Category: Policy & Business

Welsh BPS Payments

Similar to last year, the Welsh Government has announced a BPS loan scheme will be available to those who do not receive their 2019 Basic Payment on the first day of the payment window.  This year the payment window opens on 2nd December 2019 (1st is a Sunday) and closes on 30th June 2020.  Those in Wales who do not receive their Basic Payment on the first day will be eligible to receive payment of up to 90% of their claim.

Again, like last year, this will be an opt-in scheme.  It is expected applications will have to be made via Rural Payments Wales (RPW) Online.  Those who are due to receive a Basic Payment should keep an eye out for when the application window for the loan scheme opens as all are urged to apply because until payments are made claimants will not know if their payment will be made on the first day or not.  Last year loan payments were made from 10th December.  Wales already has a good record for making payments on the first day of the window, but this will ensure just about all claimants receive most of their Basic Payment within the first couple of weeks of the window opening.  The Welsh Government has said this will provide some certainty for those concerned about cash flow as the UK leaves the EU in the autumn.

National Food Strategy

Defra has launched a ‘call for evidence’ to feed into its National Food Strategy.  Readers may recall we wrote about this back in July.  The purpose of this element is to gather ‘inspiration’ to try and transform the food system.  Defra are particularly interested in ideas that;

  • help people make informed decisions about the food they eat
  • increase the access to and affordability of high-quality food
  • make food production more environmentally sustainable
  • help farming, fishing and food businesses thrive
  • promote the highest standards of animal health and welfare
  • put England at the forefront of innovation in the food sector.

The call for evidence is part of a wider independent review being conducted by Henry Dimbleby to assist the government to create its first National Food Strategy.  The call for evidence closes on 25th October 2019.  For further information and to submit evidence go to https://consult.defra.gov.uk/agri-food-chain-directorate/national-food-strategy-call-for-evidence/

Climate Change and Land – IPCC Report

On 8th August, the UN-affiliated Intergovernmental Panel on Climate Change (IPCC) released its report on how land usage contributes to, and is affected by, climate change. Its findings suggest that climate change is intensified by emissions from cattle and intensive farming practices, thus placing further scrutiny on meat and dairy products.

The study considers issues such as greenhouse gas fluxes related to land; interactions between climate change and desertification, land degradation and food security; land-related impacts and risks; response options that could help to adapt to climate change as well as response options that reduce land-related emissions or enhance carbon uptake by land systems.

Whilst the report stopped short of explicitly calling on people to become vegetarian or vegan, it suggests that by reducing meat and dairy consumption and switching to plant-based alternatives, people could be fed using less land, particularly in Western economies. It suggests that if farmland was diverted away from meat production and used for growing more forestry and biomass, it could help to create more carbon sinks to help to improve and regenerate soils. As with previous studies, emissions associated with methane were found to be most problematic as they are substantially more potent than CO2.  That said, it must be acknowledged that unlike carbon dioxide, methane dissipates in the atmosphere after approximately 12 years, whereas CO2 can remain in the atmosphere almost infinitely, if it is not sequestered or otherwise extracted. That should not be taken as an excuse for inaction, because undoubtedly emissions pose a significant challenge for the livestock industry and it needs to be addressed head on.

Food waste is also highlighted as a major issue with approximately one-third of food that is produced being lost or wasted, and from field to fork, it accounts for 8-10% of total global emissions. This is substantial given that the IPCC estimates that emissions from land use encompassing forestry and agriculture equates to 23% of human greenhouse gas emissions. In July, WRAP reported that in the UK, approximately 1.6 million tonnes of food from primary production is wasted annually, equating to just over 3% of food harvested. Further estimates from the WRAP report are provided in the table below and the results highlight that there is significant scope for improvement in managing waste at the farm-level.

Top-20 Food Waste Sectors from Primary Production by Volume (2017) (‘000 tonnes)

Source: WRAP (2019)

As the report was at a global level, it also covered numerous issues associated with combating soil erosion through greater use of sustainable management practices (e.g. more tree-planting, better management of peat resources so to help to sequester more carbon dioxide etc.). Issues around food security are also highlighted with respect to availability (yield and production), access (prices and ability to obtain food), utilisation (nutrition and cooking), and stability (disruptions to availability).

Overall, the report highlights the scale of the challenge that we face in addressing climate change. As with reports of this nature, global averages tend to hide a great deal of nuance. For instance, and particularly in large swathes of the British and Irish Isles, there are limited alternatives to livestock production whilst the proliferation of forestry can lead to problems with rural isolation if it is not managed properly. Indeed, the climate on these islands is one of the most conducive to grass-fed livestock production and improving its productivity (e.g. grass utilisation efficiency, better genetics) can also contribute to better environmental outcomes. Achieving net zero emissions requires a balanced approach, and undoubtedly everyone has a role to play. 

A summary version of the report is available via;

https://www.ipcc.ch/site/assets/uploads/2019/08/4.-SPM_Approved_Microsite_FINAL.pdf

Additional information can also be obtained on; https://www.ipcc.ch/2019/08/08/land-is-a-critical-resource_srccl/

Further information on the WRAP report cited above is available at;

http://www.wrap.org.uk/sites/files/wrap/Food_waste_in_primary_production_in_the_UK_0.pdf

Single Agri Environment Payments

All agri-environment payments in England are to move to a once-yearly basis.  Up to now there has been a 75% advance paid in the autumn of the scheme year, followed by a 25% top-up the following spring.  The RPA has now announced that a single payment will be made for the 2019 claim year onwards.  Like the BPS, this will be made at some point from the start of December through to June.  It is stated that this will improve overall payment performance by reducing the amount of processing work.  The change applies to both Countryside Stewardship and Environmental Stewardship (i.e. HLS) revenue claims.

CS Facilitation Fund

Defra has opened another round of the Countryside Stewardship Facilitation Fund on the 5th August.  £2.5m is to be made available to fund a person or organisation (the facilitator) to help groups of farmers and other land managers work together to apply for the CS and deliver benefits at a ‘landscape’ rather than single-farm scale.  Applications close on the 4th October.  Successful groups will be notified in time for individual farms to apply for the CS in spring 2020 in time for a 1st January 2021 agreement start date.  The Facilitation Fund has already led to the creation of 98 facilitation groups established across England since 2015 . The groups have supported and endorsed 1,200 new Countryside Stewardship agreements (i.e. an average of 12 farms in each group). 

Brexit Aid Package?

It is reported that the Government is planning a £500m scheme to buy-up finished livestock in the event of a No-Deal Brexit.  The Times has stated that the scheme, being drawn-up by Michael Gove as part of No Deal preparations would see the Government step in and buy finished lambs and cattle if prices collapsed due to tariffs being imposed on UK exports to the EU.  There are no details available on how any such scheme might work in practice.  The leak, perhaps not coincidently, came the same day as the Prime Minister, Boris Johnson, visited farms in Wales and promised to protect the agricultural sector.  He is quoted as saying “I will always back Britain’s great farmers and as we leave the EU we need to make sure that Brexit works for them”.

Sterling Weakness

Over the last few days Sterling has weakened against the Euro as fears of a No-Deal Brexit have increased.  The Pound has fallen to €1 = 90p (£1 = €1.11) for the first time since the turn of the year.  In the short-term, a weak currency is good for UK farming (although it tends to push input costs up).  However, if the trade-off for this is a No-Deal Brexit then, as outlined elsewhere in this Bulletin, it is unlikely to result in a positive long-term outcome. 

Boris and Agriculture

Boris Johnson finally got the job he has been chasing for so long when he became Prime Minister on the 24th July.  Quite what he will do with his prize now he has it is not entirely clear.  Both he, and his leadership rival Jeremy Hunt, competed to be ‘tough’ on Brexit and Mr Johnson has repeatedly stated that the UK will leave the EU on the 31st October ‘come what may’.  This seems to heighten the risks of a ‘No Deal’ Brexit and the massive disruption to the farming sector that would cause.

Mr Johnson has repeatedly stated that he wants to do a deal with the EU, but would not accept the agreement on the table that Theresa May negotiated.  The Irish ‘Backstop’ remains the key point of contention.  All the noises coming from Brussels, and elsewhere in the EU, are that the existing deal is not open for renegotiation; however, they would be open to reverting back to a ‘Northern Ireland only’ version of the Backstop which was originally proposed by the EU but had to be changed to a UK-wide version at the insistence of the DUP.  That said, the prospects for such a reversion would be bleak given that the Conservative Government is dependent on the DUP. The Parliamentary arithmetic to get ‘No Deal’ through also looks problematic.  Mr Johnson will have the shortest of honeymoon periods before having to negotiate a very difficult political landscape.  Many political commentators think that an autumn General Election may be the result.

Whilst the main impact of a Boris Premiership on farming will be the eventual trade implications, other issues also arise.  It is not clear whether the current plans for English farm support will survive the Cabinet reshuffle that has seen Michael Gove move from Defra (see other article).  In his first speech as Prime Minister Mr Johnson pledged to ‘liberate’ the UK from ‘anti-GM rules’.  The coming months and years will see if this is just rhetoric, or whether the UK will really start to diverge from EU rules and regulations – not just on GM, but in many other areas.  On labour availability, another key Brexit issue for farming, Mr Johnson is said to favour an Australian-style points-based system.  The detail of how this might be set up will be key to addressing agriculture’s labour needs.  In any event, it seems interesting times lie ahead. 

 

Conservation Covenants

The Government plans to introduce legislation to create conservation covenants in England.  This announcement came in a Policy Statement to give an update on the progress on the Environment Bill, and especially the results of various consultations that were undertaken as part of the legislative process.

As we wrote in February, conservation covenants could open up a new opportunity for landowners.  At present it is possible to put legal covenants over land, but only to stop certain things happening (e.g. not being able to build on it).  There is currently no mechanism in law to enforce positive action on the owner of land (e.g. maintaining trees) that is binding on future owners.  Existing agri-environmental agreements are simply a contract between Government and the occupier for a set period of time.  Conservation covenants would bind the occupiers of the land for the long-term or perhaps even perpetuity – the timescales that many environmental actions work over.  A payment would have to be offered to the landowner for them to sign-up to such an agreement.  These payments may have to be significant, and it is likely that some sort of market would develop for them. 

One source of demand for conservation covenants is likely to be bio-diversity offsetting.  Where land is being developed, compensating habitats are established elsewhere.  The covenants would provide a mechanism to ensure these habitats are maintained.  The Policy Statement also contained a pledge to  require developers to demonstrate a 10% net gain in habitat value for wildlife compared with the baseline situation prior to development.  (It is a little unclear how such a gain in ‘habitat value’ might be measured, however.)   Therefore, developers may well be looking for land onto which the bio-diversity offsetting can take place.

The full Government Policy Statement can be found at https://www.gov.uk/government/publications/draft-environment-principles-and-governance-bill-2018/environment-bill-summer-policy-statement-july-2019).

Advance Scottish BPS Payments

Scottish farmers will once again receive an advance on their BPS payments.  The Scottish Government has announced that loans of 95% of the expected 2019 Basic Payment will be offered to farmers under a National Basic Payment Support Scheme.  Loan letters will be issued in early September with farmers having to opt-into the scheme.  Payments are scheduled to begin in early October – this is two months earlier than payments could start under the normal BPS timetable of 1st December.  The loan percentage received has increased from the 90% seen in previous years of the loan scheme.

The measure is being ‘spun’ as the Government getting payments out to farmers early to provide ‘vital financial support to Scottish farmers in advance of Brexit’.  However, with the ongoing (and seemingly intractable) problems of the payments IT system, this may well just be making the best of a bad job, with little change of the system being capable of making ‘proper’ BPS payments by the 1st December.