The Latest Edition of the John Nix Pocketbook for Farm Management has just been published. The ‘bible’ of farm management has been comprehensively updated and also continues to evolve with a new section on Greenhouse Gas emissions in the latest, 51st, Edition. For more details go to – www.thepocketbook.co.uk.
The farming industry in England will have to wait a little longer to get more details on the Agricultural Transition. In previous articles we have outlined how a Defra consultation is expected that will cover the ‘delinking’ of the BPS, lump sum payments, and deductions beyond 2021. This was always billed as coming ‘in the autumn’ and we had hoped for September (it was originally planned before the end of 2019). It now seems that it could be late October or November before it emerges. This is quite unhelpful for those trying to plan future land occupation arrangements.
The reason for the delay is that agricultural policy has become entangled in the Comprehensive Spending Review (CSR). This sets the budgets for Government departments (and the block-grants to the devolved administrations) for the next three years. As farm support is no longer funded by the CAP, it comes from Defra’s budget, which is ultimately decided by the CSR. Of course, it might be pointed-out that the CSR should make no difference to agricultural support as the Government gave a ‘funding guarantee’ at the last Election. This stated that farming would receive ‘the same level of support until the end of the current Parliament’ (2024). The suspicious might conclude that subsequent events, i.e. Covid, has rendered this guarantee less robust. Until there is uncertainty over the farm support budget Defra is unable to make key decisions on the Agricultural Transition – such as what deductions will apply to the BPS after 2021.
In England, the Agriculture Bill mandates that multi-annual ‘financial assistance plans’ will have to be drawn up. This will set out what support the Government intends to operate under its financial assistance powers. The first plan will run for seven years from 2021, and then each plan will be for a five-year period. We are expecting the first plan before the end of the year, and this should provide some clarity on farm support funding. This could well arrive as part of a package of policy documents along with the Agricultural Transition consultation.
Adding to the reading list might be further consultations. One looks set to be on Regulation and Enforcement. A new regime will be required to replace Cross-compliance, which becomes ineffective once the BPS is delinked from land. This is unlikely to see much of a reduction in the red-tape burden on farming as much of Cross-compliance is already law. However, the way it is enforced (legal sanctions rather than BPS fines) and the administration of it (more proportionality and ‘common sense’?) will be different. It also has linkages to ELM and animal welfare payments. These will only pay farmers for going beyond the ‘regulatory baseline’. Where that baseline is set is therefore quite important.
The final area that could be consulted on is the support schemes that aren’t either ELM or BPS. This would cover programmes in areas such as productivity, animal health & welfare and farmer advice & training. One new idea that seems to be gaining ground in Government is a new scheme called the ‘Sustainable Farming Incentive’. Details are sketchy at present, but the idea appears to be for an interim scheme to run alongside Countryside Stewardship until such time as ELM is fully launched (2024). The SFI would cover areas that will be included in ELM, such as soil health and emissions, that are not well supported under CS. It would seem logical that the SFI would close when ELM is fully operational, although some reports have suggested it would continue to operate ‘alongside’ ELM. There may be more detail in the upcoming consultations.
In terms of ELM itself, the national Pilot Scheme is meant to open for Expressions of Interest (EOI) in March 2021 with applications commencing in April. Presumably, in order to express an interest, some details of the pilot scheme will need to be published beforehand – perhaps February? Whilst it is always possible for the scheme to alter between the Pilot stage and its full roll-out in 2024, this will at least give some indication of what ELM will look like in areas such as options, management requirements and payment levels.
Overall then, probably plenty for the sector to digest over the next few months.
It seems increasingly likely that the BPS in Wales will continue relatively unchanged for the next three years. We had previously thought the replacement Sustainable Farming Scheme (SFS) would be introduced for the 2022 year – indeed we wrote this last month. However, statements from Leslie Griffiths, Minister for Environment, Energy and Rural Affairs, suggest that the timetable will be much later.
There has been no ‘official’ release to this effect, but in a Senedd debate where the Minister gave an update on Welsh farm policy she stated on a number of occasions that it was ‘unlikely’ that the new schemes would be introduced before 2024 (see https://record.assembly.wales/Plenary/6394#A59160 for a transcript). The Welsh powers under the Agriculture Bill only run to the end of 2024 so a new Welsh Agriculture Act will be needed anyway.
In addition, Ms Griffiths indicated that there would be a significant transition period from the current arrangements to the new ones. A White Paper setting out the current administrations thoughts on future policy is set to be published before the end of the current Senedd term (May 2021). It is unclear how much detail on the new SFS this will provide. Legislation for the new Welsh Agriculture Bill will be brought forward in the next Senedd term after a full economic impact assessment of the plans is produced (due summer 2021).
This timing fits in with recent announcements. The consultation on ‘Simplifying Agricultural Support’, reported on last month, looked to be ‘overkill’ for schemes that were only running for one more year. It makes more sense in the context of schemes that will last three years (2021, 2022 and 2023). The announcement on Rural Development funding set out in an earlier article also covers the same three-year period.
Expiring Glastir Advanced and Commons contracts will be offered a one-year extension. The Welsh Government has confirmed Glastir Advanced and Commons contracts which began in 2016 and will be finishing on 31st December 2020 will be offered a further year until the end of 2021. The new contracts will be based on the management options being delivered in the final year of the Agreement; no capital works will be included and agreement holders do not have to continue with the original Glastir Entry options. Those Glastir contracts which were renewed in 2018 and 2019, and are due to expire in December 2020, will also be offered a further one-year extension. This will be on the same land and options as under the current renewed contract. All extended contracts will be offered via RPWonline and agreement holders will have 21 days to accept the offer otherwise the Agreement will end on 31st December 2020.
The Welsh Government has announced it will be making £106m of funding available for the rural economy over the next three years. This will allow some of the current Rural Development Programme (RDP) schemes to open for new rounds. The Government recognises many businesses have been hit hard by the Covid-19 pandemic, but investment must support a ‘green recovery’. When allocating funding the Government has taken this into consideration. The plans include;
The full list of schemes and funds available for each can be found via https://businesswales.gov.wales/walesruralnetwork/sites/walesruralnetwork/files/Rural%20Development%20Programme%202014%20-%202020%20Commitment%20of%20Funds%20-%20ANNEX%20-%20En.pdf. The schemes will be funded through a combination of EU RDP and domestic funds; £53m is still available from the EU.
The negotiations on a post-Brexit trade deal have been thrown into disarray as the UK has threatened to unilaterally override parts of the Withdrawal Treaty. Boris Johnson’s Government proposes to use the Internal Market Bill currently progressing through Parliament to amend the implementation of the Northern Ireland (NI) Protocol. This is despite the fact that the Treaty and Protocol were agreed by the Government less than a year ago, and that breaking Treaty obligations contravenes international law.
The EU was quick to react and told the UK that it must withdraw the relevant parts of the legislation before the end of the month. The UK has, so far, declined to do this. However, talks on a future Free Trade Agreement (FTA) will continue for now, although relations between the two sides have reached an all-time low.
The crisis began when the UK Government published its draft legislation on the UK Internal Market (UKIM) on the 9thg September. This was subject to a consultation during July and August (click here for article summarising the Government’s initial proposals). Whilst the draft legislation mainly deals with the functioning of the UKIM in a post-Brexit world, various elements impact on the implementation of the Northern Ireland Protocol. The UK Government claims that this is largely an exercise in ‘clarification’ although a Minister had to admit in Parliament that the proposals were in breach of the Withdrawal Treaty obligations. A senior UK Government legal adviser has resigned over the plans.
The UKIM legislation affects the NI Protocol in three main ways:
Moving away from the Brexit-related aspects of UKIM, this legislation will be important for agri-food businesses operating throughout the UK. Goods produced in one part of the UK (e.g. Scotland) and meeting the required standards will be mutually recognised when placed on the market in another part of the UK (e.g. England). That said, if products produced in England are subject to lower standards than those applying in Scotland, the non-discrimination principle would mean that these products cannot be prevented from being offered on sale in Scotland. Accordingly, this gives the potential for products produced to a lower standard to be supplied across the UK and this has drawn sharp criticism from the devolved administrations as they believe it undermines any powers which might be repatriated to them (from Brussels) as a result of Brexit.
The draft UKIM legislation is accessible via: https://publications.parliament.uk/pa/bills/cbill/58-01/0177/20177.pdf
The introduction of the UKIM was always going to be controversial but recent statements in Parliament by the NI Secretary of State has raised tensions to a new level, particularly concerning UKIM’s incompatibility with international law and its implications for the UK-EU negotiations. Given how controversial the Brexit negotiations have been, it was always likely that a flashpoint such as this would emerge, especially as we are reaching the climax of the talks. The prospects of a No Deal Brexit have increased. That said, the controversial points can still be ironed out in the remaining negotiations – if there is the will on both sides to achieve this. Also, it is worth pointing out that the UKIM legislation is likely to be modified significantly as it passes through Parliament and the House of Lords could potentially delay its passing by a year as it will have grave concerns about its current incompatibility with international law. What is clear is that even if an agreement is reached between the UK and the EU, significantly more time will be needed to implement any agreement. Whilst the Transition Period might end on 31st of December, a further Implementation Period is now necessary, such periods are common in other Free Trade Agreements.
Defra has reminded claimants that the BPS payments for 2020 will converted from Euros to Sterling at a rate of €1=0.89092; the same as last year and all payments will be made in Sterling. But the final rates will not be available until November, as entitlement values change on a yearly basis depending on the number claimed. However, this is unlikely to change payments a great deal. The biggest change compared to last year is that the Financial Discipline reductions will not apply in 2020 (1.4327% in 2019). Therefore the estimated rates set out in Key Farm Facts are likely to be pretty close.
The Sustainable Agricultural Capital Grant Scheme (SACGS) has been launched in Scotland. The new pilot scheme will offer grants of up to £20,000 to farmers and crofters towards the capital cost of specific items which have been identified to reduce Greenhouse Gas (GHG) emissions and improve land and livestock management on Scottish farms and crofts. Grants of 50% (60% in the Highlands and Islands) will be paid on the standard costs of agricultural equipment.
The scheme opened on Monday 7th September and closes on 11th October 2020. Each capital item has been allocated a number of ‘green points’ depending on how much it delivers the scheme objectives. If funding is oversubscribed, applications with the most ‘green points’ will be prioritised. Those who have completed a carbon audit, nutrient plan or veterinary health plan between March 2017 and March 2020 could be credited with bonus ‘green points’. Further information, the application form, and a list of the capital items supported can be found at https://www.ruralpayments.org/topics/all-schemes/sustainable-agriculture-capital-grant-scheme–sacgs-/
The Scottish Government has scrapped crop diversification (the 2 & 3 crop rule) as from the 2021 BPS year. However, other Greening requirements have been retained. This means, in contrast to England, Ecological Focus Areas (EFAs) will still be required and the permanent grassland provision will also be retained. The announcement follows the passing of the Agricultural (Retained EU Law and Data) (Scotland) Bill in the Scottish Parliament at the end of August. This now gives the Scottish Government powers to continue the CAP schemes after Brexit and also to carry out its commitment to simplifying and improving them; this announcement being the first part of its simplification. The Scottish Government has said there will be a review of the EFAs. It will work with farmers and crofters to ‘enhance EFAs’ to ‘cut emissions’ and ‘enhance the environment’ in a way that is ‘practical’ for Scottish farmers.
Agreement between the UK and the EU on a Free Trade Agreement seems as far away as ever. Speaking after the latest round of talks from 18th to 21st August, the EU’s chief negotiator was notably downbeat. he stated that “today, at this stage, an agreement between the UK & EU seems unlikely.” “Too often this week, it felt as if we were going backwards more than forwards.” From the UK side, there were similar sentiments. David Frost, the UK’s negotiator stated that “agreement is still possible, and it is still our goal, but it is clear that it will not be easy to achieve.” The sticking points have not changed. There remains a wide divergence on fisheries, the ‘level-playing field’ provisions and the role of the European Court of Justice. The European Parliament reasserted this month that any agreement must be concluded before the end of October in order for it to get through the Parliamentary ratification process by the end of the Transition on 31st December.
