fully operational, the physical check rates for SPS purposes will be as follows:

    • live animals – 100%
    • minced & poultry meat, dairy products & eggs – 30%
    • red meat & poultry products, ambient dairy & eggs, fertiliser – 15%
    • semen/embryos, animal by-products – 5%; highly-refined products – 1%

These check rates are effectively the same as the levels of checks that countries trading with the EU on standard WTO MFN terms experience.  A proportion of these loads will then be subject to sampling.  Selections will be risk-based and shipments could be delayed by several days which will have a significant impact on product value deterioration for the ‘unlucky loads’ affected. 

  1. Rules of Origin (RoO): essentially determine the ‘economic nationality’ of a goods consignment.  They aim to prevent goods manufactured in third countries, but routed through the UK (or EU), taking advantage of the zero tariffs.  They are particularly significant for industries (e.g. car manufacturing, composite foods) where components/ingredients are sourced from multiple countries.  RoO can be expensive for businesses as they have to demonstrate the origin of their product.  Whilst the TCA has allowed traders up to 12 months to supply evidence that the goods they are trading between the UK and the EU meet RoO requirements, this is considered to be of limited use as the evidence will still be required.  The TCA also allows both the UK and EU to count inputs from the other party when assessing the origin of goods.  The UK had wanted to include content from other countries towards meeting the rules of origin requirements (e.g. Canadian wheat used to produce flour for bread-making) but this was rejected by the EU.

There are three general levels of RoO, all of which must be met in order for a good to be traded between the UK and the EU on a tariff-free basis:

    • Eligibility of goods: do the goods concerned meet the RoO criteria (e.g. ≥85% of content by weight) is eligible for tariff-free trade?
    • Certification: can the trader provide adequate certification that the goods are eligible (e.g. Rules of Origin certificate)?
    • Shipping and product-specific requirements: has the end-product undergone sufficient processing in the UK/EU before it is subsequently traded.  Generally speaking, if there is a change in the tariff code as a result of processing, it would be deemed as sufficient.  Other issues can include means of transportation, cumulation arrangements etc.  Retailers such as Marks & Spencer who operate a distribution hub covering the UK and Ireland have been particularly affected by this issue.  Some of their products are procured from the continent in large consignments and then broken down into smaller consignments for shipment to Ireland.  As such products have not undergone sufficient processing, a tariff is payable upon re-entry to the EU. 

Generally speaking, if a consignment fails on one of these levels, then the products will fail to meet RoO requirements.  This is why Rules of Origin are fiendishly complex.  

For each business, it is vital to assess how the TCA will affect the products that it trades, not just between Britain and Europe but also between GB and Northern Ireland, where the NI Protocol is now operational.  The challenges here have  prompted some suppliers (e.g. Ethical Dairy Company) to cease serving NI customers.  From a business perspective, trade has become more complex.  But, once businesses become more familiar with the specific requirements that apply to their goods, some of the teething problems will be overcome.  However, the UK-EU trading relationship has fundamentally changed, meaning some of the challenges are set to become permanent fixtures.  It is likely to mean more single-product, single-consignment loads being traded as opposed to the multi-product, multi-consignment shipments of the past.  This will have an impact on value-added, particularly on high-value exports (e.g. high-end prime boneless beef cuts). 

Finally, it merits mentioning that in terms of SPS especially, the TCA is a framework that can be built upon.  Particularly in terms of reducing the levels of physical checks in the future.  However, this is contingent on close alignment on standards between the UK and the EU.  Here, the British Government is going to have a delicate balancing act in terms of the trade agreements it completes with other countries and the importance it places on trade with the EU. 

Slurry Storage

The Scottish Government has opened a consultation on introducing new rules on the storage of silage, slurry and digestate.  Under the proposals, for both silage clamps and slurry stores, the exemption for facilities built before 1991 will be removed.  Slurry store storage capacities will be aligned with the NVZ rules (22 weeks for cattle, 26 weeks for pigs).  Rainfall calculations will have to be done on a once-in-five-year maximum rather than average figures.  Deadline for responses is the 13th April 2021.  The full consultation can be found at – https://www.gov.scot/publications/delivering-scotlands-river-basin-management-plans-silage-slurry-anaerobic-digestate-improving-storage-application/pages/1/