Category: Policy & Business

The Government is consulting on what tariffs to impose once the Brexit Transition Period ends on the 31st December.  This is key for UK farming, as it sets the level of protection the industry has from low-cost agricultural imports from the rest of the world.  For the past 40 years, UK farming has benefited from the EU Common External Tariff (CET), but after Brexit, the Government has to implement its own trade policy.

The consultation can be found at – https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/863880/Approach_to_MFN_Tariff_Policy.pdf.  It states ‘The consultation will close on 5^th March 2020 and an announcement on the UK’s new Global Tariff schedule will follow shortly afterwards’.  This seems a little odd, as it would make more sense to us to see how the trade talks with the EU were going first before committing to specific tariff levels. 

The consultation explicitly states that the ‘No Deal’ Tariffs published last year  (see https://abcbooks.co.uk/post-brexit-tariffs-plans/) are no longer relevant.  This might be a relief to the industry as this saw most import tariffs lowered or set to zero (i.e. a ‘cheap food’ policy).  However, nothing stops the Government coming back with something very similar after the current consultation.  The document doesn’t really give any clue on likely levels (other than a desire to simplify tariff rates).

The Scottish Farm Advisory Service (FAS) has announced the business resilience planning specialist advice grant will be extended indefinitely.  The pilot scheme allows farmers and crofters to apply for up to £1,000 through the FAS to appoint an expert advisor to undertake a thorough review of the business and develop a ‘resilience action plan’ to address the challenges.  The scheme was due to expire at the end of March, but following positive feedback and acknowledgment that farming businesses are under pressure from factors such as Brexit, climate change and market volatility, the Scottish Government has decided to extend this support.

 

Defra has launched a new online tool to help calculate the value of ‘natural capital’.  The ‘Enabling a Natural Capital Approach’ (ENCA) online resource is available at https://www.gov.uk/guidance/enabling-a-natural-capital-approach-enca.  It is not specifically aimed at farmers, but is intended to help policy makers, businesses, landowners and public sector organisations make better planning decisions to protect and enhance the natural capital.

The landmark Environment Bill has been introduced to Parliament.  As reported in our article in October (see https://abcbooks.co.uk/queens-speech-and-ag-bill/) the new Bill will enshrine environmental principles in UK law for the first time and introduce measures to improve air and water quality and restore habitats.  In addition, the enhanced Bill will tackle plastic pollution, including the creation of new powers to stop the exports of polluting plastic waste to developing countries.  There is also a new commitment to review the biggest developments in environmental legislation from around the world every other year, the findings of which will be considered when developing the UK’s environmental plans.

The Bill will see the creation of a new independent Office for Environmental Protection.  Part of its remit will be to hold the Government to account over its commitment to reach net zero emissions by 2050.  The Office will also have powers to scrutinise all environmental policy and law, investigate complaints, and take enforcement action against public authorities if necessary, to ensure environmental standards are upheld.

Countryside Stewardship 2021

The Countryside Stewardship (England) Regulations 2020 have been published.  This will allow applications to be made to the scheme under our own domestic legislation once we have left the EU on 31st January 2020.  Agreements which will commence on 1st January 2021 will be the first under this new legislation, which can be found at http://www.legislation.gov.uk/uksi/2020/41/contents/made .  The regulations basically roll over the existing scheme rules, into domestic legislation to allow the scheme to continue.  The application window is expected to open in February.  With the new Environmental Land Management (ELM) scheme not expected to be open for a few years yet, and the BPS transition period starting in 2021, land managers may want to look at what the Countryside Stewardship can offer.

BPS, CS and ES Payment Update

Latest figures from the RPA show almost 97% of eligible farmers had received their 2019 BPS payment by 20th January (95.7% by end of December).  In total £1.69 billion has been made.  In addition, approximately £109 million has been paid out to ES and CS agreement holders, more than double the amount made at the same time last year.  ES and CS payments have moved to just one single payment this year, with all agreement holders expected to have received their money by the end of the payment window in June 2020.  The 2020 BPS application and the claim window for ES and CS will all open in March.

Countryside Productivity Small Grants (CPSG)

Claims for Round 2 of the CPSG can be submitted now, the deadline for submissions is 31st May 2020.  Claimants are reminded to make sure claims include all the information and evidence required as detailed in the CPSG Round 2 Handbook otherwise payments will be delayed.

Glastir Entry & Advanced Support Scheme

The Glastir Entry and Advanced Support Scheme, subject to certain eligibility criteria, is available to those whose claim will not be fully processed by the opening of the payment window (31st January). The scheme will pay up to 50% of the anticipated Glastir Entry & Advanced claim value (excluding capital works).  The scheme is only available to those who submitted a Glastir Entry & Advanced claim via their SAF 2019.  This is an opt-in scheme which means claimants need to apply by 14th February 2020 if they wish to receive a support payment.  Payments under the scheme are expected to start during the week commencing 24th February.

BPS Entitlement Transfer

The application period to transfer or lease entitlements is now open.  The deadline for applications is 30th April 2020 for entitlements to be in place for the 2020 BPS claim.

Farm Business Grant

The 7th Expression of Interest for the Farm Business Grant will open on 2nd March.  Applications need to be submitted by 10th April.  Farmers can choose from about 80 items which have been deemed to improve the competitiveness of their business and also make it more environmentally friendly.  Grants of between £3,000 and £12,000 are available.

Fergus Ewing has announced the first tranche of Convergence Funding will be paid before the end of March.  The £90 million of direct support will be paid automatically to farmers and crofters who made claims in 2019.  Our article of 1st November details how this will be distributed https://abcbooks.co.uk/scottish-convergence-funding/).  One point that has only just materialised though is that the convergence funding will be capped at £55,000 per business; this is expected to affect around 80 farm businesses.  The remaining £70 million will paid during the next financial year, work is still ongoing on how this will be distributed.

The way land is used in the UK will have to see a ‘transformation’ if the country is to meet its target of Net Zero emissions by 2050.  This is the conclusion of the Committee on Climate Change (CCC), the Government’s independent advisors on climate change, in their first ever report into land use which was published on the 23rd January (see https://www.theccc.org.uk/publication/land-use-policies-for-a-net-zero-uk/).  As the dominant user of land in the British Isles, farming would be at the forefront of these changes.

The key recommendations in the report are;

• Low-carbon Farming Practices: practices such as controlled release fertilisers, improving livestock health, and slurry management
• Afforestation and Agro-forestry: increasing UK forestry cover from 13% to at least 17% by 2050 by planting around 30,000 hectares or more of broadleaf and conifer woodland each year.  In addition, 2% of the agricultural area should be devoted to agro-forestry (planting trees, but maintaining the agricultural use).  Additional hedgerow planting is also recommended.
• Peatlands:  restoring at least 50% of upland peat and 25% of lowland peat.  This equates to 7% of the UK’s land area.  Although there might be some agricultural production, it is likely to be very low intensity grazing at best.
• Bio-energy Crops:  increase the growing of energy crops by around 23,000 hectares each year so that by 2050 they comprise 3% of total land use.  The report states that energy crops are faster growing than new woodland, but also cautions that the negative impacts of energy crops need to be managed.
• Reducing Meat and Milk Consumption:  (i.e. beef, lamb and dairy) by at least 20% per person.  The report implicitly recognises that this might be the most contentious recommendation.  It states that such a reduction would bring consumption within healthy eating guidelines, and can drive sufficient release of land to support the proposed changes in tree planting and bioenergy crops.  It calculates that, alongside expected population growth, it implies around a 10% reduction in cattle and sheep numbers by 2050 compared with 2017 levels.  Then report points out that this compares with a reduction of around 20% in numbers over the past two decades.
• Reducing Food Waste: the 13.6m tonnes of food waste produced annually should be reduced by 20%.

In terms of how to achieve this shift, the report suggests that there should be a mix of legislation, public funding and better information, advice and training.  In terms of legislation, this might include regulating enteric fermentation from livestock and steps such as a change in the diet of cattle to reduce methane emissions.  The report suggests that public funding should be used to incentivise farmers to plant trees and take up lower-carbon farming practices as well as for non-carbon benefits such as helping to prevent floods and for recreational purposes.  Tax treatment of woodland should be reviewed to ensure that farmers will not be worse-off if they change use of land to forestry.

In terms of changing diets, it suggests that the first stage should be relatively ‘soft’ through persuading consumers and the wider food chain to make changes.  A second stage of regulation or pricing needs to be considered if this does not work.

The report recognises that reducing emissions should not be done by producing less food in the UK and increasing imports, it goes on to state that the UK is a ‘relatively low-greenhouse gas producer of ruminant meat’.  The report outlines that methane emissions are a key factor for the farming sector (unlike most other sectors, where CO₂ is the biggest issue).  It also addresses how methane emissions are assessed, and equated to CO₂ – there is increasing debate on this subject.

Methane has a far greater global warming effect than CO_2.  However, CO₂ emissions raise the concentrations in the atmosphere for thousands of years, whilst methane naturally removes itself from the atmosphere after approximately 12 years.  It is argued that methane-induced warming is dependent on whether the emissions are sustained or new emissions.  If they are sustained at a steady rate, i.e. livestock numbers and practices remain the same, there is no global warming effect.  Most official figures and reports use either Global Warming Potential (GWP) after 20 years or after 100 years.  The UK Government largely uses GWP100.  It is claimed by some that this overstates the importance of methane and a new measure called GWP*, which is much more generous in its treatment of methane, should be used.   The GWP* measure has only emerged relatively recently, though, and is still subject to much debate.  It will be scrutinised by the IPCC in its 6^th Assessment Report which is being complied during 2020 and 2021.

Like much in the climate change sphere, it seems the measurement and statistics are open to interpretation, without an agreed methodology.  This may provide some comfort to the livestock sector that it is not as bad as it has been painted.  However, it might be dangerous to cling to this too closely as a reason to continue unchanged.  Society will expect farming to do its bit in terms of emissions and many of the policies outlined in the CCC report will be part of that change. 

 

 

 

The new Agriculture Bill contains some amendments to the tenancy legislation in England and Wales (see previous article https://abcbooks.co.uk/agriculture-bill-2020/).  This follows the joint consultation held by both Defra and the Welsh Government back in April 2019, seeking views on reforms to the law (see article https://abcbooks.co.uk/agricultural-tenancy-reform/).  The proposals contained in the draft Bill are relatively minor changes.  Other proposals included in the earlier consultation, including the more contentious ones including Tenants being able to assign their Tenancy to a third party when they wish to retire and extending the ‘family members’ eligible of succession rights, will be considered further.  The current changes include:

 

• removing the ‘Commercial Unit Test’ under the succession provisions of AHA tenancies, which currently prevents those already occupying a commercial farm from succeeding to an AHA tenancy.  There will also be an update to the ‘Suitability Test’ to more of a ‘business competence test’
• amendments to the 1986 Agricultural Holdings Act (AHA) to allow a third party to be appointed to resolve a rent dispute at any time up until the rent review date.  At present, this has to be made at the time of a s.12 notice, 12 months beforehand
• amendments to the 1986 Agricultural Holdings Act (AHA) to allow a third party to be appointed to resolve a rent dispute at any time up until the rent review date.  At present, this has to be made at the time of a s.12 notice, 12 months beforehand
• amendments to both the 1986 Act and the Agricultural Tenancies Act 1995 (the FBT legislation) to include both the President of the CAAV and the Chair of the ALA to make appointments of arbitrators.  Currently this is just restricted to the President of the RICS
• amendments to the 1986 Act to allow for regulations to be made to enable a Tenant to refer to dispute resolution requests for variation of terms or Landlord’s consent
• removing barriers which currently dis-incentivise Landlords from investing in their AHA holdings.  This will see changes to the 1986 Act so that if the Tenant has agreed to make payments to the Landlord for improvements that are wholly or partly financed by the Landlord, such payments will be disregarded from rent considerations, similarly any benefit from the improvement to the Tenant will also be disregarded
• updating the retirement provisions for Council farm Tenants.  This will see the retirement age of 65 in a Case A Notice to Quit being replaced with ‘the tenant’s pensionable age’ using the ages included in the Pensions Act 1995
• amendment to the 1986 Act, so that applications for succession on retirement can be made at any age.  Currently the Tenant must be at least 65 years old.